Atlantic Canada's Small Business Blog

I am "CA" Atreya (PMP, MBA), the author of this blog. I help businesses in Atlantic Canada achieve their BHAG successfully. You may subscribe to this blog using a feed reader (RSS). Note: We have moved the blog to a new domain to better reflect this blog's objectives.

What it takes to remain in business

Times have changed. We no longer live in an isolated world. Our competition is not only the guy down the street. The competition is in China, in India, in Europe … all over the globe. For all the new theory, new management principles, there is only one fundamental way to survive in the business world:

Ensure costs are less than the price you charge.

If the former is higher than the latter, clearly you are not going to remain in business.

Margins

The price you charge is a function of how much demand there is for your product or service and who the other suppliers are. Clearly, the other suppliers are your competition and they would exert a downward pressure on the price you can charge; unless your product or service is inelastic! So it seems logical that your costs need to follow the direction the selling price takes; i.e. if the prices are headed lower then your costs must also head lower.

The key is margin – if your margin is sufficiently high, then you can afford to keep costs the same while prices drop. But this cannot be sustained in the long run and you will need to take steps to ensure your costs also head lower.

Why Project Management

So what does all this have to do with project management, you ask? But don’t you see everything has to do with project management. Resources are scarce and you need to allocate them where they achieve the best possible return. You need to allocate resources to:

1. Ensure you keep the lights on
2. Take initiatives that help increase your margins – every project as part of the initiatives you take must directly ensure that you increase your margins

So what initiatives do you need to take to help with point 2? Enter programs and projects – and enter program and project management. If you manage your initiatives as program and projects, adopt project management techniques and you have just increased the chances of success of those initiatives. You plan your projects, why not your business?

It’s all another story if you do not plan your initiatives - but take an ad-hoc approach. That’s about strategy.

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