Speak to any business owner and they will tell you there aren’t enough hours in the day and the ‘To Do’ list never gets any shorter.
The question is ‘How to manage the daunting task of managing all aspects of the business?’
Trying to ‘keep all the balls in the air at once’ can be a tough task. Many SMEs reel from one crisis to the next with no real plan or system for managing the business.
This can be a very stressful way to work for both the business owner and staff.
One of the most useful concepts I have learnt in my time in business, is the simple breakdown of what goes on in most businesses, whether they be big or small.
Most businesses have five distinct areas being:
- Marketing & Sales
- Operations & Finance
- Human Resources
- Customer Service
If you can think of your business in this way, it helps to break down the amount of time and focus you place on each area.
Typically focus changes on each of the five areas, but if you can develop a systematic way to manage all five areas, life can be much less stressful.
A good place to begin is documenting all of the tasks required under each of these headings. This can be a great place to start to develop job descriptions for everyone involved in the business, including the business owner. It helps to ensure nothing falls between the cracks.
If you’re new to business it can be tempting to focus attention on the ‘Operations’ side of things. The danger if you do this, is that if you don’t do the marketing and selling you won’t have anything to operate on! Obviously there is no point marketing and selling something you can’t deliver, so it’s important to work on Operations at the same time.
The trick is to plan the amount of time to work on each area.
Human Resources is an area often sadly neglected by SMEs.
There just aren’t enough resources and time to do the job properly. Unhappy staff can have a very detrimental impact on business. Happy staff create happy customers. Happy and motivated staff stay in their jobs for longer – saving money on constant recruitment and retraining.
Staff with clear objectives and job descriptions are a valuable asset of any business. If you are looking to sell your business, well trained and supportive staff can increase the sale price. They can also give the business owner freedom from the business.
If you have good systems in place, everyone knows what they need to do, how to do it, when to do it, how critical it is and can report to management on performance.
Financial control, is one of the least understood and neglected areas in small business.
Many SMEs leave it up to the accountant at the end of the year and get a rude shock when they discover they have either lost money or have a tax bill they can’t afford.
It’s critical to measure profit and cash-flow monthly in any business.
Do you know which products and services are profitable and which are not? If you are working hard to market and sell them, you need to know if all the effort is worthwhile. Some SMEs argue that it’s all too hard and time consuming to implement measures and the cost outweighs the benefit.
If you are absolutely certain that you aren’t losing money in certain areas of the business this is a reasonable argument, but it’s rarely the case. If you can’t invest the time to implement business wide measurement, at least do ‘spot checks’ occasionally.
For example if you are in a service or job based industry select one job and keep a track of all the costs involved in that job, including labour and materials. At the end of the job compare it against your budget or quote, to see if you really did make money, or if it’s worth considering different ways of quoting or different types of jobs.
Another very valuable measure in a service based business is to check the number of hours you are paying to staff compared to those you are selling to customers. See if there is a gap and find out what the gap was. If it’s admin related, it might be worth employing a part time admin person to take the load off income earning staff, whose extra billable time could far outweigh the cost of the admin person. This is the start of good financial control and the resulting benefits can far outweigh the cost of specialist help.
As business owners we need to have a good handle on each of the five areas. We may be specialists in one or more of the five areas. It would be quite rare though to specialise in all five. The solution then, is to surround yourself with others who specialise. If your business is small, cost may be prohibitive to employ a specialist in each area.
The answer is to outsource i.e. retain the services of a specialist who can advise on these areas. For example, an outsourced CFO. There are plenty of businesses around who specialise in the areas of marketing, sales, financial control and human resources. You could try googling them to see what comes up. You may find a goldmine of useful information that can help and take the burden off your shoulders.
There is an ‘opportunity cost’ of trying to do everything yourself, both on your sanity and potential lost business. The time you are spending on non income earning activities could be costing the business money. If you want to grow your business you can’t possibly perform all of these tasks yourself and do them all well.
As you can see there is a lot involved and if you can set yourself a programme for calmly and proactively handling each of the five areas, your business should run smoothly.