Running a company is easy when you don’t know how, but very difficult when you do.
Below are some activities that, when performed rigorously and consistently, tend to separate strong small business operators from those who are struggling. It is not intended to be a comprehensive list, and the list is not in any particular order. It is intended to provoke some self-analysis . . . to make you ask yourself if you are handling these activities as well as you should or if you might need to refocus on some of them.
Facing Your Problems – Do you accept responsibility for guiding your company through a changing competitive landscape, or do you blame your problems on external factors (the Chinese, the cost of energy, the economy, etc.)?
Focusing on Profit – Do you focus on top line sales growth to the detriment of bottom line profit margins? Do you excuse an erosion of your pricing with, “We’ll make it up on volume,” or “We’re doing this to gain market share,” or “We just need to get a foot in the door,” or “At least we’re covering a little overhead?”
Managing Cash – Is it King in your business? Do you carefully manage payables, receivables, and inventory to keep as much cash as possible in the business? Do your people understand the importance of managing cash and are they trained to do it effectively?
Planning – Do you have an annual plan? Do you use it throughout the year as an essential tool for managing your business?
Managing Profitability – Do you know which products (or services) are the most profitable and which are the least? Do you know which customers make you money and which do not?
Delegating Effectively – Do you surround yourself with talented people? Do you give them important responsibilities and the authority to exercise those responsibilities?
Making Decisions – Is there a decision making process in place that prevents “analysis paralysis” and assures that important decisions will be made without needless delay?
Studying Financial Statements – Do you study your financial statements each month and thoroughly understand the story they are telling? Do you share appropriate financial information with your key managers?
Using Key Performance Indicators (KPIs) – Do you use them to keep a daily/weekly hand on the pulse of the business? Do your key managers know and understand the KPIs you’re watching, and are they watching them as well? Do you chart them using a 12-month trailing average?
Communicating Effectively – Do you hold weekly 1-to-1 meetings with your key managers? Do you regularly communicate with the rest of your organization through memos or newsletters, all-company meetings, individual department meetings, or “brown bag lunches?”
