Are there times that you feel you are working 24 hours a day on your business, but do not believe that you are getting what needs to get done accomplished? Do you at times feel overwhelmed? If this is the case, you are most likely experiencing what most small business owner have experienced at some point with their business. This experience is usually a symptom of working too much “in” your business versus “on” your business.
It is not uncommon to have worked to grow your business to a certain size, but become stagnate and have difficulty in jumping to the next level of growth. If you are trying to figure out if this might be you, then here are a few characteristics to determine where the differences are regarding working “in” versus “on” your business. This list is not all inclusive and you can probably add a few lines yourself.
As a business owner if find you are spending too much time “working in your business” and not enough time “working on your business”, you can turn this around, but understand this won’t happen overnight. In some cases, it will take letting go of some of the power and delegating which means you need honest and capable employees. You might have to employ a different mindset which at times is hard, but will be key to your success. As a business owner you need to focus on the top line revenue, margin and expenses and make sure that you have the right people, processes, and systems in place in order to help you manage this and make the right decisions.
Have you ever sat in a meeting discussing what to do next and the realize that you keep having the same conversation each year, yet nothing seems to get done?
There is a methodology that can ensure things get done. The methodology employs many tools such as Visioning, Grounding, Gap Analysis, Strategy Maps, Balanced Scorecard, Budget Programming, Organizational Alignment, and Performance Management.
The process always starts with Visioning. This is a highly futuristic discussion; it is all about what you want to be when you grow up. Assemble dreamers and technologists for this exercise, as it is important to create a vision that is unconstrained by the issues of today. Companies that create and work towards a strong and succinct vision, continuously enhance the value of the organization for its shareholders.
The next step, “grounding,” deals with getting back to earth, back to reality. This process step scans your organizations by undertaking a situational analysis of your current state. At a high level, it asks what is working well and what is not, and ends with analyzing your current financial state and position, and customer base.
Now that you have a vision and are well grounded in your current state of the nation, it is time to determine where the gaps are and itemize them. There will be a list of differences between where you are now, and where you want to be. You also need to assess what forces are working for you, and what forces are working against you. All of them put together; this becomes the change agenda, a high-level plan for achieving their desired state.
A strategy map describes how an organization intends to create value for its shareholders. It maps how the company’s intangible assets are used to create sustained shareholder value. Processes such as innovation, customer service, and support, can become highly differentiating as companies seek competitive advantages. The strategy map visually represents how the intangible assets of a company (Learning and Growth), through its internal goals and objectives, provide value to customers, creating a sustained financial performance which enhances shareholder value. The strategy map, in this case, emphasizes “what” is important to the organization, and what must be accomplished.
“What gets measured, gets done.” Measurements are at the root of motivation and control. The Balanced Scorecard provides a mechanism that uses the Financial, Customer, Internal, and Learning and Growth perspectives that map how strategy is translated into action using lead and lag indicators. Lead indicators are often concerned with ‘inputs,' while lag indicators are measurable (observable) ‘outcomes.' The logic is, if I get lots of ‘leads,' I will achieve my ‘lags.' When developing the balanced scorecard, a check to ensure current operations, as well as strategic objectives are achieved.
Wondering why things didn’t get done; yes, you had the vision; yes, you are well grounded; yes, you had the strategy; yes, you had the metrics; but, no, you did not allocate sufficient resources to execute. It is important to segment and identifies strategic expenses. In the book The Execution Premium (Kaplan, Norton), the concept of “StratEx” is introduced; “Strategic Expense.” There is CoS (Cost of Sales), Opex, CapEx, and now there should be StratEx.
Budget Programming maps the one-year financial goals and objectives of the company to important initiatives (strategic and operational) which are actioned by your intangible assets known as employees. By identifying key initiatives, the Capital Expenditure, Operating Expenditure, and Employee Expenditure (Intangible assets), and then labeling these Strategic Expenditures, you set the priorities of the company for the long term. Budget programming ensures cross functional, organizational alignment of spending, resources, and priorities. Budgets need to identify “’who’ needs to do ‘what,' to ‘whom’ by ‘when,' and for ‘how much.'
