Dec 142011

Question: how should you run a small business?

Answer: like a big one.

Most small business that are started don’t get beyond the 3-5 year point.  Many of those that do are still struggling along with only one or two employees and not making much profit.  Why does this happen?  Because the business owner hasn’t started and run the business with the right mentality and goal.

If you think about it, most small businesses start with a single employee – the owner.  The owner thinks he has a business but what he actually has is a job.  Why?  Because if he stops working then the income of the business starts to peter out and pretty soon there’s nothing coming in at all.  In many senses a start up business is just like having a normal job – but with less job security and fewer benefits.  If you’re working for a corporate and you stop showing up for work then pretty soon you’re not receiving your regular pay check; the same happens with a small business.

So how do we avoid this situation?

The first thing is to understand and comprehend what we’re talking about here, and have a plan to get through the job stage.  To do this we need to do a few things, one of which is to make sure we gain a clear understanding of all the work that needs to be done to make the business function correctly.  Regardless of size, every business has a few fundamental things that need to be done such as marketing, sales, accountancy, office admin, production, service delivery etc etc.

So, from the start, sketch out these different ‘departments’ and then write out what different tasks need to be achieved by each one.  For example, the admin department needs to open the office up, open and file the mail, deal with telephone enquiries, respond to emails, order stationary and a multitude of other jobs that are minor but still important to the business running successfully.

When the business starts up, you (the business owner) will be doing all these jobs yourself but the aim should be to start shedding load as soon as you can.  There are two ways of shedding the load – the wrong way and the right way.

The wrong way is to abdicate responsibility without direction.  By this I mean getting someone in (permanent, temp or virtual) and just saying ‘sort it out’.  The chances are that the person will not know what to do, or how you want it doing, and very soon everything will fall over.  You will then end up spending time telling and showing the person how to do it, so now you’re paying someone to do the task and you’re then doing it yourself – hardly a smart way of working.

It’s also wrong to try shedding load at high level at the start.

The right way is to make sure you write out a system or process for the work before trying to shed the load.  You do this by taking the tasks from the list you made earlier and writing down, step by step, all the details that someone will need to achieve that task successfully – with no input from yourself.  Once you have written the process down once then it can be used and followed by as many temps or virtual assistants are necessary without you having to go over it all again.

You start this with the low level jobs (eg office admin) as they are the easiest to systemise and are often some of the more time consuming.

As you shed load you are then able to spend more time on other, more important things – like moving the business forward, growing profits and greater success.

People often talk about there being a difference between working ‘in’ the business and working ‘on’ the business.  When you’re working in the business you’re doing all the mundane tasks like filing letters, doing the accounts etc.  That’s fine to an extent, it’s work that needs doing for the business to run, but it’s not really moving the business forward (and it’s stopping you from moving the business forward because it’s taking up all your time).

The more load you shed the more time you’re able to spend working on the business.  By this I mean thinking about the next stage of business growth, how the next marketing campaign needs to be set up, which market sector you’re going to attack next – all those things that help you grow.

I sometimes liken the ‘in’ and ‘on’ to a person walking down a road and constantly watching where they place each foot.  By focusing on where each foot is placed they don’t trip over but equally they don’t really know where they’re going.  What a successful business owner needs to do is get someone to keep an eye on where the feet are being placed so that the owner can look up and determine the best direction in which to move.  This can only happen by systemising the business and shedding the load.

One final tip – it’s never too early to start writing out the systems and processes required for your business.  It takes quite a bit of work to achieve and by breaking it down into small  pieces it makes the job easier.  Also, the likelihood is that when you realize you need these  systems you will not have the time to sit down and start them from scratch.