Articles

How To Keep Your Business Simple

February 13th, 2011

Running a business should be a pretty simple operation if you peel back the onion layers, but for some reason business owners (including me at times) seem to want to complicate the heck out of it!    Work out what you are going to do for the customer, what they like and dislike, what makes you special, give them what they want at a price they are happy to pay, make sure everyone in the company is on the same wavelength, measure what you do and the job’s done!.

That’s not too hard is it? You wouldn’t think so and in theory that sounds great, but is that always the case?

Ways to ensure your business operates effectively

Remove the ‘someone’s going to do it’ approach and make people accountable and responsible. To do this you need to:

  • Identify the key tasks
  • Decide who is accountable for the tasks being completed
  • Decide who is responsible for making them happen
  • Decide how you will measure activity
  • Have an audit process in place and remedy if required

And it doesn’t matter if you are a business of 1 or 100 – the principal is the same.    To get a clearer picture of this I’d suggest you read Gerber’s E-Myth Re-Visited, one of the best business books for small to medium businesses.

Identify the key tasks

Specific tasks are the building blocks of any business plan. You can have all the theory, all the strategy, plans coming out of your ears, but unless you break them down into specific tasks that get completed the strategy will be nice words that never get achieved.

The task is a specific activity that an individual needs to complete. It will need to occur at a certain time on a certain day and most likely as a recurring event.

Example
You may decide that you want to review your sales targets, so the sales manager is accountable for ensuring activity is completed, sales are followed up etc, but there may be others in the organisation responsible for key parts being completed. But as the business owner, the ‘go to’ person if you have a sales query is the sales manager.

Who is accountable and who is responsible?

Remember if ‘somebody’ is accountable or responsible that means no one is. Accountability doesn’t mean that you have to do everything yourself, but when there is a query or when the buck has to stop, it needs to stop with the person that is accountable for the task being completed.

Example
An administration person may be accountable for ensuring any work variations are captured and charged to clients, but a project manager may be the one responsible for getting all the required information.

Measure the activity

You need to measure the activity to ensure firstly that it is completed or not completed and secondly if it is completed are you getting the results you want. There is no point doing various tasks if you don’t know what results you are getting. The test should always be the question Sir Peter Blake had for the New Zealand America’s Cup Team – ‘will it make the boat go faster’. If it does great, if not stop doing it.

Example
You may decide that you want to increase GP dollars. First of all you need to measure your GP$, comparing it if possible against another similar period, break the GP$ down into more specific areas if possible, compare against targets then look for solutions if it needs to be increased or the sales mix needs changing.

Audit Process

The final part of the process is to ensure you actually take time to stop and look at what you have done. Too often people do an activity, record the information but don’t stop to consider what they have done, what the information is telling them and if they need to remedy or modify the activity.

Example
You may have a focus on debtor control to drive cashflow. The audit process of all the tasks required to make debtor control an efficient part of your business may be having debtor control as a check/discussion at your weekly management meeting and then having a ratio that identifies the results. It may be that you allow a certain % of overdues to be in the 60/90 day period, or you have a target for your account receivable days and if you are within those ratios you are happy. If not, what activity is required to remedy?

In my next article I will look at how weekly management meetings are essential to running an efficient and profitable business, regardless whether it is just one person in the business or you are leading a large team.

If you would like any more information on the above article, or how this process may help your boat go faster, please contact John at PlanA Consulting.

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