When determining the ‘who needs to do what, to whom, by when, and for how much,' it is important to ensure organizational alignment. The expected outcome is the right organizational structure with effective and efficient processes operated by knowledgeable and skilled employees (intangible assets).
Once the Budget Programming and the assessment and assignment of all the resources in the organization have been completed, the question is can the budget be rolled up and approved?
Business Performance Management
The most important step in the process is the business performance management aspect of running the company. The tasks, objectives, metrics identified in the budget, balanced scorecard, and strategy map all come together to create a system of performance management. In this system, daily, weekly, monthly, quarterly, and annual meetings complete with agenda and measures are delegated (not abdicated) to management teams and their staff. Reporting processes are put in place that advice management at all levels of the company on how well the strategy is being executed.
You can see how employing a compliment of many tools such as Visioning, Grounding, Gap Analysis, Strategy Maps, Balanced Scorecard, Budget Programming, Organizational Alignment, and Performance Management can guide a company’s management team to ensure “things get done.” Bypassing any of these steps can quickly become a cause for concern, since critical information may be missing, and weakened by holes in the foundation upon which the plan rests upon.
What Is Business Performance?
Business performance is management and analytic processes that allow you as the business order to achieve your defined goals. So with that said, to improve your business performance you, you have to an overall business strategy with defined goals developed for your business.
What Affects Business Performance?
How a business performs is usually reflected in their overall financials. There are some businesses that make money despite themselves, but this is not usually over a long period, as a poorly operated business will eventually have an effect on their financial performance in the end. A well-performing business will operate well across all areas of their business, will have an overall business strategy and direction defined, will have documented processes and procedures, and will follow best practices in each area of their business. They also will measure and track their performance, whether that is their financials, sales forecasts, return on their marketing efforts, or their customer retention.
Importance of Strategy
There are times when we talk to a potential client; they are turned off when we tell them our focus is on the strategic side of their business. They usually say - I am not interested in that I just want to get help hiring employees, creating marketing materials, or getting sales channels. The problem is without a strategy and an understanding of where you are going and the costs associated to get there; you are not sure if the task you are looking to do will help accomplish your business goals. You may find out you would be spending money and time in the wrong place. You have to have an overall strategy for your business. If you don't, you most likely will not succeed long term, be able to secure financing from a bank or investor, or be able to sell the business down the road, even if you can muddle through. Strategies are not there to bind you, as strategies in businesses change on a regular business. They are there to guide you to help your reach your goals.
Defined & Documented Processes & Procedures
If there are not processes and procedures within a business, that is when chaos starts to take over. It is fine when you are a Soho business as you are doing everything, but the minute you have one employee or have someone besides yourself performing work, it is at that time you need to have defined and documented processes and procedures. Whether that is a credit and payment process within finance, an employee handbook in human resources, or a sales process to follow, all will help you manage your business.
There are best practices in every area of a business. For example in HR, one best practice is to have defined job descriptions for your employees so they understand the job they are performing. Another is to make sure the employee knows who they report to and to ensure that they receive regular feedback and performance evaluations. For operations, one best practice would be to have the right systems in place to track what you need to within the business whether that be financial information, sales, or employees. An overall business best practice is to have contracts in place such as employment contracts, vendor/supply agreements, or reseller contracts. Contracts written or reviewed by lawyers protect you and your business.
Measuring & Monitoring
It is important to be able to measure and monitor your business performance. When within your business you have a strategy in place with goals defined and how you plan to get there, defined and documented procedures, and utilize best practices, it becomes easy to be able to measure and monitor your performance. For example, if you have a goal of achieving 10% growth, it is important you can measure and monitor your success. If you have a marketing plan, sales personnel with quotas & contracts to support generating that level of revenue, a credit strategy where you collect down payments and collections for those that do not pay on time, and a proper financial system to track your revenues and expenses, you are able to monitor your performance. Even if you didn't reach your goal, you can tell exactly where there were issues in not meeting the goal. You may not have gotten a return on your marketing; your sales personnel may not have met their forecast or your accounts receivable department was not able to collect on all sales.
No matter where you are in the business life cycle of your business, business performance is important in making sure you are business is running as effectively and efficiently as possible where you can reach your goals. If you are wondering how your business is performing, get your business performance score above. If your business scores 220 out of 285, you are doing well
RK Fischer & Associates