Lead Article (Self-help topic – KNOW YOUR BUSINESS)

I did some work for a company recently that had a range of different facets to the company. As I spent time understanding their business and the different business units they owned, there was one particular business they were in that seemed to struggle. The financial results were poor, the staff turnover was high and the customer satisfaction left a little to be desired. A triple whammy in poor performance. They had only recently bought this business before my involvement and I admired their innovative approach. They had purchased a bar and most bars at the moment rely heavily on taking advantage of habitual behaviour of gamblers sitting in a room in front of a poker machine – beer in one hand and smoke in the other. Other components of bars – such as meeting with friends, enjoying a meal and having a few quiet drinks – seem to have been forgotten over recent years.

The approach of this particular company was to remove all gambling devices, convert the ‘gambling room’ to a function room and ban smoking in every area of the pub. Then return the pub to yesteryear where people met to talk, socialise and generally enjoy the company of other people. There was no sound business reason to do this – it was done on purely philosophical grounds – and I admired them incredibly for this.

Some may say it was a stupid move and others may ask why you would destroy a perfectly good business model. I have had a dislike for the smell of smoke in pubs for many years and I used to joke that someone should start a pub that banned smoking as I felt there were many people in society like myself that disliked smoking so much that they would flock to a pub that promised an entirely smoke-free atmosphere. Other non-smoking friends would always tell me that the concept sounded great but such a pub would be doomed because groups of friends would not want to disenfranchise their friends who smoked by going to such an establishment.

Looking at the initial results from this particular organisation let me say that my friends were right and I was wrong.

Patrons stayed away from this particular establishment in droves. It seemed too easy to me to blame this entirely on the removal of addictive gambling devices that encouraged people to stay all day and smoke and drink and the banning of smoking. Actually when I write it like that, it is hard to imagine the cause being anything else.

The problem then presenting itself – should this company throw away their ideals and return to the simple formula or gambling and smoking or should they retain their philosophical approach despite the poor performance?

Even though people can often end up in trouble for standing for what they believe, the board stayed true to their ideals and what I saw came down to not being too concerned about a simple concept of the gambling and smoking being blamed for the performance. What I saw was an organisation which didn’t understand what they were. The real root of the performance issue was a lack of understanding of their own business model and identity – and this is a problem is see all too often.

Now that the main source of income was gone, was this a bar that encouraged people to sit around and get drunk or a family friendly restaurant that served some alcohol or a meeting place for people who wanted to socialise or an establishment to listen to live music or… the list of options goes on but what I immediately picked up on was the actual purpose of the bar was now confused. The lack of solid direction and purpose from the management of the organisation was reflected in the lack of certainty and sense of purpose in every staff member. This was what was leading to poor customer service, high staff turnover and low profits.

The first question I put to the board was “what is the purpose of this bar?” Answer that, then drive towards that, and you will solve your problem.

This is an issue I see all often in many organisations of different sizes and in different sectors and one you need to guard against at all costs. When you don’t understand what you are, your customers are completely confused. If your target market is “everyone” then often you end up with no-one. It is unreasonable to be all things to all people – so don’t even try. I spoke with a supermarket chain recently and when I asked them about their model they were very definite in their understanding. Their model was a “deep-discount” model. I had never heard the term before but it was obvious to me what it meant. If you want cheap prices then shop with them. If you want the most prestigious and most luxurious brands on the market, then this particular chain is probably not for you – and that is fine! They understand their model and they understand their clients. They don’t want everyone in the market – but they do want the people who want cheap prices.

In your business, make sure that you understand what you are and ensure that all of your staff not only understand that but work towards that every single day.

I know you are dying to know what happened to the bar with a lack of identity. You will be pleased to know that its health is improving. The management and staff had a close look at exactly what they wanted to be and decided that they needed to let the wider community know that this was a place for friends and family to meet and enjoy the quiet ambience. You are unlikely to see teenagers on pub crawls sitting at the bar and you probably won’t see tradies lined up at the bar at lunchtime having a quick meal and a beer before going back to work. Everyone now understands who they want as their customers and what they need to provide to them. In a short period of time, profits have improved and repeat customers are commenting on how much they enjoy the establishment. The only real change is one of attitude and understanding – and most importantly the philosophical view of no smoking and no gambling has been maintained.

Tell me if you really understand what your business is at md@smallbusinessrules.com.


Science Quiz Question

I am trying to impress my wife with my cooking skills. I declare that for our eighteenth wedding anniversary I am going to cook her a wonderful pasta meal. I prepare the necessary ingredients and, wanting to make this the best pasta meal ever, I throw some salt into the water sitting in the pot before turning the stove on. I want to raise the boiling point of the water with the addition of salt and everyone knows that adding salt will achieve that. My wife tells me I am an idiot and all the salt will do will make the pasta taste salty. My question is this: Should I add salt to the water before bringing it to the boil to try and make the water hotter therefore improving the quality of my pasta meal?

Science Quiz Answer

The correct answer to the age-old myth about adding salt to water to increase the boiling point is yes and no.

From a pure scientific perspective, adding salt to water will increase the boiling point. But not by much. If you had 5 litres of water in your pot and you added 20g of salt, the boiling point of the new solution would be increased from 100°C to… wait for it… 100.04°C. For each litre of water you need to add 58g of salt to raise the boiling point by just 0.5°C. My wife is a sensitive soul but I am not convinced she would notice a miniscule increase in the boiling point – I think she would notice salt in the water more than the increased temperature. I would be better off using unsalted water and using a pressure cooker to raise the boiling point to 120°C or more.

So the next time an ‘expert’ tells you they are adding salt to increase the boiling temperature, you have the correct answer for them.


Scroll to Top