By Ken Ingram, MQA President &
Yasmina Jimenez, Senior Coach and Advisor
Congratulation for taking the first step outside of your comfort zone. It takes guts to be in business and the fact that you have stepped up and are stepping out is something to celebrate. Now that you have taken the first step you need to be mindful of every next step that you will take as you move forward. At this point, make sure you don’t fall into the trap of over investing in the operational aspect, as many business owners tend to do.
Examples of this would be a focus on branding such as the logo, website, business cards, “the fun stuff“ rather than the customer service delivery or teamwork part of the business. While important leaving little or no time to invest on the development aspects of their business may put you at risk of being over whelmed. Over the last year, we have met with and reviewed the business plans of approximately 50 start-ups, and the one thing missing in every one of these plans was Risk Management. Every one of these plans painted a Rosie picture of their future, however, even though optimism is highly encouraged, these plans failed to paint a realistic picture of the business ventures they represented. In some case they did not need any money to launch the business and in other cases they did but the plan did not pass the investors/banks smell test.
Although the very thought of Risk Management might elicit sweaty palms for some entrepreneurs, it is an essential step towards establishing your business. A simple tool you can use to gain a deeper understanding of the challenges ahead is the SWOT analysis:
– Strengths: are made up from a set of elements that include key advantages, capabilities, competitive advantage, unique selling points, resources, assets, experience, financial reserves, and likely returns. Some strengths are easy to identify while others may not be as obvious.
– Weaknesses: while no one likes to high light or even think about the fact that they have a weakness, it is critical that you take a good look in the mirror. Weaknesses are disadvantages, gaps in capabilities, lack of competitive strengths, reputation, presence, reach, financials, timescales, deadlines, and the biggest one of all CASH FLOW and banks like to know that you have Assets.
– Opportunities: I love opportunities. This is where the greatest possibilities hang out. A place where your imagination can roam. A place where the only limits are your imagination. If you had all the money in the world to create your ideal business what opportunities would you explore/exploit.
Consider market developments, competitors’ vulnerabilities, industry or lifestyles trends, technology development and innovation, global influence, niche target markets.
– Threats: can potentially stand in the way of your goals and can be either internal risks or external risks. So you need to evaluate both. Examples would be changing demographics, exchange rates, political, legislative or environmental effects, IT development, market demand, competitors’ intentions, vital contracts or partners, obstacles faced, loss of key staff, and other element are examples of what can be considered. It could be a mix of factors within your control or outside of your control.
The criteria’s may vary depending your business opportunity and the part of the Spa industry that you choose as your focus. Yet the key to the SWOT analysis is knowing how to bridge the gap between your weaknesses and strengths as well as knowing how to transform your threats into opportunities.
For example, you might identify your business as having the following:
– Strength: Innovative beauty product for athletic women
– Opportunity: non-paid internships with local university or trade school
– Weakness: Small team and little budget
– Threat: Higher demand than ability to deliver
Use your strength and opportunity to eliminate your weakness and threats: partnering up with the university will extend your team and allow you to meet your demand at no extra cost as well as allow you to directly market to athletic women, thus creating greater opportunity for exposure.
If it is this easy, why do so many businesses fall short and disappear within their first year? They forget to look at the big picture, foresee obstacles and therefore fail to adapt.
In addition to neglecting risk management, many entrepreneurs spend more time, energy and money on their branding rather than invest in leadership development or team building. Although marketing is important, establishing the structure of your organization as well as the system or manner by which it will operate, will allow you and your team to bridge the gap between setting goals and actually getting results.
Don’t underestimate how your inability to delegate or an employee’s failure to communicate your business mission can impact customer loyalty and hence sales revenue.
Similar to a SWOT analysis, make sure you take the necessary time to learn about your employees’ strengths. Find out about their leadership and conflict management style as well as areas needing significant improvement. A simple way to do so, is by observing them as they work with others as well as taking note of how they handle interactions with customers and colleagues. An example of key areas to observe is the following:
Unity: what is the degree of cohesion or “we-ness“ in the workplace. Have you ever walked into a salon and felt you could cut the tension with a knife? Chances are you have experienced this more than once and the opposite is true. The best way to demonstrate your mission and brand is by creating a team atmosphere rather than a group that screams individualism. Building a positive team identity is crucial.
Self-Direction: motive is power. On one hand, if one or a few employees have little to no drive, it will eventually have an impact on the rest of the team who may feel as they are carrying all responsibility for maintaining a positive image and great results. The contrary is also true: a dominant employee or a “clique“ can very well crush the team’s spirit and create rivalries that will eventual bleed onto your customer’s experience. As owner and de facto leader, you need to promote shared leadership, planning, execution and evaluation of individual and team related work.
Problem solving: your team’s ability to make decisions, find solutions and resolve or maintain disagreements is not an easy task. At times, employees excel when working by themselves, yet fail miserably in a team setting. Competing personalities, personal issues or agendas can bring out the worst in individuals. Making problem solving fun, such as a brainstorming session of who can find the most possible solutions in less than 3 minutes or partnering people up with outside mentors who can offer support and advice in a sticky situation are creative ways to deal with difficult moments in a teams’ life.
The important fact to remember is to invest more time in preparing the “meat“ of your business: the delivery of your services or products and the function of your team. After all, you want to leave your clients with an overall positive impression rather than present a mere “facade“.