Why knowing your business's CSFs must be a priority

Some of you might be asking, "what is a 'CSF'"? Second question might be "what are the CSFs for my business"?

CSF stands for 'critical success factor'. Put simply these are factors that are necessary to be in place, to be implemented, in order for your business to have any chance of achieving its goals. It can be difficult for a business to ensure that their CSFs are always in place but it does draw a line in the sand in respect to what they need to aim for, where their priorities should lie. Most of the time we only consider them as being attached to the business operations but what is often overlooked are the CSFs of the business owners themselves. These critical success factors that relate to the person are not characteristics or traits - rather I see them as behavioral tendencies that are relevant during a particular stage of the business.

I give you an example of a recent client of mine. His business had a dominant online presence however in order to continue being in a position to undertake the profitable jobs with corporates he needed to establish a high street presence. This also meant that he would have to give up running the day to day online operation and hire a number of employees which was going to be a challenge as he had grown his business from scratch.

The critical success factors, at the business and personal level, were:

1. Establishing a high street presence in a central location
2. Being able to delegate work and manage a number of employees who could multitask.

Put simply, without the two CSFs listed above my client's business would have no chance of operating in the way he envisioned.

There are long term and short term critical success factors - those that must always be in place and those that only need to be in place to achieve short term goals. A long-term CSF for the client above is that his company must be within the top 5 google searches, a short term CSF was that he had the initial funding for the shop (before it could begin to generate its own cashflow).

What wasn't critical was the size of the store, establishing an office for the employees or putting in place complicated operational processes. Expenses were kept to a minimum and all employees worked remotely. However without the store and the employees then the business would not have been able to develop - no matter how strong his company was online.

So have a think about the critical success factors for your company and whether you are undertaking those tasks that will let you achieve those factors.

The principles behind increasing your income

If there is one thing entrepreneurs and freelancers should be focusing on this is it - how to increase your income or of more use how to increase your productivity. It amazes me how many startups and self-employed focus on aspects of their business, that whilst important to some degree, fail to concentrate on the drivers of income creation (note I say 'income' not 'revenue').

When consulting to clients there used to be the question of how to charge for work performed. That is, charge per job or charge per hour. Of course you may still charge per hour is required but your preference should be always per job. Why? Because you could (1) complete the job in fewer hours than the budget and therefore increase your per/hour rate of income or (2) give the job to a qualified associate for 80% of what you are receiving. Five such jobs will see you earning 20% more than what you could have as an individual.

But what I really want to communicate is that the wealthy do not sell hours - they sell knowledge. A motivational speaker does not speak to a single person if they can speak to hundreds. A website will not provide information to just one person - rather the same 'valued' information is presented to hundreds, thousands and millions of customers. This is the leverage of knowledge.

This is not an option for everyone but many careers and businesses can utilize the concept. Not only consulting, motivational speaking and certain web-based advice business e.g career and investment advice. However those in a trade can certainly also leverage their knowledge so they are not handicapped to work for only a particular rate per hour.

However just as important is that you have to recognize that you cannot just know something and expect huge success if no one else values that knowledge as much as you. This is the fallacy that many professionals believe to be true - that once you have a professional qualification then you're set. Unfortunately this is not the case. Firstly you have knowledge but probably cannot utilize it effectively within a working environment. Secondly many other people also have the same knowledge. So it appears the secret to business and career success is just not having knowledge and leveraging that knowledge. It's about applying the knowledge in such a way that (1) not many others can copy (2) how the knowledge is applied is valuable and (3) you can leverage across many people.

Be aware of the attraction of short-term goals

"Now, wait just a minute" you may say, "we all need short-term goals so who is this guy Daryl Close thinking he is when he says to be aware of them?". I will then respond by asking you all to let me explain just what I mean.

I first started thinking about this topic when reading yet another article on the saga of the US financial system. AIG, if you haven't read it, are paying out another couple of hundred million dollars in bonus to the people that supposedly lost billions. Now, whilst interesting on its own, what is more interesting is the approach bank chiefs and regulators are now recommending - that is reward for long-term performance only, not short-term.

