Are Your Foundational Business Pillars Helping or Hurting You?

Here’s what you’ll find:
● What the foundational pillars are
● What the pillars do
● Why they are critical to your business’ sustainable success

For almost 20 years, I’ve worked closely with small business owners of all ages, styles, business experience and personalities. I found that all solid, durable and profitable businesses were built, grown and maintained on the strong foundation of these pillars:

I’ve also worked with businesses that struggled with chronic inadequate cash flow, limited profitability, and insufficient revenue and/or deteriorating customer loyalty. Without fail, 90% of these problems track back to malfunctioning or operating weaknesses in one or more of the pillars. This has thrown the operation off balance and created dangerous instability in the business.

Here is how you can evaluate the strength of these pillars in your business.

Financial and Cash Management Pillar

This system manages the business’ cash and financial resources. It also provides the critical data you need to make consistently better decisions.

It interacts with virtually every other functional area of your business. That means the financial and cash management pillar quickly becomes a treasure trove of invaluable information.

Companies that can’t effectively manage their cash don’t stay in business. Business leaders frequently don’t make the best use of their financial and cash management system. Too often, the data they capture is passed to an outside accountant—who often focuses largely or solely on taxes. That means financial information frequently isn’t well analyzed and used. This usually results in poor business decisions—and more stress.

Savvy leaders make decisions using evidence, not guesses. What they do is an ART: ensuring Accurate, Reliable and Timely information is shared within the company. It begins with having a sound financial system, identifying the information you need to get from it, and understanding what this means for more effective business decision-making and guidance.

Deliver and Fulfill Promised Customer Value Pillar

This is where customer trust and loyalty is either built or eroded.

Often the owner started the business to deliver something of value to customers. Unfortunately, the information on how to create this frequently is locked in that person’s head. Because there are often inadequate systems or processes to share this knowledge with others, everyone must go through the founder for decisions. This is inefficient and stressful as the company grows and becomes more complex. It almost always leads to mistakes, unmet promises of customer value, and increasing levels of internal stress as fulfillment problems multiply.

The fulfillment pillar also holds the greatest potential for profit and/or cash leakage out of the business. This comes from a misguided tendency many businesses have for solving customer dissatisfaction problems. They either give away or don’t charge for otherwise profitable fulfillment services to compensate for and lessen the customer’s displeasure.

Get and Keep Profitable Partners and Customers Pillar

Peter Drucker’s famous mantra is that “a business exists to create a customer.” I believe we should add the qualifier of “profitable customer.” If a business can’t get and keep enough profitable customers and partners to increase its revenue, it won’t survive.

Without the right level of sales, a business can’t create the positive cash flow it needs to operate. Here, too, the secrets of acquiring and retaining the right customers often reside with the founder. When no effective and repeatable system and processes exist to do this, there’s serious trouble.

This also is where we determine which customers produce the most profit and which fall below the acceptable level. When necessary, sales strategies and processes are reengineered to produce more profitable customers, and gradually reduce or eliminate those that aren’t a good fit.

Interactive Pillars, Not Stand-Alone Silos

The three foundational pillars must work together. They feed each other information, insights and critical performance data. Then leaders use this to regularly improve products, services, customer value, competitive differentiation, and marketing communication to target audiences.

A free flow of communication among the pillars is as important to the success of the business as the pillars themselves. Making certain this dynamic interaction continually occurs is up to the organization’s leaders. They must ensure that the three pillars don’t turn into three stand-alone organizational silos, which will throw the business dangerously out of balance over time.

Next Steps

Now that you know this, here’s what you can do:

  • Regularly audit your three pillars to ensure they are operating at effective and comparable levels of competency.
  • Use a 1 to 10 scale to assess their operational competency. A combined score of 30 would be perfect, and 3 appalling. Don’t shoot for perfect. It’s a waste of time and unnecessary. This will involve making judgments. For obvious reasons, you can’t ask the managers of the pillars to assess and score themselves. Objective trusted advisors work well for these kinds of assessments.
  • Periodically ask the internal and external “customers” of the pillars about the quality, quantity, timeliness and value of the “product or service” they receive. Do this through one-on-one discussions, surveys and focus groups.

Key Ideas

  1. You can’t operate a successful, sustainable business unless three functional areas work well—separately and together: financial and cash management, deliver and fulfill promised customer value, and get and keep profitable customers and partners.
  2. Your job is to ensure the pillars remain vital, high performing, and generate the greatest possible value to their internal and external customers.
  3. Audit them regularly, to make sure they are strong, healthy and interacting well. This will eliminate many of the performance problems that torment other small businesses.