3 Apr 2011 | Small Business
I have been running my own small business, and advising small business owners, for almost 30 years now. Over that time I have seen some fail; some achieve outstanding success, while most have provided a good steady income for their owners. One common factor for all businesses is the important role that the owner manager plays in developing a successful business.
Too often when things go wrong in a business the owners are quick to direct the blame outwards. It is never the owner’s fault it always is the economy, suppliers, employees, government, or even the weather is to blame. The first step on the road to business success for an owner is them taking responsibility.
In the late 1980’s I went to hear the premier small business author and presenter Michael Gerber. He quoted an old Italian saying in his presentation that made a lot of sense. It was “the fish stinks from the head down”. Meaning 99 times out of 100 the problem with a business is the owner.
The first step to ensuring a business has long term profitability is to recognise that ultimately the success or failure is down to you the business owner. Gerber’s in his book “The E Myth Revisited” states on of the main reasons why business fail is because the business owner spends too much time working in the business instead of working on it.
Instead of analyzing why things have gone wrong, and therefore working on the business to find ways of improving it, business owners react to problems rather than learning from them. This means when things go wrong they look for reasons or things to blame the failure on rather than properly analysing what actually happened.
In the “Total Quality Management” movement there is a technique used that helps with this analysis. It is called an Ishikawa diagram named after the Japanese TQM practitioner that developed the management tool.
It uses an image of a fish skeleton to work out what has contributed to the problem and is also called a fishbone diagram. Each of the bones coming off the central spine represents the cause and effect of different factors that could have contributed to the problem. These factors can include staff, environment, equipment, and materials.
By using a fishbone diagram to analyse a problem it forces a manager/owner to break down the problem into its smallest component parts and then assess what each component played in contributing to the problem. This then results in steps being taken to improve either the training of staff, the quality of materials, the service of equipment, or the environment of the workplace, to ensure the problem does not reoccur.
At the heart a business owner working more on the business is having a system to record when problems occur. This means often a total shift in attitude by the owner. Rather than playing the blame game and looking for someone who can be abused for the problem, it means calmly assessing what occurred and finding a way to improve things.
No business is perfect and there will always be problems and mistakes. Mistakes that affect customers should be embraced and regarded as an opportunity rather than a disaster. Businesses that quickly and efficiently fix a customer’s problems, rather than going through the excuse and blame game, will more than likely end up with an advocate for their business.
ESTABLISH THE REASON FOR EXISTING
A major component of achieving success in anything is to establish goals. To do that effectively in a business you must first work out why you are in business. People give many reasons for why they originally went into business. For some it is the desire to no longer work for a boss. For others it is to build something that can provide employment and security for their children.
What is important is to recognise what it is you want the business to do for you. Too many people work tirelessly away in their business without taking the time to work out what they are trying to achieve. When this occurs the business tends to take over and the owners have very little time for anything else. A business should not dominate the life of an owner it should provide the means for having a life.
MEASURE EVERYTHING THAT YOU CAN
It is impossible to improve anything without taking measurements. It does not matter whether you are trying to build a house or lose weight. To achieve the desired result measurements must be taken. It is surprising the number of people who recognise that they must measure constantly to produce their good or service but do not bother to accurately measure how they are performing financially.
All aspects of a business should be measured to provide a benchmark to gauge the success or failure of steps taken to improve the business. This includes such things as the number of customers or clients a business has, the average value of each transaction, how many potential customers are converted into actual sales, the number of telephone enquiry’s that are converted into sales and the length of time it takes to perform various jobs.
This notion of measuring the time it takes to do a job is one of the most important and least measured aspects for many businesses. If the most common complaint of people in business is that they never have enough time why is it that so few measure where their time goes in a business? Once a person has measured how long it takes to do the different jobs in a business the easier it is to work out how much extra time can be gained to do the important management jobs and to delegate the more menial jobs to someone else.
PUT YOUR FAITH IN SYSTEMS
The only way to ensure that a job will be done correctly every time is to develop a system that sets out how it is to be done. Without systems a business is totally reliant on the previous experience of the people doing the work or the owner constantly monitoring how each job is being done.
The best way to effectively give a job that you do not want to do is work out how you do the job and what the desired result is. This system for performing the required task should then be written down because for a system to work it must be in writing.
EMBRACE CHANGE AND GROW
Any business that does not change inevitably goes backward. To avoid this the owners of a business should be constantly looking for new and better ways to do things. This may involve embracing new and different technology to improve efficiencies. It can also mean constantly reviewing your product or service and making improvements. The improvements may not even be to what you sell or provide but may involve finding more efficient ways to deliver your product or service. By embracing change and constantly looking for ways to make improvements a business can not help but grow and prosper.
PLAN FOR THE FUTURE
One of the major ingredients of growing a business is planning for the future. The information that has been collected by measuring as much as possible the activities of the business provides most of the data that can be used to plan for the future. To plan successfully the business should be broken down into its smallest possible components starting with the sources of income. Once you have segmented your income into its different types you can then effectively look at the factors that impact on the income and make plans to increase it.
LOOK ON BUSINESS AS A PARTNERSHIP NOT A CONTEST
There have been many business systems and management ideas over the past 50 years One of the most successful was and still is Total Quality Management. Under that system a major principle of continuing success is all parties to a business transaction should come out winners. Too often owners treat business as a competition made up of winners and losers. Under this school of thought it does not take long for customers and suppliers of a business to work out they are losing and they take their business elsewhere. If however the critical business relationships are treated as a partnership, where everyone wins, the levels of trust are maintained and the business prospers.
NEVER STOP LEARNING
The final step of being a successful manager of a business is to never stop learning. Too often people can not find the time to get away from their business to learn new skills either directly related to their business or themselves as individuals. Apart from being a great source of ways to improve a business seminars and training session provide a great opportunity be get away from the problems that surround you while working in your business. By taking the time to get away and learn something it is amazing how often a nagging problem can be solved just by not being totally immersed in it.
The final ingredient to managing a successful business is not a step at all. It is more of a philosophy. That is if you are not enjoying your business and having fun while working in it gets out. Without a sense of really looking forward to getting to work each day it will only be a matter of time before either the business fails or your health does.