You probably know the statistic; something like two-thirds of businesses fail in the first three years, a horrible statistic that rises to around 80% by five years.
Why is it so? I’ve touched on this question from a number of angles but there’s always another, useful perspective from which we can learn something to keep improving our businesses, their cash flow, and profitability.
Is there a ‘right way’ to run a business? One thing is for sure, run a business the wrong way, and you’ll end up as one of those statistics – road-kill on the business road.
But what is “the right way”? There are so many different elements that have to be juggled, and meshed together so they all run like a well-oiled machine. And you, the owner, have to be both engineer and mechanic, keeping the cogs properly meshed, oiled and spinning. Get one cog out of gear, do things the wrong way, and the machine just won’t work
So I talked to Martin Sargent from The Business Group to discuss this conundrum.
For those of you who don’t know Martin, he has been a business consultant in the New Zealand scene for the past 15 years. He gets his daily fix of excitement by working alongside business owners to achieve their true potential.
With vast experience both at the corporate level and in the small to medium business environment, Martin and his team have developed their own unique solutions covering planning, marketing (including online and social media) and money management to help business owners achieve their dreams.
Martin was keen to share one of those solutions with you - "How to do Business, the right way…” He touched on the eight elements he sees as critical in doing business the right way.
I asked him four questions to explore this issue:
1. Why did you get into business as a business consultant?
2. What do you see as the major hurdle business owners face?
3. What are the 8 critical elements of the business jigsaw you refer to?
4. What is one thing you would like to leave your listeners with?
There are sources of advice beyond the usual that people suggest by rote; accountant, bank manager and so on. Small and medium enterprises make up a very large part of our economy, and their owners have a lot of issues that don’t slot into the traditional pigeon holes.
One large hurdle that must be cleared is the trap of treating the business as a job, and not a business. That is why it is so important to go into your business with a plan – plan your entry into the business, plan how you will operate, and, just as importantly, plan your exit. You need to be aware of each part of your business, and how it will operate in the plan.
Critical elements that need to be covered:
1. Getting the right people and put them in the right jobs
2. Having the right mindset, focusing on the things critical to your business
3. The right products and services, right for your business, and for your market
4. Make sure you give your client/customer the right experience
5. The right governance – making sure the business is being run the way you want it run
6. Getting the right message out about who you are
7. Having the right processes and procedures, and that starts with actually documenting them.
8. If you can’t measure it, you can’t do it. You need both financial and non-financial measurements
If there is one key issue, it is PLAN. It doesn’t matter how your plan looks, but write it down, get it down. Make yourself accountable for what you say you will do. That is - IMPLEMENT. Most plans fail because they aren’t actually implemented.
If you would like to get more information or resources from Martin, you can:
• Get goodies from his website at http://www.the-business-group.co.nz/
• Subscribe to their newsletter and blogs
When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, it is not just marketing that is holding them back. It is the lack of control they have over their business, and eight times out of ten that lack of control comes down to a lack of knowledge of what is happening in the business.
For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand:
• The strengths, weaknesses opportunities and threats of their business
• Determine where they want to be – clear, achievable goals, and
• How they are going to get there – their strategies to achieve their goals
This is sometimes known as the NOW – WHERE – HOW model.
If you would like to discuss with me how you might do that, book a Strategy Consult here.
© Copyright 2016 Adam Gordon, The Profits Leak Detective
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?