Small business owners wear many hats and make many decisions each day. Most of these decisions are small and have minor impacts. Some decisions, however, are common to most small businesses and can have far-reaching, fundamental impacts. As a starting point, let’s look at three fundamental challenges:
The first big challenge facing most small business owners is finances. As the CEO of a start-up frequently said to me, “Cash is king.” Businesses exist to make money and most small business owners run their finances without adequate planning or oversight. They monitor bank balances, accounts receivables, and expenses, but most don’t have a basic financial forecasting, reporting, and review structure in place. Additionally, many don’t have the forethought to establish a line of credit or other funding sources to help them remain solvent when inevitable financial speed bumps occur.
If your business needs some help in the financial area, here is a short “best practices” checklist to consider:
- Get help to create a basic financial reporting (KPI) structure, such as within QuickBooks or your chosen accounting software
- Document financial reporting requirements and ensure they are followed by you, your employees, 1099’s, etc.
- Establish a recurring schedule for reviewing results and forecasts for all important financial data, such as cash, revenue, accounts receivable, and major expense categories
- If not yet established, investigate funding options such as a bank/SBA loan, line of credit, credit card, silent investor, or personal funds… before you need the money
The second big challenge facing most small business owners is people because every person is critical to the operation. One poor performer can have unforeseen negative impacts. A sudden resignation by a key contributor can slow production. Finding new talent can be difficult, or motivating and retaining talent can be overlooked.
If your business needs some help in the people area, here are a few ideas to consider:
- Take the time to consider carefully the performance of each member of your current team
- Determine those employees who are critical to your success and what you will do to motivate and retain them
- Determine those employees who are not performing and what actions you will take to address this
The third big challenge facing most small business owners is time. Few seem to have enough of it, even if they are working 60 hours a week or more. After working long hours for years, they begin to feel they have become a slave to their business … that the business is running them rather than they are running the business.
If you are working more hours than you want and not on a track to improving this, here are some ideas to get more of your life back:
- Jot down the actions you take for a day or two, then review your list and decide what you can stop doing with no/minimal impact
- Take a good long look in the mirror and ask yourself “Am I failing to delegate work that others could be doing?”, then delegate appropriately (the topic of a future blog post!)
- Establish more organizational structure in your daily activities, such as a daily “to-do” list and time scheduling for key activities to do daily, weekly, and monthly
- Make a commitment to yourself to reasonable work hours and hold yourself to them, which will motivate you to eliminate or delegate low-value work
Most small business owners I meet have all of these problems, in varying degrees. If you are a business owner who doesn’t have any of these big challenges, it’s possible you are overlooking one or more of them.
Think again. Don’t skip over this opportunity to improve your business and your work/life balance!
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Richard Kirby (www.richardkirby.net) is “The K Factor”, an executive coach who provides inspiration and guidance to small business owners and corporate executives who genuinely seek success at a higher level.
Richard Kirby (www.richardkirby.net) is “The K Factor”, an executive coach who provides inspiration and guidance to small business owners and corporate executives who genuinely seek success at a higher level.
770-366-5875
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Last week, one of my clients filed for Chapter 11 Reorganization. Now, two of my clients are in Chapter 11, working to find a path back to solvency. In April, I was engaged by a new client to help them find a way out of Chapter 11. In the case of the two former clients, I can honestly say that I wasn’t responsible for the circumstances leading to their demise. In other words, I didn’t place any executives who caused these problems, and I haven’t been involved in consulting projects that resulted in adverse consequences. To the contrary, I placed an executive to help one client navigate through Chapter 11. Regarding the other client, I placed an executive to help them avoid business failure. Regrettably, Senior Executives sometimes fail to heed sound advice. In each of these situations, failure was predictable. Management failed to adequately penetrate their home markets before moving into new territory.
I’ve witnessed the results of many crazy decisions during my career. Some noteworthy situations include an ice cream brand selling franchises beyond their distribution capabilities. Or a California-based brand that tried to move into the Southeast with a single location. I’ve seen Southeastern brands sell franchises on the West Coast, thousands of miles beyond their management reach and distribution network. A Northern barbecue chain leap-frogged into Georgia with a few restaurants placed across the state. That decision was funny, in a sad way, as barbecue has a distinct regional appeal. Another brand added drive-throughs to dogs with the hope of turning them into profitable restaurants. Sadly, they created dogs with a drive-through. From my perspective, the most egregious yet consistent mistake is the urge for start-ups to enter new markets before adequately penetrating their home base. To be sure, many of those mistakes were made by rookies, entrepreneurs lacking experience or solid advice. However, these mistakes continue to be made by experienced leaders who should know better.
I can speak with authority on this subject as I spent most of my career working on retail expansion. I began my career as a financial analyst assigned to the new store development group. In this role, I performed analytical work on capital expenditures for new stores and other investments. I learned how to evaluate the prospects for a new store, and the penetration required to optimize the return from a larger market, i.e. city, SMSA, or region. I became a strategic analyst and planner shaping retail store development strategy for several national brands. Finally, I held general management positions where I was accountable for return on investment. In fact, one of my first assignments as a senior executive was to identify and prioritize markets for focused development. As a result, I am confident in my ability to build a retail brand, especially, food-service brands. I appreciate the value of achieving significant market share before developing new markets. Believe me, engaging in the development of a new market, before adequately developing a home market can be fatal to a business, especially so for a start-up.
So, if significant penetration of a home market is fundamental for success, why does management continue to violate this well-established rule? Over the years, I have asked this question of countless CEOs, CFOs, and Chief Development Officers. The only consistent response is “sometimes, management becomes so enamored of expansion that sound business practices are ignored.” Imagine, human emotions getting the better of Senior Executives. Who knew? The only solution is to hire accomplished retail development executives, among others, who won’t hesitate to tell the “Emperor that he has no clothes.”