What does the business value? The 3 reasons why clear values are essential for business profitability
Jay Wheeler, Red Potato. www.red-potato.com
Why would an independent business owner want to take the time-consuming, uncomfortable journey of developing, interpreting and running a business in accordance with clear values? Because ultimately it effects the bottom line. This article shows why, when it comes to business values, the journey is as important as the destination.
In many corporate organisations there is a cynicism about business values. The cynicism is usually something to do with the hypocrisy of the organisation saying something like “we value and respect our employees” and then making those “valuable” staff redundant in a less than respectful way. One person told us they received an email to meet “Human Resources” to be told their role is likely to be affected by the latest reorganisation and they are on “gardening leave” with immediate effect! And there are far worse stories…
So given this discredited approach, why would fiercely independent business owners want the additional uncomfortable process of developing and interpreting values for a variety of stakeholders – and also crucially running a business in accordance with these values? As Keith Shephard, Policy Associate with the ELGH consultancy says, “values have to be evident in the day to day business to have any meaning…values simply imposed top down will not carry the same weight as those developed through deliberation”. This takes time and resource – both of which are in limited supply.
In this article we will look at how “business values” can enable an independent small business (SMB) stand out in a crowded market place, and by standing out (- in a good way!) from its competitors ultimately win more profitable sales, which whether we like it or not is the bottom line for most SMBs, as this infographic from the Federation of Small Businesses shows.
First of all what do we mean by “values”? The Oxford English Dictionary (OED) defines values as “the regard that something is held to deserve; the importance, worth, or the usefulness of something”. That though is only the first of six different definitions in the OED! If the dictionary isn’t illuminating, perhaps we can turn to our shared understanding of values. Ask a group of British businesspeople about what are British values, and you’ll probably hear things like “fair play” and “stiff upper lip”, perhaps said slightly “tongue-in- cheek”. The reason for the sheepish grin? Well most of us know that values change with time, and maybe British values should also include “instant gratification” and other more modern values to reflect the lives we lead today.
Maybe it is easier to lampoon, correction “focus”, on big corporates and their value statements. Predictably there are lots of howlers with bland statements about accountability, leadership, integrity etc. However it doesn’t all have to be corporate b.s. Virgin Media has some interesting value statements we particularly like the “insatiable curiosity”!
Moving on from corporate enterprises, do SMBs really need explicit value statements, don’t small businesses have values as part of their DNA: If you run your own business, everyone knows you, what you stand for and what you believe. One of my colleagues, Mike Meldrum of Mortgage Mine, always ends his presentation with the words “Far too tight to let any deal go down without a fight” – and everyone who knows Mike believes him!
But what about when your SMB company needs to reach out beyond the immediate network. Do your business partners understand and appreciate your business values? When the company expands and new employees join, will they be able to say what the business stands for? This point is made by Michael Scutt, Head of Employment and Dispute Resolution at solicitors, Crane and Staples…”It’s when businesses grow that they risk losing sight of why they exist. For small businesses the challenge may be in communicating those values – which is why social media provides such a powerful tool.” In summary if your values are also your business values, the company will always revolve around you and this could well make it difficult to expand and grow the business.
Which brings us to the three reasons why clear business values are essential to SMB business profitability:
1. Your customers want to feel some affinity with your company. If customers share some of your values they may purchase more of your products and services
2. Most businesses operate in crowded competitive markets. By having clear values you can make your business stand out from the crowd. By standing out from the crowd, your business is likely to receive more enquiries, which can be converted to greater sales
3. Clear values can help build a dialogue with your customers. For instance Red Potato has a strong partnership focus to our work, this is reflected in our values and this informs all our customer engagements.
We hope this article has helped stimulate a renewed discussion about business values and small businesses. The article discusses the link between clear business values and “The Bottom Line”. But is there more to business than profitability? In our next article we’re going to look more broadly at business values and their wider context within the communities we serve.
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