Financial success only comes when you figure out what customers want and how you can provide it profitably with the help of suppliers; when you deal effectively with business disruptions; and when you determine how to differentiate yourself from the competition, while living within the rules and capitalizing on changes in technology. These are the basics, though it may seem complicated.
In the world of science and engineering, the basics often revert to the equation F=mA, where the resultant force equals the mass times acceleration. In business, the basic is also F=mA, where F represents your financial success, m represents management and A is for Action. Financial Success = management Action (F=mA). 7 forces need to be aligned to accelerate your business in the right direction. Let me use a fleet that hauls freight as an example of the forces.
1. Who is the customer? If you are a fleet, is the customer the shipper? Is it the manufacturer of the part? Is it a stocking distributor? Is it the consignee? Or is it the customer that walks into the grocery store? Yes. You need to understand all of these customers to optimize and align the force of magnetic attraction between the customer and the product.
2. Who are your suppliers? Certainly it is a vehicle OEM for a fleet. But, it's also the breakdown service, the dealership, the parts suppliers, and many others. These can be like the force of gravity, holding you down.
3. What rules do you have to follow? There are so many, it's hard to stay out of trouble with someone. Federal government, state government, and municipalities all weigh in on this. You might also subscribe to working within the rules of some trade association or non-profit that you support. Rather than allowing your business to accelerate and grow, these can feel like a centrifugal force holding you back.
4. What are your competitors doing? Are they lower priced? Are they offering better service? How does your customer define better service? Are competitors focusing on your most lucrative shipping lanes, or are they acting like disruptors that nibble away at the less profitable freight, until they become real competitors? Competitors are like atomic forces that can look like chaos at the level of atoms.
5. Are you ready for the weather? Do you have plans in place for when equipment breaks down? What about a driver or other employee who calls in sick or has some other emergency? Do you know what you will do if someone sues you? There are so many ways that our attention can be taken away from the primary goal of delivering freight to our customers to make everybody happy. These disruptions are like forces of nature -- human or otherwise.
6. What do you have going on internally that you need to deal with? Are you worried about passing on the company to the next generation or creating an Employee Stock Ownership Plan? Do you need to reduce costs? Are you dealing with the need to train new technicians? Is driver recruitment a problem? This is all like the force of friction that either makes it difficult to get started (static friction) or is constantly draining your resources (dynamic friction).
7. Technology is constantly creating opportunities to improve your business or otherwise making changes that affect you. This force of change is one that you can use to your advantage, but it must be managed to achieve financial results. Running older equipment requires more fuel and experiences more breakdowns. Newer equipment is more fuel efficient, cleaner and comfortable, but comes with increased needs to understand how to operate and service it. Don't let change be forced on you, force the changes that make sense.
That's 7 forces that can impede your growth to the point of failure, or, when aligned properly, can accelerate your business to growth and increased profits if properly managed. F=mA. Financial success = management Action.