Business Growth Requires Pruning
I’ve learned a great lesson as a homeowner. You must prune your trees and shrubs to foster healthy growth. You must also prune your business to foster healthy growth. In our zeal to grow our small business, we can create an unholy mess. What should you be pruning in your business?
How do plants grow?
The growth food for plants are sunlight, water, and nutrients. Nature feeds plants to help them grow. A benevolent farmer tends plants to maximize growth and production. One of the activities that increases growth is pruning.
Pruning is cutting off limbs from trees to accomplish four key objectives: 1) improve nutrient flow to remaining limbs; 2) improve quality of fruit produced; 3) prevent spread of infected limbs; and 4) improve light and air to remaining limbs. All four of these items foster healthy and controlled growth. The concept of pruning a plant is to rid the plant of random and wasted growth. After waste is removed, the healthy portion of the plant grows better.
How does plant growth relate to business growth?
In the case of your business, if you’re feeding the wrong activities, you’ll starve the right activities; and kill your business. Unlike plants that get water and nutrients from a benevolent farmer, businesses get cash by three methods:
Debt – given by a bank who is repaid by profits.
Investment – given by investors who expect a return from profits.
Profit – given by customers for the value you give them.
If it isn’t pruned, a tree will grow out of control and look ugly. A business, on the other hand, will die if it is not pruned. Why? Because a business’s food source (cash) will be cut off.
Think about it…
What bank will give you a loan, if they’re not assured you have a method to repay them? If you have an unprofitable business, they’d be foolish to loan you money.
What investor will invest in your company if your company isn’t profitable?
What customer will buy your goods and services if they’re overpriced and poor quality?
Sorry to repeat this so many times, but it’s important that you realize the cycle of your business and why pruning is so important. A business’s nutrients are cash; cash is indirectly or directly coming from profits. You cannot make profits without pruning.
How do you prune your business?
I tend to look at businesses like a machine (also a tree apparently). Four components of this machine must be part of the pruning process: 1) Marketing; 2) Sales; 3) Operations; and 4) Employees.
The tendency for new business owners is to attempt to sell their product or service to everyone who could possibly buy them. If this, is you, stop it! The more directed your messaging is, the stronger your niche will be, and the more effective you will be at attracting your ideal customers.
To prune your marketing, you must focus on your ideal customers. Once you gain enough traction in your niche market, then, and only then, attempt to expand to other markets.
Selling is a process of moving your prospect from a place of interest, into a place of making a purchase. In many cases, this process involves education and trust-building. The length of your sales process could be five seconds, or it could be five months.
The key to pruning your sales process is to include only the steps that add value to your business and to your customer. If you have steps that are a waste of time, you’ll lose prospective customers; increase sales costs; and frustrate your salespeople.
Operations are the act of creating your product or delivering your service to your customers. Customers rightly want value. As the business owner, you want profit. To deliver both ingredients to grow your business, your operations must be as efficient as possible. To prune operations, constantly review supplier agreements, cost of goods sold, customer satisfaction, and delivered gross margins. Cut out unneeded expenses and innovate processes to create greater value than your competition, and your business will continue to grow.
The most sensitive, and yet, most overlooked pruning activity is your employees. Before I talk about the pruning process with your employees, I want to point out an important truth. Employees are living and breathing people. These people are highly valuable souls who have bills to pay, a family to support and lives to live. They are NOT to be thought of as a dead limb that will be discarded in the trash.
How, then, can I possibly talk about pruning such high-valued people?
The pruning process with employees has three possibilities:
Reward High Performers: If employees are doing well for your business, they must be rewarded accordingly.
Develop Potential: If employees have great character, fit your culture, and are lacking in knowledge; invest in training and you’ll reap great rewards.
Not a Fit: If an employee has demonstrated that they belong in a different career with a different company; please release them and let them go.
The first two seem obvious. The third one is a challenge for most small business owners. The most difficult task that I had as an employer was laying employees off or firing them. And yet, it was the most beneficial act to those employees and my business.
When you keep an employee who is not a good fit with your company, you’re limiting the ability of your company; you’re penalizing your good employees, and you’re limiting the growth of that individual.
There’s a second type of employee pruning. It’s the way you organize and staff your business. There are three key factors in succeeding at creating the perfect organization structure:
Avoid understaffing: This may seem like the opposite of pruning; and it is. It’s possible to over-prune a tree. It is also possible to over-prune your business. If you need a person to complete a vital role, hire them and pay them what they’re worth. See what activities that you’re outsourcing that should be insourced.
Avoid overstaffing: This may seem obvious, but it’s one of the main problems facing inexperienced small business owners. When you add staff that you don’t need, they’ll create inefficiency throughout your organization. You’ll need to train this individual, provide direction to this individual, and task this individual with busy work. This robs the rest of your organization, your customers, and your investors.
Role clarity: Failing to communicate roles or work direction to new employees is like adding dead branches to a tree. If your new employee is high talent, they’ll get frustrated and leave. If they’re a low-quality employee, they’ll stick around and suck the life out of your business.
Organization structure is sometimes difficult to fully anticipate in a growing business, but it’s critical that you review your organization structure on a yearly basis to ensure you’re not inadvertently ignoring dead branches in your business… that ought to be pruned.
I hope that you’ve gained some insight into the pruning process and how it can help your company grow healthy and strong. If you’re like me, you hesitate to prune because you aren’t sure if you’re cutting off too much. When you see the new limbs grow out in springtime, with healthy buds, blossoms, and then quality fruit, you’ll be convinced pruning created healthy growth.
If you’d like to learn more about how I coach my business owner clients, please visit my website at www.mmbizcoach.com.