This is the first in a series of articles that will hopefully educate readers and illuminate the process of doing business in a simple to understand, nuts-and-bolts way.
In the beginning…
Many people these days are either starting a business or are a part of a small business as a partner or original contributor. The economy is such that many folks do it in self-defense as well as for the “traditional” reasons: having a great idea, seeing a better way to do somethng they were doing as an employee, or creating a new service or product.
As a Business Consultant, I have worked with dozens and dozens of small and medium sized business, and they all started that way, which is not surprising. Owners, for the most part, were ordinary folks that for many reasons either “fell into” owning a business or started one in their basement, bedroom, or garage and went from there. And, as a consultant, I was there for one reason: the business was in trouble. Even the owners that were highly educated and experienced business people – former sales directors, marketing experts, divisional VP’s – were having problems. And every time, there was a pattern.
Why small businesses get into trouble…
The first thing to know is that there is no place I know of that actually teaches people about how to run a business on a day-to-day, week-to-week basis. A Bachelor’s degree or an MBA is great, but these programs teach big, generic concepts. What they don’t teach – and no one does – is how to tell if the bookkeeper is stealing, how to get the most out of your service crews, manage cash flow on a daily basis, motivate shop workers, set a pay scale, properly determine real costs, and set a price that makes sense. And on and on and on.
These “little” things aren’t a problem when a company is really small, with 2 or 3 employees, but start to spiral out of control as an enterprise gets larger. The owner(s) are generally there every day, working 10 or 12 hours a day and are a part of every action and decision. They know where every dollar goes, know their customers, the market, what works and what doesn’t, and take care of it personally. And this very thing is the core of the problem as the business expands. It is nearly universal that this micromanagement style is how businesses start and begin to thrive, and that’s ok. However, what works for a tiny startup definitely does not work for a company that is larger. Why?
Owner as “The Juggler”…
As a business grows larger, all the things the owner(s) manage become more complex. To use the juggler analogy, three balls become four, then five, then eight, then ten. The owner works harder, works faster, hires people, buys technology, adds products or services. All of these things require more customers, more vendors, more marketing, more expertise. Things move faster, become more complex, require more time. And this is where things begin to fall apart, because micromanagement doesn’t work in an environment like that. It works for a while, and that traps owners into the idea that they are doing ok, and if they work just a little harder, spend a little more time, look at more details, dig in a little harder, tomorrow will be better. I promise, it won’t.
Small business owners who fail to adapt their management style – and this is the hardest thing they can do because they have had the experience of success doing it one way – will eventually either fail or the business will stagnate at a level they can handle. Now, I have no problem with an owner who wants to just maintain a certain level of trade. I do not believe the “grow or die” paradigm that is heard so often. Do a thing, do it locally, do it well, and stick to what you know works very well. But even those types of businesses get into other kinds of trouble, mainly from lack of simple skills I will cover in future articles.
Asking the right questions…
In most of my consulting, after the first day or two and once I have a basic understanding of what the problems are (financial, managerial, or both), and I get to have a little rapport with the owner(s), I start to ask some unusual questions. Before I give you a sampling, let’s go back to the beginning for a moment.
Most entrepreneurs don’t start a business to make a ton of money. They have a dream aside from providing that perfect service or unique product. They think about the life that a ton of money might bring, but it’s generally not about the money itself. Some dreamt of – and still dream of – a vacation home, or a college education for their kids, or building a business that allows several vacations a year with their families, or a sailboat. The specifics don’t matter… everyone that ever started a business has a dream like that, how they imagine their life will be once they hit some level of success.
And all of that gets buried somewhere along the way as they work harder and harder, try to do more and more. Their lives are consumed with details and work, and as things start to slip, it gets worse.
So, for all you budding entrepreneurs and small business owners, here’s a question or two for you:
When you thought of starting this business, what did you imagine your life would be like?
What did you dream of having?
Do you have the family or fun time you thought you’d have by this time?
Are you any closer to fulfilling your dreams than when you started?
Answer those questions. Be honest.
Then, find or make a picture of your dream. Make it BIG. Paste it on the wall in your office so you face it every day. And focus on that dream. Because that’s what you are in business for.
Not money. Not fame. Not respect.
That picture is your true dream. That’s your true motivation.
Next time, we’ll start to map a path to get you much, much closer to your dream.
It won’t be easy, but it works. I promise.
Please contact me offline at [email protected] with anycomments, suggestions or ideas for future articles that you may not want to share here.
- What’s the Best Advice You Can Give to Other Small Business Owners? (blogs.constantcontact.com)
- Tips for Business Owners (thinkup.waldenu.edu)