We all can imagine of a successful company…

In every industry, there are companies that take off. They effortlessly hire talented people, attract loyal customers, create cool products and make lots of money. These companies seem to stand out and scale up quickly with support from customers, employees, investors, partners and the media.

Though most Small & Medium Businesses have clarified their weekly and monthly revenue targets, why do they still face inconsistent, underwhelming sales compared to what has been forecasted?

Most SMBs are run by a group of well-intentioned executives who have a good understanding of the details of their business but they don't spend much time thinking or talking about why their organisation exists or what values should drive their behaviours.

Though they talk about being more strategic, they can't really articulate a simple, clear strategy, and they don't have a consistent method for evaluating decisions. The team is constantly managing against a long list of goals, some of which may not be compatible and most of which pertain to only a few members of the team or just the owners themselves.

Though they talk about being more strategic, they can't really articulate these 4 things:

1- What is the Organisation Growth Objectives for the year:

a. what is the market expansion plan this year?

b. what is the infrastructure expansion plan this year?

c. what’s the annual revenue, gross profit, overhead, and profit target? at what margins?

d. what’s the growth % compared to previous year?

e. how much will each product line contribute in annual revenue and annual gross profit?

f. how much new customer & returning customer must the organisation acquire per product line?

g. how much in new customer & returning customer growth will the business acquire this year?

h. how much customer and revenue contributions per sales channel/unit?

i. what are the monthly and weekly numbers of the above?

j. who are responsible for the targeted numbers?

2- What is the Organisation Core Market Territories for the year:

a. what market categories will the organisation dominate?

• of what product?

• of what segment?

• of what geography?

• of what industry?

b. what is the organisation core value propositions?

• what? 

• that provides what? 

• that prevents what?

•  better product, cheaper (better product), better accessibility to product?

c. who is the core customer?

• who? 

• struggling with what? 

• due to what?

d. how is the organisation acquiring new & returning customers?

• encourage substitution of consumption from xx to what? where? when?

• education on threats and opportunities of product adoptions?

• social proofs from clients, customers, users?

3- What is the Organisation Core Key Performance Indicators (KPI):

a. Team KPI (weekly & monthly).

• Team execute XX to acquire XX new customers per channel,

• Team execute XX to acquire XX returning customers per channel,

• Team execute XX to acquire XX ascending customers per channel.

b. Customer KPI (weekly & monthly).

• XX amount of new customers sales per product line.

• XX amount of returning customers sales per product line.

• XX amount of ascending customers sales per product line.

c. Sales KPI (weekly & monthly).

• XX amount of sales per product line.

• XX amount of gross profit per product line.

d. Sales KPI (weekly & monthly).

• XX amount in marketing expenses.

• XX amount in facility & admin expenses.

• XX amount in salary expenses.

e. Operational KPI (weekly & monthly).

• Production Days below XX Days

• Customer Acquisition Cost below XX

• Sales Days below XX Days

• Payment Days below XX Days

• Billing (Payable Days) above XX Days

• Inventory Turns above XX

• Order Fulfilment Days below XX 

• Order Completion Rate below XX

• Customer Satisfaction Score above XX

• Referrals Rate above XX

f. Who Responsible (weekly & monthly).

• XX for Team XX

• XX for Team XX

• XX for Team XX

4- How Meetings are Productive to the Organisation:

a. 10 mins daily meetings (operational issues)

b. 40 mins weekly meetings (KPI scoreboard tracking)

c. 1.5 hour monthly meetings (KPI scoreboard tracking + strategic brainstorming)

d. 4 hour quarterly meetings (quarterly business review + strategic brainstorming)

No clear articulation of the 4 things above impacts the alignment of the organisation ability to produce incrementally growing performances, profitability, and cash — like the 9 common symptoms of a struggling SMBs to grow beyond RM 10 million below:

1. Sales are inconsistent/plateaued due to the lack of definitive, standardised, and scalable sales strategies to: efficiently communicate contagious value propositions to buyers/users and acquire new/returning customers.

2. No Core Key Performance Indicators (Team KPI, Customer KPI, Operational KPI, Sales KPI) are established, tracked, and productively discussed within the organisation — causing inconsistent operational quality, bad customer experience, non-accountability, and issues within departments.

3. Meetings are nonexistent or if exist, are mostly unproductive with no proper structure to spark strategic discussions, accountability, and KPI that are the building blocks towards the organisation's annual objectives.

4. Undefined Market Territories confuse the executive team on how to defend against rising pressures from competitor products providing better deals — causing customers to substitute for better alternatives — making the business unable to protect losing its market presence and existing customers.

5. The lack of Additional Cash Inflows from declining, inconsistent, or plateaued sales is causing the business to eats up its internal cash to support its ongoing month-to-month operating costs.

6. Annual Profitability is vague, as the number recorded doesn't match the actual cash in the business bank account after tax has been paid.

7. Cash keeps running out and it's not accumulating no matter how much sales are increasing due to bad cash collection and payout policies.

8. The nonexistent of 12 to 24 Months Milestones on the Sales Cycle and Cash Cycle are causing low-level productivity in employees and owners as there is no motivation for growth and motivation for rewards as everyone is unclear on the business priorities and where the its is heading to.

9. With Decreasing Cash, the business has no capability to invest in good employees and managers. Not to mention the lost opportunity to invest in better operating systems, operational functions, or expansion projects.

10. Owners have Visions but are unable to translate them into strategies and narratives that would elevate organisational productivity and growth — causing them to be in endless dilemma with the business struggles.

The Core Problem:

Unless Managing Directors/CEOs are capable of aligning business goals with their building blocks of KPI; and translate them into clear, communicative, implementable strategies with their teams, the business is unfortunately very far from success.

And it all starts with the right strategic planning.

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What is the revenue and profit target for the year? What margins should you be achieving per product/service line? How many customers do you have to acquire? How much in sales will customers contribute per product/service line? What are the core success metrics you track every month? What are the team accountable for?

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