Managing a business is complex, hard work. Business owners cannot wear every hat, so inevitably it’s easier to play to our strengths and focus on what we’re good at. There is nothing wrong with this, but it does mean that other parts of our businesses might need to be managed better.
Of course, nobody ever wants to admit their business needs better management. As business owners, our businesses are like our children – we think that we know them better than anyone else, and always try our best to look after them. That deeply emotional connection, especially when the business is our “firstborn”, can make it really hard to see when we need to manage better. It makes us feel like we are a bad parent.
At the Advisory Collective we have no desire to make anyone feel bad about themselves, as a business owner or as a person or parent, but we do want to help where we can, so we’d like to share the “Six Signs” that we look out for, based on our Six Pillars Strategic Framework:
1. Your Strategic Plan Has Not Been Successfully Implemented
Good businesses invest in creating a great Strategic Plan. However, the implementation of that Plan is arguably one of the toughest management challenges. Many business owners are too easily pulled in multiple directions, usually working more “in” the business than “on” it.
Yes, your Plan may need to shift or pivot depending on unforeseen internal and external factors – that’s all part of agile management. But if you are constantly resetting your business strategy, it probably means you didn’t design the Plan well enough, or you are not managing the execution of the plan properly.
2. Your Sales Are “Flatlining” or Declining
You might already be the established “Market Maker” or holding “Market Leader” pole position in an increasingly competitive market. Or you may have enjoyed a quick rise to fame, but have not been able to maintain growth after that surge.
But managing a business is not just about “holding on”, it is also about continuous improvement and innovation. Great management fosters innovation across the whole business, and not just when it is first growing. Combined with good people and financial modelling, continuous improvement will help business grow sustainably. Great managers set up feedback loops with customers, ensuring their needs are met while investing those learnings into new product development.
3. Your Team are Not Engaged
Your people can be your greatest asset and opportunity, or your biggest cost and risk. If they are currently behaving like the latter, it shows you that they are not engaged in your business.
Disengagement can stem from multiple reasons, but will inevitably harm your business. Some causes to consider are:
- They are the wrong people for your business – they might not be aligned with your business’s purpose, values, or direction, and you may need to manage recruitment better.
- They are the right people for your business, but their roles need to be reviewed or they may need better performance management, eg in the shape of better performance appraisals, consistent weekly catch ups, or a coffee from time to time, to better understand what motivates them and how to make good use of that.
4. You Don’t Know Where the Money Goes
Many people work incredibly hard with the hope that it will translate to the bottom line, but don’t plan or manage their finances well.
Rather than feeling disappointed with your profits, become savvy with forecasting your revenues, gross margin, overheads and cash flow.
5. Your Business is Growing – But Your Profits are Lagging
You may have heard the common quote: “the definition of insanity is doing the same thing over and over again and expecting a different result”.
It’s critical to map your business processes, capacity and constraints, and understand the role they play and the impact they can have on the efficiency and profitability of your business. Once done, you can take active steps to manage your operations better.
6. You Have No Idea What Your Risk Profile Looks Like
Risk management sounds technical, something that only big corporations should think about. However, this is the silent killer of most small to medium sized businesses, largely because hidden risks “bubble away” under the surface, until one day one inevitably emerges, and your business may be fatally affected.
Good managers consider both opportunities and risks – and most risks are actually “hiding in plain sight”, if we take the time to look for them.
Managing Your Business Better
While these Six Signs are very common, there are of course many other potential management weaknesses, and every business owner needs a way to identify and address them.
Our Business Health Check is a great way to identify both opportunities and risks for your business, and your Strategic Plan should provide a performance management framework across each of the Six Pillars of your business, based on your goals, actions, accountabilities and measures of success. You may also consider implementing a balanced scorecard to keep track of your management progress.
Remember, we believe that having “gut instinct” about your business is great – the same way you may use that to be a good parent. But great businesses need great management, and that requires honest reflection and the right management tools and habits.