How can a business remain stable in an unpredictable economy?
That was one of the central questions asked by Jim Collins in his book Great By Choice: Uncertainty, Chaos and Luck – Why Some Thrive Despite Them All.
Collins, who has written iconic books such as Built To Last, Good to Great, and How The Mighty Fall, spent 10 years with his research team examining why some companies were able to thrive despite chaos, and also why some did not.
Great By Choice reiterates numerous findings by Collins, and also introduces some new concepts. Things like the 20 Mile March as demonstrated in the thrilling race to the South Pole between Roald Amundsen and Robert F Scott. Amundsen’s relentless focus on only marching no more than 20 miles per day helped him to get to the South Pole first, and lead all of his men safely home. Scott, by contrast, perished on the journey with his team, having not practised this discipline.
And there were other concepts such as:
• Leading above the ‘Death Line’
• Getting the right people on the bus
• Finding your Hedgehog Concept
• Firing bullets and then cannonballs
And many others. But what does any of this have to do with helping you ensure business stability in an unpredictable economy? Five words: hold on to your core
Stabilise Your Premises
With all the things that you can’t control, it’s extremely important to hold onto the core things that you can control. That’s the take home message of Jim Collins’ book.
And one of the things you can control is the very premises in which you carry out your business. Having a stable base of operation gives you and your employees the security you need to allow you to focus on your business’ core activities. It also gives you advantages such as:
• Freedom to use the premises, alter it or even move away from it because you’re not tied to a fixed-term contract
• Claiming capital allowances towards the cost of renovating or converting it
• Forecast your costs more accurately if you’ve got a fixed-rate business mortgage
Financing the purchase of your premise may involve taking out an owner occupier business mortgage, but speak with your broker to determine which business mortgage option is the best for you.
Stabilise Your Cashflow
But just because you’ve got premises doesn’t mean that you will have stable cashflow. And as every business owner knows: cashflow truly is the lifeblood of any business.
One way to stabilise your cash flow is through invoice factoring. This is where a business sells its invoices to a third party for a discounted percentage of the value of the invoices. So for example, an invoice worth £400 might be sold to a third party for £300 (a discount of 25%). The third party will then take full responsibility for managing and collecting the amount on the invoice from the customer. If you’re currently considering this as an option for your business, speak to experienced invoice factoring brokers first.
In summary, chaotic times call for a radical focus on controlling everything that you can control. This includes your premises and your cashflow. Secure these two things and you – like the companies in Jim Collins book – will have the opportunity to be great by choice.