Leadership

Failproof Secrets to Creating a Bulletproof Business

Failproof Secrets to Creating a Bulletproof Business

During the heart of my career, I led troubled companies back to health. By definition, it was high pressure and high risk. I often told my executives and managers, “We must build a bulletproof business and do it quickly. Employee jobs are at stake.” 

It does not matter your business model, or if you are a large company, a small or mid-size business owner, or a founder entrepreneur, you should set up your company for safety and endurance. There are common attributes that provide safety and there are missing disciplines that contribute to higher risk. You must find ways to reduce the risk of business failure. We will explore proven techniques to do that

What is a bulletproof business?

  1.  A bulletproof or failproof business operates to stand the test of time. The times will change, and economic winds will blow, but the company will endure.  
  1.  A bulletproof business will continue to operate correctly and safely if the management team is changed out. The business structure, discipline, and tools fundamental to business operation will function well no matter who is in charge and at what level. 
  1.  Another attribute defining business success is that negative surprises don’t have deadly consequences, impacting employees, existing customers, business growth, or the business’s financial health.

This idea sounds simple, and it is, but no two businesses are structured the same way. So, what are the common attributes of bulletproof companies? I believe there are six, but I will discuss two critical characteristics in this article.

How can you create consistent business predictability? 

You must consistently and predictably forecast the future of your business and how it should perform over varied periods.

Let’s explore an example to help you relate to this. A large successful publicly-traded company measures and predicts its future very well. It should consistently hit its financial projections. If it does not, it will face negative scrutiny by analysts and shareholders expressing lost confidence in their stock by selling it. When public companies have negative surprises, the market does not react favorably. Potential investors will find other places to invest. This environment for public companies exists so that investors can have confidence in the business’s ‘future direction and performance’ and its stock to make buy and sell decisions. They are thinking, ‘safety.’ 

So, a primary role of those public company executives is to communicate the short-term or long-term performance plan in advance and then deliver as expected over the reporting period. If able to do that, the world will be a kinder place for those executives to live.

You need to know and understand what these sizeable public company executives know. They are consummate ‘Risk Managers ‘. Consistency is safety. Predictability is safety. Having fewer deadly surprises means security for your business too. These attributes reduce risk and the potential for business failure. 

Companies of all sizes need safety and consistency to survive and grow. But what you may not know is those small business owners, and privately held businesses can create this safety more quickly and inexpensively than public companies are required to do. 

Here are the essential things you must do.

Can your division leaders manage risk for their smaller businesses?

Is every manager your target audience to become a trained ‘risk manager’?

Yes, but what does that mean? Think of the company this way. Each division or department of your company is just a small business inside your larger enterprise. So, would your business be safer if your department heads and leaders knew how to manage risk for their ‘small business’ much the way you do at the executive level? It would be. 

Additionally, if each department head and manager knew how to manage and predict the future like a small business owner, would your company have fewer deadly surprises? It just makes sense. Having competent ‘risk managers’ run your departments is like having a 360-degree radar running perpetually. It is a far more comprehensive view than just top-down radar. As a result, the senior business leaders will make better, low-risk decisions. Every aspect of your company will benefit.

What business risk management tools do your division managers need?

Like those used at the executive level, division managers need tailored, simple, usable tools and best practices to forecast their ‘small business’ future. Those tools and practices should mirror those used corporately. Then those tools and practices become part of the framework of each division once in place. 

Remember, it is a smaller version of what you are doing at the executive level and should connect to those associated components. Just as division plans are part of the overall business planning, the tools and disciplines connect similarly. Teach ‘Risk Management’ as a part of your company culture.

How do you create company-wide business skills depth?

Training your department leaders to manage risk has other significant and enduring benefits for your business operations and growth. As you train them, those managers get to see how the business at the higher level operates. They are seeing in proper context how their role and capabilities impact the company’s overall success and how best to reduce the potential for business failure. 

This participation creates an ‘ownership’ attitude in your managers. It also creates talent depth and helps senior leaders identify who within your organization performs well and could be candidates for promotion to higher responsibility. 

Department managers are better motivated because they understand that the business is more likely to ‘promote from within if they invest the time and energy to become highly competent and learn business operations. And since you are more likely to retain your best talent, you are building depth across the enterprise.

‘downline training’ .’Your department managers should then train those who report to them as they were trained. The models and disciplines work well if everyone has the same knowledge and tools and understands how the generated information gets utilized by upper management. Everyone can help!

How do you start Risk Management training for your division managers?

Since every business is different, there is no definitive, ‘one size fits all’ solution for training managers. But here are some principles that will help you build the depth described above.

Each manager must learn how their management responsibilities impact the health and performance of the overall business. How are their numbers calculated into the company’s performance metrics and influence the business plan? 

As CEO, I participated in training my department managers. I took the approach of requiring predictable future-related information from them regularly. The process included showing them how I plugged in their data to manage risk for the overall enterprise.

By doing this, my managers understood the need for their information to be an appropriately detailed reflection of their business unit’s expected performance, accurately included in the financial projections. Over time, that input became more precise as their developing leadership skills became stronger. The goal is that each manager learns to, with appropriate tools, reasonably forecast the future performance of their business unit, both short and intermediate-term.

For example, my senior management team created a subset view of the financial and operational models that we used to ‘risk manage’ the enterprise. These smaller versions of financial projection models became tailored to the departments using them. And each department leader participated with the executive team to create those models. The training was powerful and the tools designed were useable immediately, developed in cooperation with senior and division management.

The entire management team leads more confidently. The risk management downline training described above has a ‘trickle-up effect’ on the larger enterprise. As a CEO, you can now have confidence that the information you and the executive team use for managing the enterprise’s risk is accurate and of high quality. Everyone sleeps just a bit easier.

To summarize: Risk Management must become a part of your company culture. And it needs to be a part of every company’s business plan. That includes the entrepreneur and small business owner. Everyone in your company can participate in creating a safe and successful business. After you have established the discipline, it lasts a lifetime. Your business’ survival depends on it. 

If you implement these principles, you are well on your way to having a Bulletproof business. And you will build powerful leadership teams in the process.

To conclude: This topic covers lots of ground, and it is essential to the safety of any business. There are several more attributes associated with a Bulletproof business. If you would like to discuss this topic, click below for a free session. https://calendly.com/dave-kerford/

Also, join our bulletproof business community. This is a forum for shared wisdom and experience from our C. suite and business leader members who have formed or are forming what we call bulletproof businesses. As a first step to joining our community, click below to sign up for our newsletter. https://davekerford.com/subscribe/  Enjoy.

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