“For wisdom will come into your heart and knowledge will be pleasant to your soul.” – Proverbs 2:10
There are two primary sources of inspiration for this column. The one is to record stimulating thoughts related to my area of business activity, enterprise development, and the other is to respond to those kind readers who find the time to comment on the column verbally or in writing. Both these sources are alive and well and hence my column continues. The content is disseminated not only through the Barbados Advocate Business Monday “Serious Business” column, but also via email, social media and other more traditional news publications.
Indeed, last week the editor of a New York City publication requested permission to reprint what he described as “your powerful article” on the topic “Triple Flame of Finance” which he thought “deserves wider circulation”.
Also, Barbadian Senator John Watson, in response to the same article asked me to explore the topic “the major hindrance to growing a business is getting market share”.
Here is my attempt:
A business is an integrated process and the core objective is to manage the following five business systems well: (1) the technical and support operations system produces growth which is measured primarily by the profitability of the business; (2) the corporate governance system lays the foundation which is measured by the efficient functioning of a Board; (3) the finance system provides financial security which is grounded in the Triple Flame of Finance; (4) the people development system gives rise to sustainability of the business and is measured by happiness; and, as the senator suggests, the marketing business system produces life in the business and is measured by the generation of revenue. Profit cannot be generated without revenue. It is also true that the generation of revenue does not guarantee profitability.
In order to establish a profitable business and achieve growth in profits we have to: (1) identify profit centres; (2) grab more market share; (3) increase productivity; and (4) contain costs. Structurally very simple.
The first thing is to establish profit centres not only theoretically but in practice. There is no shortage of entrepreneurial flair here, at least theoretically. Once profit centres are established in practice then, Senator Watson is right, the business has to wrangle market share away from competitors and expand its market geographically, which, in a small emerging nation context, means the business has to export.
It is useful here to be aware of Ross Shafer’s book entitled “Grab More Market Share: How to Wrangle Business Away from Lazy Competitors”. Ross’ advice is to: (1) Stay relevant through innovation; (2) Respond to customers – fast; (3) Use customers’ ideas; (4) Snap up competitors; and (5) Be more flexible.
Then there is increasing productivity. What is “Productivity”? It is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input. We speak about “labour productivity” which can be optimized through training and motivational techniques; “process flow productivity” which can be optimized by critically examining the flow of activities in each business process; and “technology productivity” which can be optimized by embracing emerging soft and hard technology as it becomes available. The direct and indirect costs of the business need to be diligently monitored and contained.
Let us all use the wisdom that emerges from our heart regarding business ideas and the corresponding innovation so that we can apply business knowledge and achieve growth to produce results that will be pleasing to our soul.
May I thank all readers over the past year especially those who have provided feedback. It is truly an inspiration to me. Happy and prosperous New Year to you all!