The American system of business management has been admired and emulated around the world. This system is characteristic of two traits in the American psyche:
(1) enthusiasm for the future and making things better, and
(2) an openness and willingness to change in order to achieve that end.
No society in the world is better or more prolific at creating new businesses than the United States capitalistic system but often we are so busy commercializing ideas and starting new ventures that we don’t take the time to learn basic, successful management principles that have been developed by our larger companies.
Many entrepreneurs are technical experts in what they do but start a business without any formal training or experience in management practices and principles. By “management” here we mean the business of successfully managing the non-technical side of the business, the “back room” activities. As a result of inadequate management, many small businesses fail in the early years. They fail not because of a weakness in the product or service concept they have, but because the business was not properly managed in the back office.
Once a business has emerged or grown to a certain level, management techniques must change or the business will run into trouble. For many small businesses this level is $1-3 million in annual sales or 5-15 employees. Sometimes the critical point is smaller and sometimes it is larger, however, when it occurs, the owner or manager of a small business must evolve, morph or otherwise change from a manager of things to a manager of people and from a technical expert to a strategic thinker.
This is often a difficult task because of ingrained habits developed over time but failure to grow as a manager is a major, perhaps the major reason why a business will falter, stagnate or even collapse under its own weight.
But what do successful businesses have that troubled businesses don’t? First of all, owners of successful businesses have developed personal characteristics that exhibit themselves in their businesses:
•Invariably they have a positive attitude towards their business and life in general.
“Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” Mark Twain
•They are committed to their effort.
“The only place you’ll find success before work is in the dictionary.”
May B. Smith
•They are patient.
“Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage." Victor Kiam
•They are persistent.
“Many of life's failures are people who did not realize how close they were to success when they gave up.” Thomas Edison
Secondly, the owners of successful businesses have developed a business blueprint called a Strategic Business Plan that clearly describes their business concept, their mission and their philosophy of business. In this document, they have set personal and corporate goals and set out specific time lines and strategies to achieve them.
Thirdly, the owners of successful businesses have developed an Organizational Structure that functions as a well-oiled machine. This structure, including all its policies and procedures, encourages all associates to perform to their utmost capabilities. It rewards those who excel in proportion to their contributions. It also disciplines those who deviate from acceptable behavior. Positions, tasks, duties and responsibilities are defined and communicated and performance is routinely measured. Training, job enrichment programs and incentive compensation plans are designed to encourage each associate to excel. Successful owners view their associates as their most valuable asset and resource.
Fourth and last, the owners of successful businesses have developed Operational Support Systems. These may be financial or non-financial, manual or automated. The objective of these systems is to support and make efficient all the activities of the organization. Well structured, they also relieve management of many day to day routine activities, giving owners more time to be strategic thinkers. The information provided by these tracking systems provide critical information on sales, cash flow and other financial performance data so that senior management can take timely action as change occurs. Red flags appear early, before problems become unmanageable.
IN SUMMARY, THE FOUR KEYS TO SUCCESSFUL SMALL BUSINESS MANAGEMENT ARE:
- Owners have developed habits and traits that are Positive, Committed, Patient and Persistent.
- A living Strategic Business Plan is in place.
- An Organizational Structure has been developed that encourages people to be their best and helps them do so.
