Extract from the ebook Saving a Business written by John Mason and Staff of ACS Distance Education
Successful businesses do not remain stagnant. A good business manager recognises this fact, and is aware that a business only has two realistic options – to get better, or worse. Remaining the same is never an option.
It is important to recognise problems as early as possible. Delays in recognition compound problems and cause delays in solutions.
TO RECOGNISE PROBLEMS
When things get worse in a business, there are always choices:
• Some people increase activity hoping to stimulate growth
• Some decrease activity hoping to minimise losses
• Some change activity hoping to find a more profitable mode of operation
• Some close down the business
• Some do nothing
The worst option is usually to do nothing.
Focus on the Issues
It is important to learn to focus – stand back and see what is important. The owner of a failing business often has a clouded view of things. Priorities are askew and they are not seeing some things that should be important, because they are preoccupied with things that are unimportant. When business owners are heavily involved in the running of the business, without delegating tasks to employees, they can become bogged down with the day to day technical tasks of the business, spending all their energy and efforts into keeping things operating, that they don’t have time to pay attention to the bigger picture – where the business is heading, how to improve the business, goals and projections, reviewing the market, and so on. The business owner may need to step back from the daily operations to get a clearer picture of changes that need to be made.
Analyse the Problem
Are you focussing on what is important and analysing where your problems arise? There are many questions you can ask in order to pinpoint where the problems in your business arise from:
• Is it a lack of customers? Perhaps this is due to customers facing increased costs in other areas of their lives. Maybe your customers are moving to another 'newer' product or service.
• Did your sales go down gradually or suddenly? A gradual change could suggest that you have failed to keep improving your product or service. A sudden change might indicate that a competitor has moved into the market.
• What other things occurred at that point of time? For example change of staff, website profile down - forgot to pay for web positioning, lack of funds, withdrawal of funds from the business for personal use.
• Do you still have customers but lack resources? Not enough staff, too many staff.
• What business decisions have you made in the past year? Look at all decisions not just those that you ‘think’ may have caused your downfall.
• Do you have too much debt? Too much money spent of incidentals that do not relate to business growth e.g. flashy new office, or new office equipment you could have managed without, new car you couldn’t really afford, too much spent on entertaining etc. etc? Is this promoting a cash flow problem that is limiting your ability to buy in products or materials in order to continue running the business?
• Are there mistakes happening? Where are the mistakes stemming from?
• Are you procedures systemised? Is your business chaotic or organised? What can you do to streamline your business and make operations smoother?
You can gather information from a range of sources:
• Your own experiences and knowledge about the business
• Speaking with employees
• Reviewing customer feedback
• Reviewing financial report
• Analysing the operating procedures
• Analysing sales reports
• Looking to the Market for competitors
• Looking to the Market for other influences, for example global financial crisis, end of the financial year, and other influences that may affect customer’s purchasing decisions
Consider Your Product or Service
• Is our product obsolete? When was the last time you conducted any market research to gauge how your product is seen by your customers?
• Have your customer needs changed? Have your customer’s expectations changed? Is your product or service still valued? What can you do to bring your product or service in line with your customer’s desires?
• Is the competition offering a better, or cheaper, or better pitched product? Make enquiries, ask your customers, contact your competitors, pose as a customer to see what others are offering.
• Are your suppliers offering you the best possible service and prices, or are there better options?
• Have you lost interest or confidence in yourself or your business? If so, how could you regain interest? Think about what attracted you to it in the first place.
• What could you do to improve what you have to offer? Can you modify your existing product or service?
Maintaining a Balanced Perspective
Get a balanced perspective - this means creating harmony between what your business has achieved in the past, what you are doing now, and what you plan to do in the future. You need to balance these areas rather than focus too much on any one of them.
If you can attain a balanced perspective you will feel more:
• Pleased with your own achievements
• Enthusiastic about your business
• Satisfied with your business
Spend more time working ON your business rather than working IN your business. A small business can gradually seep into your life and take over all your free time if you do not maintain a balanced perspective. Over time this can sap your energy and not be of benefit to productivity – for a manager, the business should be about thinking of new ideas or better approaches rather than on spending every given moment working. Remember why you started the business – most people go into business for themselves so they can have more free time. This often backfires for the small business owner. Figure out ways to make your business run smoothly so you don’t have to always be there.
Build networks of like-minded business people you can bounce new ideas or discuss issues and problems with.
Recharge Your Batteries
Many businesses fail because their owners do not delegate responsibility to senior members of staff, or do not take breaks or holidays.
Take time out - your business is very important to you, but some of the best decisions you will make, and some of the best ideas you will come up with are when you are relaxed and doing other things. This can also help you gain perspective and the bigger picture of your business, so when you come back you can approach your business in a whole new light.
Always Run your Business as if it is For Sale
When you want to sell something (a car a house and so on) you tend to keep it in the best possible condition in order to increase or enhance its value. This is just common sense; a well-presented house or car with few defects, will sell faster and at a higher price than those that are poorly maintained and presented.
The same approach can apply to a business (even if you have no intention of selling it at that point of time) - thinking of your business as a saleable commodity keeps you focussed on retaining, constantly improving and expanding its value. Keeping good financial records is important for selling a business – and until you are ready to sell, maintaining good financial records will provide you with an important tool for fine-tuning your business.
Developing thorough and comprehensive operation procedures will mean that the business can continue to be successful. If you were looking at buying a business, you would want to know that the business can continue to operate with a new owner. There are many benefits for you to establish these even if you do not want to sell the business at the moment. It ensures that all necessary tasks in the business are being completed, and in the best way possible. It provides guidelines to train staff to complete tasks, so staff that are not experts can still produce good results. It also provides an opportunity to delegate tasks to staff members to alleviate the pressure on the business owner, giving an assurance that the job can be done correctly.
This approach encourages you to explore new ideas and at the same time gives you an exit strategy, should you want that. It is all about forward thinking – people that look to the future in their businesses tend to focus on business development. And although the day-to-day running of a business is important, they do not get bogged down with it. Good managers will have staff to deal with the minutiae, freeing them to develop new ideas and look at the broader picture. In a successful one person, or small business they know how to prioritise and avoid the pitfalls of sweating on the small things.
You should always remember that you are not the business – the business should stand on its own merit and be able to run without you – this makes it valuable in the eyes of the business community and at the end of the day increases its value, too.
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