As a Business Leader, Do These 3 Worries Seem Familiar?

Running a business as an owner or part of a leadership team brings along with it worries that can keep you up at night. Here are three of the most common worries, along with strategies for overcoming these fears:

1. Employee retention. When you lose a key employee, it is difficult to replace them, especially in a tight labor market. A rule of thumb to replace an employee is upwards of 3x their salary! One way to help retain valued employees is to do a routine check-in with each employee. Some might call it a “stay interview,” meaning what does it take to keep the employee happy enough to stay? In many instances, an employee primarily wants to be heard and valued, which comes from soliciting their feedback on how the company can do better.
   
2. Customer retention. It seems with many of my clients fall within the Pareto rule. This means that 80% of their sales comes from 20% of their customers. Hence, if you lose one of these 20% customers, it can be a significant impact on the business. I have used in my business the Net Promoter Score (NPS) which asks a simple question: ”On a scale of 1 to 10, with 10 being highly likely, would you recommend to a colleague to do business with me?” This simple question can help you see if you customers are satisfied with the value you bring.
   
3. Running Out of Cash. This fear can vary greatly among business owners and leadership teams based on their risk tolerance. However, if you run out of cash, that’s it. . . lights out and close the door. I have customers who keep a close eye on cash to ensure they have enough to weather economic storms that inevitably come our way. However, I have others who push it to the edge. Each business has a “speed limit” to grow and an amount of working capital that it should have available to meet everyday needs. Calculate your working capital needs by knowing your cash conversion cycle. This is the gap from when one dollar of cash leaves your door until it returns to your bank account from your customer.

Having a strategy for each one of these three worries can be the difference between having a thriving business or closing your doors. Let us know how we can help.