That got me thinking about my own decision making and how I differentiate between short-term and long-term goal setting. Obviously, it would seem, I make short-term goals that benefit me now and long-term for the future. But are is goal-setting process aligned? Do I make short-term goals that benefit me in the long-term and long-term goals that benefit me in the short-term? 'I don't know', is the answer to the first and 'I don't know' is the answer to the second. But for the second 'I don't know' may be a acceptable answer...it sure as ain't for the first.

As with the financial markets, if I take a high risk position to make myself a lot of money in the short-term, I carry with that a high risk of losing a lot of money. I've gone through that experience and it isn't pretty. Did that result benefit me long term? No way it did, though the intention was good. Now apply that logic to every other short-term decision you have made; at work, about a career choice, about a business choice, about a relationship choice, about a fitness choice....short-term goals and results do sometimes blind us from making decisions that are best for us in the long-term. Taking a job, for example, for 20% more is something that benefits us in the short-term but not if it takes us on a direction we don't really want to head in. Even settling for a job 85% of what we truly want will come back to bite us in the ass in the long-term...and let's face it, that's not great because at some point the long-term is the present. Everyone hates the word 'hindsight' and that's what that word represents - making a decision that is regretted later on.

So when you're making your next decision or setting your next short-term goal, question yourself as to the real benefit of that decision. Is the benefit in the short-term going to become a long-term benefit, and if not, is the short-term benefit going to out-weigh any negative consequences in the future? Not starting a business and keeping your 'safe' job may benefit you in the short-term, by protecting you from risk but in the long-term?....have a think about that one which is only just one example.

So my message is keeping setting short and long-term goals....but don't think they are independent of each other. If you don't then I think the quality of your short-term decision making will improve dramatically.

What are the key things entrepreneurs need assistance in?

Entrepreneurs are a strange bunch.....I say this tongue in cheek as I have a lot of respect for this group of people who often risk everything in the belief that their service or product will be a success. I am not talking about business owners here per se but those who start a venture from nothing, create the possibility to bring something new or improved to our society. The best entrepreneurs have loads of confidence and self belief, have a great vision, focused and lots of determination and perseverance. Ideas may be sensible, slightly crazy or completely off the wall but in all cases they often have a reason for pursuing their particular venture. The vast majority of us would not be successful as entrepreneurs - even though some of the competencies of an entrepreneur can be taught a lot has to do with personality traits. This is not something that can be taught.

However taking into account all of this I have seen many entrepreneurs fail and some of my clients are entrepreneurs - thus I have seen the same patterns over and over again. Entrepreneurs are great at kick-starting a project but they do run the risk of expending lots of energy with little return even though they may have a high degree of focus. Entrepreneurs are often not able to operate as a business, rather they often operate in the 'new product development' or R&D sphere, which is great to begin with but is not sustainable. What entrepreneurs need to be aware they need assistance in is business strategy, financial management and funding and most important, self health and well-being.

So why have I selected these particular areas? Entrepreneurs are all for pushing a product or service to market, but often they have no concept of how to move past the creation and innovation stage. Do they have experience in market entry, competitor analysis, market analysis? Maybe, maybe not but I am a believer that you cannot do everything well. Even if you think you can do everything your performance will suffer at some point due to your inherent limitations (due to genetics, your experiences and knowledge). Many entrepreneurs are not experts in finance or fund raising and this is one reason that many entrepreneurs go to venture capitalists for assistance and guidance. Lastly, and perhaps most importantly, entrepreneurs are not experts in mental strength and well-being. No entrepreneur will experience success if they are continually stressed, distracted and mentally fatigued. Entrepreneurs, more then most, will face problems that need to be addressed and these cannot always be solved by one's self. There is a need for external guidance and support.

So my advice for entrepreneurs is two things. Firstly recognise what competencies it will take to be a success - not just in the creation of whatever you are involved in but getting it to market. Secondly, assess your own competency gaps and don't be too proud to ask for assistance. Know your strengths and recognize it is a strength to know when to do it yourself and when to delegate.