Setting Priorities – It seems a simple enough question to answer;
- Grow and/or Expand
- Sell Up and/or Retire
- Save Costs
- Increase Prices
As with most things, ideas are easier than implementation. By setting priorities you avoid trying to manage too many aims at once, here are some tips to help you prioritise.
Big companies often bring in external consultants. Their independence allows them to make unbiased observations and to sometimes suggest painful solutions that internal staff would be reluctant to put forward.
Their analysis will look at internal and external factors, the steps will most likely include:
- Is there a healthy market for the product or service
- Are products competitive or can they be improved
- Are the resources there to make, source and deliver
- What investments are required and are they worth it
- Are there alternatives
The result of such investigations will give the management of the business guidance on setting future business priorities. Whilst this varies across businesses, there are common threads that apply to many:
- Invest just enough to keep “Cash Cows” bringing in the money and possibly extending their profitable life
- Invest in growth market products
- Cut costs and plan to exit loss making areas
- Skills and Expertise
- Stop investing in new products in areas with no market profitable potential
Of these the last one is often the most difficult decision to make especially in significant money has already be spent consequently companies large and small are guilty of not always “biting the bullet,” and making such decisions.
What SMEs Can Learn From The Approach
Cynics may say that large companies use consultants to make the tough decisions that they should make themself. Whether true or not, they make decisions and determine priorities.
Whatever size a business is, difficult decisions sometimes have to be made. Consultants can help any size of business but many small businessmen have a good grasp of the market they work in, so are well placed to determine changes necessary. Finding analysis time is the bigger challenge similarly familiarity, is another danger, staying in our “comfort zone,” even if demand is falling rather than looking for the next opportunity.
A favourite saying of a former boss rings true, “In business as soon as you stop moving forward, you start going back!” This translates to prioritising on activities that will grow your business in profitable markets over those that are holding you back.