The world feels as though so much has changed in such a short period of time. I would like to share what I believe to be three timeless rules for any business and why they must always remain important.
Rule #1: Income must exceed expenditure
For many businesses, income has suddenly contracted, or worse, even disappeared. However, expenditure does not stop. This is like running out of fuel. What now? Do we abandon the vehicle and walk? Get out and push? Is the journey over?
I feel that the world has forgotten the importance of this rule, with many of the biggest (and newest) names doing exactly the opposite. We live in a world where burning through cash is taken to be an indicator of prosperity. Uber, Netflix, Tesla, Twitter, Slack – all familiar examples of this type of success. These are companies where expenditure has exceeded income for years, or even decades.
Burning through cash is surely the most fragile of paths to success. This time of change may present opportunities for businesses to discover real resilience, securely built on a foundation where income exceeds expenditure.
Rule #2: Look after the family
The business family includes customers, employees, suppliers, partners, shareholders and the community. All are important, though arguably customers and employees are the most important.
A business must look after its customers, or there will be no business.
Despite actually inventing the digital camera, Kodak was sure that what their customers really needed was more film! Blockbuster, Borders and many others were convinced that their customers loved the experience of coming to their stores more than they loved the products in their stores. So they built more stores, which no longer exist, rather than investing in ways to deliver the product that their customers actually wanted.
The needs of customers are met by the endeavours of talented people employed by the business. There truly is no better asset to any business, and in fact, the most exciting task in a business should always be recruiting! What could be more important than discovering new members to join the family and look after the needs of customers even better?
Therefore, a business must look after its employees, or there will be no business.
Yet, there are many unfortunate examples of high profile companies being negligent in the safety and sustainability of the supply chain that makes their products, or of companies seeking to censor the opinions of their employees, and we have sadly witnessed the unbelievable efforts companies exert in an effort to destroy the lives of their employees should anyone ever dare “whistleblow” on their own bad behaviour.
Meanwhile, underpayment continues to be a huge issue, with many of the largest employers joining the ranks of those caught failing to pay their employees what they are fairly owed.
Changing circumstances means changing customer needs. The best way to meet these needs, as always, is by discovering new ideas, new products, new services, all of which are suddenly more relevant than ever, all of which rest on the shoulders of employees.
Rule #3: Build long term partnerships
A business must build enduring long term partnerships with its entire community: customers, employees, suppliers, distributors – everyone.
For example, I was taught that “a business must always collect its debts”. However, almost all bad debts come from bad partnerships. If I convince a customer to buy something from me, that they do not need or they cannot afford, then who is really responsible for the problems subsequently created?
Arguably the most important partnership is within the business team itself. Hiring quickly, rather than carefully, is a surefire way to create unwanted ripples in any team. The best hiring advice I can give is to “Hire carefully, aiming to only ever hire people with standards that are higher than yours.”
Businesses should choose all partners carefully, always with a view to sustainability, which is the key to long term success.
Putting it all together
I came across a wonderful uplifting story of how one business is looking after its customers by giving them better access to its products. At the same time, it is managing to keep all its employees working by teaching them valuable new skills. And, it is taking care of its long term sustainability by discovering even more valuable products. These are ideas that would have never otherwise been discovered, but for this time of incredible change that we find ourselves in.
Shoni Even-Chaim is the Founder of OFS. Mr Even-Chaim is driven by his vision of a world that produces the things it needs in the most efficient and most sustainable manner, and by his firm conviction that the operators. He started OFS with one goal in mind – to develop innovative technology that uncovers these ideas and empowers the operators who have them, resulting in products that are better made, with less effort and less waste.