Wilbert is the Founder and CEO of Think Act Prosper, an independently published global media and education company.
When a business grows, CEOs and owners tend to focus their efforts on acquiring new customers, finding new business avenues and increasing quarterly profits in the hope that the growth will keep them competitive in an ever-changing landscape. However, with this approach, the most important aspects of growth, such as current customer satisfaction and employees, tend to be neglected, which results in unstable companies that continue to chase profits.
As a serial entrepreneur, I have founded three businesses to date and have observed that many business leaders and executives focus their energy on the wrong areas of business. Here is my take on what owners should be focusing on in order to scale their company quickly and to set themselves up for weathering any economic situation.
1. Hire fast, fire fast.
The traditional theory when it comes to recruitment is to hire slow and fire fast. While this is good advice, in a world where everything is changing and developing at such a fast pace, taking months to recruit employees isn’t the best way to spend your time. If an employee is underperforming despite your efforts to get them back on track and firing them is your only option, you still shouldn’t delay letting them go. However, when it comes to hiring, I believe you should bring new hires into the company quickly.
That said, hiring fast doesn’t mean hiring recklessly. It means having a solid structure to interview, test and hire people quickly. When a new vacancy opens up, most businesses need to hire people who can hit the ground running, so it doesn’t make sense to me to keep these new hires waiting.
You need to know exactly what skill set you are looking for and communicate this clearly in the job posting. Ask for examples of experience during interviews, create a comprehensive onboarding process for new employees and allow them to work their magic from day one.
Furthermore, educate new hires on exactly what is expected of them, and explain that they will have monthly reviews of their progress and their ideas for growth. If they are not interested in continually improving, employees with the wrong mindset will be weeded out quickly, and you will be left with people helping your business grow strong.
2. Cut bad costs and bad profit.
A growing business will have growing costs and, in many cases, investments into new locations, infrastructure or products that will bring in more profits. As a business owner, you need to be comfortable with your company’s costs. And while you should look for ways to reduce unnecessary spending, be careful to not focus solely on cost without weighing the value of the investment.
If you cut “productive” and “revenue-producing” costs incorrectly, it will set your business back. A good example is the marketing budget. When a business looks to cut costs, it often cuts marketing spending, as things like “branding” are hard to measure quantitatively. While in the short run costs have been cut, in the long run, your company might not become a household name or as strong as it could have been.
When it comes to cutting costs, talk to your employees. Each person will likely be able to point to an area to cut costs while improving efficiency because they deal with different parts of the business on a daily basis. Consider offering a bonus to those who find ways to cut costs and increase efficiency.
Profit should be treated in a similar way. From my perspective, not all profit is good, and some profit brings more problems than it’s worth. Think of the amount of time dissatisfied customers can take up in a business because of a bad product, which brings returns, complaints or even a recall.
The 80/20 rule should be applied to profits made: Which 20% of your customers are delivering 80% of your profit? And which 20% are costing 80% of your employees’ time? Again, ask your employees which customers bring in the most revenue and are a delight to work with.
3. Go above and beyond to turn your customers into raving fans.
I consider Apple to be a helpful example of turning customers into raving fans. Apple has made customers loyal through years of service, products, branding and customer interaction. From my perspective, it appears that the company genuinely cares about the customer’s experience, and it’s paid off.
While customer satisfaction might cost more in the short term, in the long run, doubling down on this is what makes loyal customers who essentially become part of your marketing team. Studies have shown that by increasing customer retention rather than acquiring new customers, you can can increase profits from 25%-95%.
In my experience, if a customer has already bought from you and had a great experience, they are less likely to take on the risk of switching to a competitor, and they are likely to tell others about their positive experience. In a world of constant advertising and online reviews, word of mouth is what I view as the most effective way of growing strong as a company. A simple way to do this is with Fred Reichheld’s Net Promoter Score, which asks customers a single question: How likely is it that you would recommend our company/product/service to a friend or colleague?
Paying attention to your business as it is now is arguably more important than what it might look like tomorrow. Fast growth can be stable, and not all costs need to be cut to be profitable, but you need the right team and you need loyal customers. If you can get these two sets of people working with your company, then you have a solid foundation on which to grow strong and even more profitable.
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