When we start out, we are all obsessed by turnover. How often are we asked about turnover size as method of measure, from internet forms to banks to business coaches?
Stupid question – the wise measure of the business is all about the profit, not the turnover.
(2) Size as in number of years established
No one disputes that it is an achievement to keep a business going for a long period. In reality though, you only have to look at the average life of a Forbes top 100 business (for example) to know that even the good and the great have a limited life.
Surely a short and successful business career to be ended on a high with a sell-out rather than a slow and inevitable death is a better aim?
Again, how many times have I stood around at some business event and people have asked me how many staff I have and been impressed by volume.
The reality is that the clever contemporary business has as few staff as possible. Staff are without doubt the most volatile part of your business, the one that will take up the most time and cause the most trouble and be a continual drain on the company’s money, in bad times as well as good.
No wonder the CBI talk about trends to sub-contracting, especially in my beleaguered manufacturing area. It is absolute good sense to sub out whatever you can and pay for the most reliable service, only as and when you need it, in as many areas as you possibly can. Really good staff are far and few between and finding them can be a full time job.
Read more from Jan Cavelle:
- Under Labour, would entrepreneurship throughout Britain lose all incentive to succeed?
- Government dictation of wage levels will hinder, rather than help, productivity
- Promotion of entrepreneurship is great, but not everyone is cut out to run a company
Old fashioned sales was all about the sale. A sale at any price. We have moved into wiser times. The best sales are those which are profitable. It is all about upping the EBIT now, a concept few of the old school sales people understood.
We all seek more customers, be it in startup mode or when we are expanding. But how easy is it to forget that customers, like a bad sale, can have a negative effect on you and your business?
Most obviously, the ones who don’t pay their bills are a customer not worth having. However, those who demand too much for too little, those who are unreasonable or unpleasant, can all have a hugely negative impact on the performance of your staff; an impact that will affect their performance overall and cost a great deal more than that one customer, if they are falling out of love with their jobs.
Contrarily, a good customer, one who behaves professionally and expects your staff to do the same; who works with you to explain their needs so you can deliver the optimum of service, those are so rewarding they make every day enjoyable for you and your staff.
I would therefore conclusively argue that the wise man (or woman) ignores their turnover, works with the smallest possible number of great staff (who enjoy delivering great goods or service to happy, paying customers) and gets out of their business at an early age. Simple really.
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