Welcome to The Never Normal, the ever-changing environment in which we live. In this, the art of focus is invaluable to any business and entrepreneur. We all know it: tempting opportunities, new ideas and distractions that can distract us from what we are really good at, the core of our business, with its specific values and standards, and our success. Entrepreneurs often spend too little time strengthening that core. They get overwhelmed by the day-to-day hassles of managing a growing business in complex market conditions and get caught up in operational details. This lack of focus on the essence of their business, where a successful business often originates, can lead to stagnation or even decline.
Keep reminding yourself and your team of your company's mission. Focus is essential. Start by focusing yourself so you can transfer that focus to your team. That way, everyone knows where the company's priorities lie and you strengthen the core of your company. Clarity around the mission, future plans to those around you promotes focus in the company.
A trusted advisor can provide objective assessment and a sounding board for the many ideas you have as an entrepreneur. In addition, your numbers and reporting also offer far-reaching insights into the things that really make you money. It promotes discipline in your long-term vision and focus.
For a long time, we were in a period of historically low interest rates. This led to a search for yield and cheap loans. This lowered the minimum return requirement for investment projects. If a loan costs you only 2%, you are less likely to question an investment project with an expected return of 7% than if that loan costs 5%. Of course, strategic considerations must also be taken into account. A project with a lower return but such strategic importance for the future of the company should also be considered
Nevertheless, many of these low-yield investment projects are still ongoing. Business requires financial flexibility: quickly adjusting to the new situation on the market. The impact of interest rate increases on business should not be underestimated: higher interest rates force us to focus more. It becomes more expensive to deviate from your core business. But note: diversification is also healthy, as long as you remain aware of your mission, vision, strategy and core competencies.
Cash is king: focusing allows you to free up money from uninteresting side activities and concentrate your resources on your core strength. Also consider your optimal inventory levels and make sure you are not holding too much working capital. A tip: many companies are currently running straight loans with high interest rates (5-6%). These were usually started when interest rates were much lower. Thoughtful business decisions can help wind down these loans and save significant interest costs. If you have cash left over, consider how to generate returns with it, such as by investing in your core business, thoughtful diversification or opening a term account.
In these turbulent times, it may pay to maintain a cash buffer as challenges are expected that may present interesting opportunities. But remember, the secret to success lies in the art of focus. Do you know and name your added value?
