Who is a Business Strategy Consultant? Do I Need One?
A business strategy consultant aims to promote business acumen.
Help the business owners and organisational leaders become astute businessmen.
Consider this: Most businesses borrow from the same sources. Offer similar products and services.
Cater to the same customer segments.
Yet a few stand out while most others go under.
What makes the difference?
The winners stay clued on to what matters the most.
The others operate on false notions and make erroneous assumptions.
Sound business leaders pause often enough to question the assumptions underlying their operations.
The unsuccessful ones avoid business strategy consultants for fear of standing exposed.
Do not relish anyone challenging their assumptions about business and make them uncomfortable.
Enlightened business leaders tease their intellect to stay ahead of the game.
Great minds find it difficult to grasp simple truisms of life.
Theodore Levitt coined the word marketing myopia to signify shortsightedness in business. Lose perspective and spend an enormous amount of time addressing the wrong problem. The handicaps extend to the area of general management as well.
Care to put your business acumen to test?
Business acumen is about finding ways to keep the business simple, easy, value-adding, and fun. Here are a few posers for the owner promoters and the board of directors. Stimulate your mind and test your readiness to be an industry or market leader.
What should be our #1 business priority: Revenue, profit, cash, or market capitalisation?
Most people would go with a preference in the order.
I beg to differ because the time value of money is the cardinal principle for any business.
Insurance companies, doctors, lawyers, educational institutions insist on payment in advance.
Most retail businesses and online marketing relies on cash and carry mode.
Ever wondered why?
Because the sooner we collect the money, the less risky we are as a business.
Advance payments reduce the risk of late payments, goods return, bad credit, and write off.
Preference for cash should thus have been the priority.
Profit is not cash but a promise of deferred payment. We know what election promises are!
Revenue includes the cost of all inputs, overhead costs, premiums, and risk of non-payment.
Market capitalisation is arbitrage and opportunistic.
If it is your own money and reputation at stake what would you go for?
How much should we borrow and for how long?
Somehow most businesses believe that unless they borrow, they can’t be in business.
Worse yet, quite a few business icons prefer to go for an IPO and raise a lot of capital.
Believe that the more the money they have at the command, the more powerful they are.
Yet, every day we come across companies that learn to borrow less and deliver more.
Don’t believe in borrowing from banks or public because it costs money to service the debt.
Bankers take collateral before lending. Companies like Asian paints, Eagle flask and Pidilite industries rotate their cash. Operate as their own bank. Let’s us to collect full payment in advance before delivery. Gain a competitive advantage. Bankroll your operations the way Toyota or GE Capital used to.
How much inventory should we carry and for how long?
Surprise me! The World’s largest retailers hold no inventory but effect guaranteed delivery.
Every businessman knows that a slow-moving inventory slows down cash rotation. Diminishes cash profits. Business acumen lies in collecting a premium for prompt delivery from impatient customers. A guaranteed delivery system attracts more customers. Ensures faster stock movement and command a higher premium. Uses up less real estate. Accelerates value realisation and released the pressure on precious working capital. The answer is to carry as little inventory for as short a period as possible.
Treat every market as if it has a seasonal demand and every product as if it were perishable. How much extra would we stand to make if we operated as a florist? A smart florist would know in advance the events and dates their clients love to celebrate. Dial them up a day in advance, book the order, collect the cash, and then buy the flowers of their choice. Enjoy infinite returns on zero investment!
How much credit should we offer and for how long?
Are we in the business to make our customers poorer or richer?
Imagine the consequences of parenting an adolescent child with unlimited pocket money.
Would they ever value the dignity of labour and learn to make money on their own? No way!
Since pocket money comes with no obligation payback, why would they let go of that privilege?
We handicap ourselves by extending them a line of credit they cannot honour.
Forfeit our right to recover the amount advanced. The inability to pay back is bad enough. Encouraging them to celebrate their delinquency is avoidable. Unless we are good at assessing risk, we should elect not to extend credit. Why not let the customers earn the privilege to patronise our products? Qualify themselves to enjoy the credit we extend?
What risks are we exposed to and unaware of?
One of the ironies of life is that when the going is good, we take goodness for granted.
It never occurs to us to explore opportunities for going from goodness to greatness.
Too busy counting the pennies, we lose sight of the riches we leave unclaimed on the table. Here are ten inconvenient truths that can be a goldmine for the ones who care.
Most of us would love to brush them aside because they are a nuisance to deal with.
We know that
Do we ever sit down to take notice of how much these things cost?
How much more we could save, if we paid attention to them?
What untapped opportunities are we overlooking?
Consumers expect their suppliers to back their sales with post-sale maintenance.
Invest in extending the shelf life of their product even if it means paying a small premium for it.
Yet, very few business leaders care to cash in on this opportunity.
Forego an opportunity to earn recurring revenues in advance.
An inability to compound the short-term wins into long term advantage is a cardinal sin!
Everyone knows it is bound to happen but elect to do nothing about it.
In Teaching Smart People How to Learn, Chris Argyris highlights an anomaly. The smartest and most successful professionals have an aversion to learning and change. Turn a blind eye and stay indifferent to disasters waiting to happen. Avoid departing from conventions and forego opportunities of a lifetime.
Don’t we all know that:
Do you need a business strategy consultant?
This is a lot of food for thought.
You become the company you keep.
The decisions are yours to make.
Would you not be better off making an informed choice?
How would it feel to know where you will end up to be?
We have all the potential to become, whoever we may wish to be.
Make sure you go with a business strategy consultant that is your ally and a long-term bet for you.