There has never been a time in the history of the marketplace when tried and true best practices – oft mislabeled “Old School” – are being so indiscriminately brushed aside by digital leverage best practices we’ll call “New School.”
While sorting out what part of properly labeled Old School to shed (like running a business without a mobile strategy) and which New School practices to adopt (like a digital transformation strategy), we must remember that there’s a third category of best practices that often get lost in the generational translation.
Those best practices are what I call “THE School” – aka the fundamentals.
THE School best practices were originally formed and forged into fundamentals by our forebears using 100% analog leverage. These operating elements were alive and essential before and during the pandemic, and they will be immutably relevant and imperative as we increasingly operate in a 100% digital dimension.
Volumes have been written about THE School fundamentals, but we’re going to look at them in terms of resetting your business in the post-pandemic reality that I’ve named The New Regular because there’s nothing normal about what just happened or where we’re going.
And whether you’re a veteran steeped in Old School or a New School newbie, these eleven THE School fundamentals are as timeless and nonnegotiable today as they were yesterday and will be tomorrow.
1. Financial statements
Become an expert at understanding your financial statements – P&L, Balance Sheet, cash flow projections (different from a cash flow statement). Spend more time with the numbers below the revenue line on your operating statement. Know your gross profit percentage and number.
Don’t just create your statements, manage your business with them – every day.
2. Budgets
Yuck! Right? But your financial train needs a track to run on. Creating budgets isn’t hard; sticking to them is. As business planning galactic guru Tim Berry says, “there’s power in comparing plan vs actual” with your budgeting strategy.
Someone once said, “If you take care of the pennies the dollars will take care of themselves.” You take care of pennies with a budget.
3. Cash management
Nothing in a small business is more potentially perilous than your cash flow reality. Whether sales are up or down, you must be intimately familiar with your cash picture today, tomorrow, and for the next 12 months. You will never feel more in control of your business than when you can project and track cash into the future – even if it’s negative.
As the owner, the capitalizing-your-business buck stops with you. That means you can’t delegate this fundamental – I don’t.
4. Inventory
As an alternative state of cash, inventory isn’t more immediately perilous, but it is more fragile. Inventory that isn’t turning is declining in value through theft, damage, and obsolescence.
Just-in-case is an Old School practice worthy of retirement. Just-in-time inventory management is a newer member of THE School fundamentals that must be practiced!
5. Vendors
Division of labor, the original marketplace lever, by definition also begat the vendor concept. Even vendors have vendors. And since it’s a symbiotic relationship – your vendors’ success depends on your success – make every vendor a partner in managing inventory, improving margins, lowering freight costs, and New Regular ways to serve customers. Get rid of any vendor that only wants to sell you stuff.
6. Systems
It’s more likely than not that you’re using structurally outdated and unproductive systems in your operation. If you’re looking for a low-hanging-fruit place to begin your digital transformation strategy, look here for automation opportunities. Scrutinize employee schedules, delivery routes, opening hours, (your idea here).
Nothing is sacred! Plus, this effort will help address the current employee shortage.
7. Customers
God bless them every one, but you still have to manage each one differently. Categorize customer relationships from the most profitable As to the least profitable Ds. Worship the As, cater to the Bs, encourage the Cs, and let the Ds learn the meaning of self-service. You might even have to fire a few.
8. Products
Same song – A-B-C-D – different verse. Don’t fall in love with products. Stock the fast-turning As, keep some of the Bs handy, and only a couple of the Cs. But never let a D spend the night under your roof unless a customer has paid for it!
Blasingame’s Law of Business Love states: “It’s okay to fall in love with what you do, but it’s not okay to fall in love with how you do it.” That means you only love the products your customers love – today.
9. Add Value
Arguably, value is the most imperative customer-touching Old School fundamental. Only the relevant will survive in the digital age, and only those who continually add value will achieve and sustain relevance. Adding value to achieve multi-faceted relevance is your only real advantage over Big Tech.
10. Employees
Humans are born Old School analog and then convert to New School digital. The greatest management challenge for all businesses is a) helping Old School employees join us in the 3rd decade of the 21st century and b) teaching New School team members the eternal value of THE School fundamentals.
11. Bankers
Your banker should be your business’s best friend. Good news or bad, an informed banker can help you. But an uninformed banker is a scared banker, and no one ever got any help from a scared banker! If you want to calm your banker down, show him or her your 12-month cash flow projection – even if some months show negative cash.
Use THE School fundamentals as the nexus between Old School and New School and success will come and play in your backyard.
Write this on a rock … No one is ever too cool for THE School.