Businesses need to develop a 'present-future' mindset

Owners or CEOs of small- to mid-size businesses quite naturally are focused on the numbers, particularly the financial numbers, of their businesses as one mistake can potentially have a major negative impact on their survival.

Cash flow is king and their bank account is continually reviewed. However, it should be recognized that this is not the driver of the business; it is the scorecard.

The scorecard review tends to lead to a mindset of what is termed past-present.

Based on the condition of the business now, the tendency is to rationalize this situation based on what has occurred in the past.

However, the present is the present and this situation cannot be changed by what might have been; it is reality.

The value of the scorecard is to measure how the business has performed against the original vision of the business. It is to determine the reality and validity of the original vision and, critically, to what extent the vision needs to be adapted to provide a future validity for the business; this is a mindset termed present-future.

Businesses are started based on the idea, the passion, the energy and the willingness to invest and take risk by an individual or group wanting to do something better than anyone else, whether it be a product, a service or a retail opportunity.

Small- and mid-size businesses are the engine of U.S. employment, currently employing 53 percent of the total U.S. work force.

Long-term success for small- and mid-size businesses, for the owners and CEOs, is dependent on moving their mindsets from past-present to present-future. This means that the historical numbers should be used for information but not as the crutch for future results. The critical step for future success is based on adaptability as a skill.

An example of historical numbers creating a perceived incorrect business situation versus future business opportunity occurred in the mid-1970's when Kodak entered the instant photography market to challenge Polaroid's monopoly of this category.

Within the first few months of Kodak's market entry, Polaroid's "numbers" showed unit sales, gross revenues and profitability declining.

Consequently, in a past-present mindset Polaroid then spent a dramatically higher percentage of revenue on advertising to compete with Kodak.

In reality, a present-future mindset would have led to the belief that Kodak's entry into an early-stage product category launched by a little known company, Polaroid, would bring a whole new level of credibility to both the new category and Polaroid's products in particular.

Within a year, Polaroid's sales and profitability had exponential growth and the company adapted and changed its whole business model from competing with Kodak to building the product category as a future plan.

Even though the present-future mindset may seem logical, why do so many small- and mid-size business owners fail to operate this way? The answer is usually, "I don't have time to think about the future, I am just trying to survive".

As difficult as it may seem to change from the past-present mindset to a present-future mindset, it is very important for business leaders to step back from day-to-day issues to look at options to evaluate and to adapt to future opportunities.

What is the impact on their business of the Internet, the impact of technology changes, what alliances could be important, are there appropriate strategic partners available, could we provide more experiential customer service, and so on.

These are subjective assessments and not just numbers. Business leaders need to have an inquisitive approach to building their businesses and then put scenarios around their conclusions - a present-future mindset.