All About Focus

by Alicia Arenas on November 12, 2009

3181052163_bef023aa1d_oI just wrapped up an interview with a local magazine and the interviewer asked me this question:

“You worked with a wide range of clients, from family-owned businesses to several Fortune 500 companies, what have you learned from both?”

I think the answer to that question merits a post.

I learned that both business models have a lot to learn from each other. In fact, if both models combine their strengths, the results will be tremendous.

Corporate Crap

Looking at Fortune 500 companies, particularly publicly-held companies, their emphasis is on profitability. There isn’t anything inherently wrong with that priority; businesses have to be profitable to survive. The danger comes when profitability becomes a singular focus or when the only important result is the next quarter’s closing stock price. With that focus, companies often choose to make sacrifices in vital areas that cripple long-term success. I worked for four publicly held Fortune 500 companies. I saw leadership shoot themselves in the long-term “foot” in an effort to find an extra $1,000 in saving. For example:

  • Companies are cutting back on commissions paid to sales people – the people who are bringing in new customers.
  • What about professional continuing education and training? Employees who need to learn how to do their jobs better (to serve their customers better so they can improve customer retention) are suffering under on-the-job training from managers who aren’t trainers and are just as frustrated as they are.
  • I worked at a company where the brilliant executive team (not) decided to save money by cutting back on salary increases. The result? A group of their front-line customer-service employees received a 10 cent hourly increase at the time of their performance review. How excited were those employees to serve their customers and put a positive face on the company? The company had 38% turnover in 60 days in this group of 120 employees. It took months to find qualified replacements. It was no surprise to see profits plummet.

The ways in which companies choose to focus on profitability has impacted more than just the employees, it has impacted the American people, specifically the taxpayers. Remember the contention around the “Big 3” begging for government subsidies while flying in luxurious corporate jets?

Small businesses don’t have it all right either.

I am stunned by the number of small business owners whose singular priority is to build and maintain relationships. They don’t have budgets, they have not set financial goals, they can’t tell me what their average cost per sale is and they don’t know how much profit they netted last month. Yes, developing strong relationships is a hugely important business practice. This strategy will earn you credibility in the marketplace,  expand your circle of influence and help you grow and retain your customer base . That said, if you don’t develop a financial strategy that will keep you healthy and strong, your business will close. If you don’t balance meeting the needs of your customers against your P&L, you will fail.

It’s all about your focus.

If corporations want to win long-term, they need to devote more resources to their customers and their employees. Folks, the market is changing and if you haven’t been taking care of your people, get ready for some turnover.

If small businesses want to win long-term, they need to devote more time to understanding the numbers at a micro level and creating a sturdy financial plan.

What other lessons can small business learn from corporate and vice-versa?

Photo courtesy of rogerimp.

Alicia Arenas is a guest blogger for The Red Recruiter.

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