So you have taken the plunge, and embarked on the painful, yet rewarding journey of starting you own business. With so many books on small business management, and advisors offering help, what do you do? As always the answer is never straightforward, but here is my humble contribution, to these vexing small business management questions.
Managing a business, is an exceedingly difficult exercise, as all small business people, only discover, after having established the business. For the most part, business management is a balancing act.
Allow me to expound on this balancing act. If a plumber quits his normal job, to go into self-employment he will be an expert in his chosen field, and remain confident that the money will roll in. Later on, he runs into cash flow problems, customers shortages etc. He then comes to the sobering realization, that business is not the bed of roses he thought it would be.
A small business owner concentrates at what he is good at, i.e. computer services, building, carpentry etc. But any business, no matter, how big or small needs an admin department, and an operations/production department. No matter how good you are at what you do, if you lack certain skills and competencies in administration, you business will constitute part of the 75 to 80% small business failure stats.
You might create a workshop for you product and services, but do you have a proper administration department? Businesses collapse due to a lack of proper administration.
Here the balancing act comes in. Divide time equally between your administration and operations duties, as a small business owner.
Many new business owners cannot grasp the fact that an inadequate administration department leads to eventual business failure. This compels me to provide numerous examples to my clients.
Here are some to ponder on:
· A potential customer sends you a fax or an e-mail requesting a service or product. The fax or e-mail goes missing. By the time you have located the e-mail, the potential customers have gone to the competition.
· You don’t maintain a customer list or e-mail list. You have many products and services to offer, but customers don’t know about it! You lose business.
· You don’t maintain records on how much your customers owe you, and is therefore not in a position to collect.
· You’re phones go unanswered, or messages are not noted from prospective clients.
· Inadequate stationery (no business cards, letterheads with contact info)
· You don’t maintain proper books of account, so spending and income patterns are not monitored, leading to stock and /or cash losses.
Jack up your admin department, to the same level of your operations department within the first three months of your new business. I am not suggesting you spend less time on operations, only equal time on administration. That is a good start, but the balancing act between admin and operations department goes much deeper. Look out for the second article, later in this week, which provides more detail, of additional sub-departments under admin and operations.