Let me say upfront that I am a Business Coach, and I hope that this doesn’t scare people off from the start. Coaching is an industry that has strong levels of opinion one way or the other depending on people’s experiences or views. We aren’t all bad, and we aren’t for everyone (just as a personal trainer isn’t for everyone, but they do help those that work with them!). I am not going to rant on about the pros and cons of business coaching as it is an individual viewpoint, what I am going to do is talk about my experiences of talking with local business owners I have met and put some common lessons that all business owners can hopefully use to learn from.
According the ABS statistics, Canberra has 24,600 businesses in operation, which showed a 600 decline on the prior year. Businesses close for numerous reasons; be it financial, relocation, personal, economic or other, but clearly there has been, and still is a trend in businesses doing it tough out there. I see this from a personal standpoint in my own business, and from those I meet with. So what can you do if you are in business to prevent becoming one of the statistics in a forced manner?
There are some common opportunities for business improvement out there and they aren’t all overly difficult to implement. I have picked the most frequent ‘gaps’ in the operation of businesses from my Audit process (in no particular order).
- 1. No Business Plan developed: All start-up businesses need to establish a business plan and document it (not just keep in your head). There may be a need for this from a financial standpoint for financing from banks, but if you are in the fortunate position of starting your business without financing, the plan will help define what you want the business to achieve, how you plan on getting there, and what tools, processes and resources you will need. The plan should be active and regularly reviewed for currency and business change, not used as a door stop, or stashed away in the filing cabinet!
2. Insufficient working capital from commencement: Nearly all businesses will require some level of capital to trade, regardless of the source i.e. personal or bank. Quite often the business commences with little or none and believes that they will trade and grow from turnover. Rarely this works, or if it does the general growth level is slower than planned. You will need to budget for marketing, staffing, your wage (or to fund lack of wage), stock, business set up costs, legal, accounting etc. The first 6 months feels like you constantly have your hand in your wallet or on your credit card (I know from my own experience). Complete a cash flow forecast in advance, or even if established to determine what your needs for the next 12 months are and to see easily if there is any shortfall.
3. Poor people systems and processes: People are your greatest asset, but if not managed they can be your biggest liability. If you employ staff, you must ensure you have job roles, establish performance management processes, establish KPIs and generally manage their output based on your business goals. Wages, tax and Superannuation also need to correctly established in a legal manner. Do you have a customer service process and standard? How detailed and structured is your training process? All these help develop the organisation that you desire with the team to achieve it. A lot of the business owners I speak to feel trapped with poor performing staff and have a great fear of managing them.
4. Lack of delegation from the owner: Many owners feel they have to do everything, because ‘no one else can do it as well as them’. The true power of a leader is to effectively learn to delegate tasks to others and be confident in the processes they establish to ensure tasks are completed to the desired level. Do you have role description for your position? What would you expect of someone if you were paying a commercial wage to replace you? This is your foundation for your role process and structure. Business owners working 7 days a week most likely don’t have adequate process in place, or have a fear of letting go of the minor tasks in their business. Do the exercise of working out your real hourly rate based on what you pay yourself divided by the actual hours you work- this can be scary!
5. No marketing strategy or plan: This forms a part of the business plan as above, but is commonly missing. What is your brand?, What do you want it to represent?, What is your USE (unique selling edge), How will you engage in social media?- which ones to use and what your messages will be? Etc. Everybody is marketing, some well others not quite so well, but to build your brand you need a process and a goal, not just shooting in the air hoping to hit something- define your products, their target market, then establish how to reach them best. Most importantly, marketing is expensive, so monitor and track the performance of all marketing outcomes so you have an accurate idea of your ROI on each activity. If something didn’t reach your goals, don’t just say it didn’t work, evaluate the message used, did it have a call to action, was it just branding, or a specific promotion?
6. Poor accountant advice (or other advisors) and lack of financial awareness: Get a good accountant! Look for one who provides proactive advice, gives ideas for business structure and tax effectiveness and isn’t just ‘someone who does your BAS’. Professional fees are expensive, so seek value from the service you pay for. In addition to this, it is a massive issue out there for business owners to rarely look at financial information regularly if at all. Review P&L, Cash Flow and Balance Sheets at least monthly to get a picture on how you are trending. Don’t wait until July when you get accountant P&L’s returned, as this may be too late if things aren’t tracking well and don’t use the bank balance as your measure of performance. Again, if you are not confident in this area, seek guidance from your accountant.
7. Working ‘in’ not ‘on’ the business: ‘Failing to plan is planning to fail’- this is so true for business owners, We get so busy doing the day to day ‘things’ that we don’t spend time to plan, review and strategise. Force yourself to spend some time each day, week or month to look at the business in an overall context. Seek feedback from clients, suppliers, other businesses and mentors etc. to help identify areas you may miss from becoming ‘store blind’ in your own business from doing the same thing every day. Your staff can be a great tool in this area as they see issues that you may not, so formal meetings and open feedback from them can also drive improvement.
So there’s my list and whilst this isn’t a complete list of opportunities, from my experience these are the most common I have found exist.
My biggest piece of advice is to spend time on a regular basis to sit back and reflect or review your businesses past performance for the period, and see what worked or didn’t, and make plans for the coming period. It is always a great time over Christmas at a minimum, but half yearly or quarterly is preferable.
Good luck with your planning and goals and if there is any desire to take up my offer of a free, one hour coaching session to see if this is something that may help your business please email me at firstname.lastname@example.org or call 0447 610 279. Alternately, check me out on www.smallfish.com.au/tonyozanne