Work less, make more

How can business owners profit from the economic cycle? The answer may be to work less! Editor Glenn Baker attended a workshop hosted by Dr Mike Ashby to find out more.

As workshops go, ‘How to Profit from the Economic Cycle’ was definitely a ten out of ten. I almost wished I was still a business owner so I could apply some of the principles learnt. Dr Mike Ashby, who led the workshop at the North Harbour Stadium, encouraged all attendees, mostly business owners, to at least apply one principle to their businesses that very day. And there was a wealth of good principles to choose from.
Ashby, perhaps best known as the COO who turned around the fortunes of Southern Cross Healthcare, first focused on the five common mistakes business owners make when the economy slows. (With bankruptcies currently at an eight year high in this country, he suggests we could be in for a slowdown.)
The key for business owners, he believes, is to see adversity as opportunity. Unfortunately in tougher economic times many captains of commerce will only see disaster on the horizon, and the five mistakes they’ll make are:
1. Cut marketing costs;
2. Cancel training;
3. Put a sinking lid on staff numbers;
4.  Hang onto the business they have at
 any price (and think it’s all about    price) and just cover overheads
 (a form of denial says Ashby);
5. Put in more hours.
Ashby finds the last mistake particularly amusing. “When did quantity equal results? And how can the clock measure productivity?”
He reminded his audience that business owners have three primary resources: time, energy and the ability to think. Unfortunately we’re programmed to go down “the track of doing” says Ashby. ‘Busyness’ takes over, which leads to stress, and then our health and thinking time suffer.
He encourages business owners to think in terms of input and outcomes. “The way we think is programmed over many years, and conditions what we do.” He says if you own a $1M business then you will have $1M thinking. To have a $10M business requires a $10M mindset.
“Successful people inevitably think big. To improve your business you must shift your thinking.”
And don’t worry about the competition – “if you’re worried about the economy, so are they, and they may be desperate!”

Think smart
The best strategy according to Ashby is to increase value while other businesses are increasing their overdraft.
“Securing the perimeter” is one half of this strategy. This involves watching debtors. “Don’t be too forgiving on those one or two large customers who don’t pay on time.”
It also means increasing liquidity on the likes of stock, terms of trade and capex. And it doesn’t mean discounting – if anything put prices up, he says.
“Remember if you operate on a 30 percent margin and you raise prices by ten percent, your volume can drop by 20 percent before your bottom line is impacted.
“Your mindset is your biggest obstacle to raising prices and you must learn to place more value on your product or service.”
Cutting back low margin activities is also the key to ‘securing the perimeter’.
Ashby says many businesses rate their customers from A to D, but that’s as far as most go. It’s time to get rid of the Cs and Ds – the 20 percent that take up 80 percent of your time.
“Every minute you use your primary resources on a low value customer is one you’re not spending on a high value customer,” warns Ashby. “You must treat your primary resources [time, energy, ability to think] as scarce resources. And remember that 20 percent of your activity generally creates 80 percent of your [business] value.”
Be ruthless about low margin activities – time-wasting stuff, like that ‘squeaky’ staff member with “personal issues” for example.
“The worst thing you can have is a ‘toxic performer’ on the payroll,” says Ashby. “The person who may be good at his or her job, but spreads a lot of discontent throughout your organisation.” He guarantees business owners that, no matter how good that person was at their job, “productivity will go up the minute that toxic person leaves the building”.
He says the cost of keeping that person on the payroll will far outweigh whatever it costs to get rid of him or her.
While you’re securing the perimeter, take time to “lock and load” says Ashby. This involves increasing your marketing (while your competition is pulling back); investing in your business, yourself and your people so when the economic cycle comes round you’re positioned to grab more market share; and entertaining the inconceivable, trying new things, instigating change (Ashby reminded us of Jack Welch’s comment that ‘if the rate of change outside your organisation exceeds the rate of change within it, then the end is in sight!’) Change is to be encouraged and pursued, says Ashby, and while it’s OK to work your business under pressure, it should never be stressful. 

Work less, make more
Working less in the business, while turning more profit is all about breaking the addiction to the familiar – or breaking bad habits such as simply being ‘busy’.
Focus on the really important things in your business, says Ashby, and he offered the following tips:
• Taking more time off will increase    your profits because you’ll only have   enough time to work on the
 important things.
• Success follows happiness, not the   other way around.
• Planning gives you focus, and being   relaxed allows you to stay in control   of your time, and your business.
He then finished on the five secrets to leadership:
1. Vision – your role is to paint    the picture of your business going
 somewhere. A powerful vision    should also provide your staff with   something (and someone) to  
 believe in.
2. Wake Up! “90 percent of our    waking time we’re really ‘asleep’,”   says Ashby. At work he calls this    “unconscious competence” – going   through the motions and not really   seeing what’s going on. A bit like   driving a car.
3. Set goals for focus and     accountability and work on them   every day.
4. Seek a detached perspective on    your business – surround yourself   with successful advisors.
5. Have the courage to change and   make changes.
Yes it all sounds easy, but if you can successfully apply just one piece of Ashby’s advice to your business you should notice a marked difference. It’s mostly common sense – but admit it, you were just too busy to stop and think about it.   NZB

Glenn Baker attended the workshop at the invitation of Hayes Knight. Dr Mike Ashby is director of the Entrepreneurs Success Programme in Auckland. For a free copy of his booklet “The Business Owner’s Guide to Working Less and Making More”, email [email protected] with your postal address.