Creating Systems To Meet Your Goals
It is one of my strongest beliefs in business that you should do it your way. Too many people start a business by copying whatever most similar businesses are doing. Sure this might seem safer, but will this allow you meet your goals? And think about this: if you set your business up the same as everybody else, how do you expect to do better than them? How will you dominate your industry if you are doing the same things as everybody else? If nothing makes you stand out from the crowd, why will people pick you over your competitors? There is a difference between designing a business and simply entering an industry.
With this in mind, let’s have a look at some examples of how to arrange your business systems (remember, Save Your Self Time, Energy and Money). Because of the almost limitless different types of businesses that people can start, we will of course not be able to examine every possible business operation, but the following should give you an idea of how to match your systems to your goals.
Income before expenses — leveraging your money
The basic idea behind most businesses that sell products is to turn cash into stock, and then turn that stock back into cash as soon as possible. A footwear store will have capital (cash), and purchase shoes (stock) to sit in the stock room and on the shelves with the aim of selling them for cash — and for a profit — as quickly as possible. A whitegoods store pays upfront for the items in its showroom, and then aims to generate a profit by then selling these to customers at a higher price. Toy stores stock toys which they have already paid for; bookshops stock books that they have already paid for; even restaurants have to pay for food and other ingredients that they then sell to customers as meals.
You should already have noticed the major drawback of running your business this way. Think of the amount of cash that is tied up in stock that is not earning any money! If you are opening a bookstore, you might have to spend $150,000 just to put books on the shelf. And you will have to pay for most of these before you have made a single sale. It will take a long time to sell these books and recoup that cash. And you know that some of the books simply won’t sell, so this is cash that you will never get back. The cash that has gone into buying this stock could have been used on marketing to generate further sales.
A few years back I actually looked at purchasing my own Athlete’s Foot franchise. One of the reasons I didn’t go ahead was the amount of stock I needed to purchase to be operational — it was a large investment. Even though I could have designed the business to meet my goal and had less stock, you need to be intelligent and still keep your customers in mind. Footwear buyers in a retail environment don’t want to wait for their shoes to arrive; they will just go somewhere else and get them. Even though I am saying design it your way, you still need to be intelligent and consider your customer’s objectives. You must design your business to suit your goals, but you must make sure your goals make business sense as well.
HEY, did you know i’m running a contest while I am away…
Firstly, here is what is up for grabs…
There are two prize packs to be won. To Enter: 1. Post a ‘review’ of one of these book excert posts, on your blog, with a link back to the relevant post on my blog. Does that make sense ? I’ll see the link or the trackback. 2. Include an email address in your post unless your whois information is correct. 3. Promise to give a review of the entire book on your blog once you have received it and read it. 4. I’ll randonly draw the 2 winners when I get back after April 18 2008. It’s that easy!  |
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