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December 22, 2008
The 1 Secret Small Businesses Must Know In Order To Survive And Prosper
Succeeding in business doesn't happen by accident. It is hard work and perseverance that produce success. We often forget that it takes a LOT of effort to make a company successful. It also takes some luck and good timing. It's been said that luck is what happens when preparation meets opportunity (George Allen - NFL football coach). If that is true then luck is nothing more than hard work (strong effort and accurate preparation) while waiting for an opportunity to present itself.
You've probably also heard that if you fail to plan then you plan to fail. This cliche is actually pretty accurate when it comes to business. But why do so many business owners and managers hate preparation and planning? Maybe hate is too strong. Let's try "avoid". Well, planning usually involves a lot of detail work and many managers don't like that kind of effort.
But planning is not the secret referred to in the title of this article. Planning is a necessary part of running a business. You have to do it. It's not negotiable. If you won't do it then you put your business in the VERY HIGH RISK category. I'm assuming you are reading this article because want to find a tool that will help you run your company better, make better decisions or improve some aspect regarding your company. What you read below will do just that but you have to take action or what you read cannot help you. That is where planning, perseverance and effort are needed as noted previously.
Are you ready? The great secret is: You don't know what you don't know. Failing to realize this fact and make adjustments is a very good way to ensure you make mistakes. If this is true then what does it mean in practical terms?
Let me offer an actual example. When I was working as a business consultant, I specialized in turn-around consulting. I was hired by a company that was a fabricator of metal devices. The first meeting with the owner was typical. I asked a lot of questions to uncover details. When I asked about the team, he said they were skilled but were very inefficient and should be producing a lot more. I asked, "How do you know that to be true?" His answer: "I just know it."
The company had repeatedly missed the estimated budget and deadline for each project. They routinely used over-time hours (often over 30% of payroll) to bring projects to completion by the deadline. Obviously there was some gap in information or communication that resulted in missed deadlines and a large number of over-time hours, and I had a feeling that the reason was not inefficiency of the team.
This is where I prove my point. The company had the estimate budget and deadlines for all projects in one database. They had the actual time for every hour worked by every employee on every project in completely different database. They did not have a consolidated report that merged labor, resources, and deadlines into one format. The result was the managers could not make informed decisions or view all projects holistically.
To correct this, I created a single page (it was a big E-size print out) that showed what they budgeted, current status, and remaining days and resources for all projects. With this single page they were able to move resources as needed to meet deadlines without overtime. Then they could reallocate resources to ensure future projects were performed timely. The result? Overtime was taken to 0, that's ZERO, in less than 4 weeks and they made their deadlines moving forward.
The managers of this company didn't know what they didn't know. Practically, the manager of a company needs accurate and timely information with which to make decisions. It is imperative to have whatever information is necessary, whether it is cost data, project data, time data, sales data or any other information that is critical to good decision-making.
Technology, software and hardware, can provide frameworks that facilitate collecting, sorting and displaying mission critical data. How is it possible to plan and prepare as discussed earlier if accurate and timely data is not available? Well, it's not really possible. I submit that you cannot plan with any accuracy if data is faulty or missing. Remember, failing to plan is planning to fail.
All too often managers make decisions primarily based on "gut feel" without good metrics to substantiate the "gut feel." You want your business to improve and your decisions to be better? Decide what data points you really need to know to make an informed decision and seek out technologies and methods to provide it to you in a reliable and repeatable manner.
Try to use the many-to-one concept for collecting data. For example, let's say you have 5 salespersons and you would like to know "how things are going". You could take several approaches from having meetings several times a week to talking with each salesperson frequently to waiting to see how things turn out at the end of the month, etc. Most of these methods take a lot of time and are usually subjective. They also take the salesperson away from selling.
But imagine you build an Excel spreadsheet that contains daily activity for leads, calls, prospects, targets, etc. This spreadsheet has the same format for all salespersons. Imagine you put it together so that each salesperson entered their daily activity on their sheet. It would be very easy to pull the data from each sheet and aggregate it to a top sheet for your viewing. You could easily see where each salesperson stood on targets you defined for them. And the benefits of this approach are fantastic. Taking just a few minutes, the salesperson enters data before her or she leaves for the day leaving more time for selling. You do not need to have a meeting to gather the data, the data is automatically aggregated for you and you get to see the individual as well as the team totals. With that kind of ammo, you can make informed decisions because you know the details and you know them early in the game. If a particular salesperson isn't hitting target you know it immediately and have time to make a decision or adjustment.
In short, you must know what you don't know. Put processes in place that spread data entry across many resources to keep the burden light. Apply technology to give you the data reliably and daily. It costs less than you think and is worth its weight in gold.
To see more from Charles, please http://qvinci.wordpress.com/
Posted by Charles Nagel at December 22, 2008 12:45 PM
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