So many times I look at a small business and think the owner is doing well, only to discover on talking to them, that they are actually earning even less, when their income is converted to an hourly rate, than their top employees. You see, the challenge that every business owner faces is that they are so busy working in their business that they cannot see the potential of their business.
The good times of the seventies where anyone could open a business and succeed are gone and I don’t believe they will ever return. It’s not whether the economy has or will not recover. It’s that new business owners today must be aware of and are controlled by an ever increasing plethora of government rules and regulations and face competition from large conglomerates.
Take the example of a one stop financial operation that existed in the seventies and eighties.
A client could have all their financial, legal, insurance, superannuation and investment (real estate, share market and business) needs met by one group. To provide this service, there were four partners (an Accountant with a real estate license, a registered Stock Broker, a Solicitor and an Insurance Broker).
In today’s business world, a similar operation would require at least 20 qualified specialists. Five Accountants (general practictioner, superannuation specialist, trusts specialist, company structures and tax specialist), about the same number of specialist solicitors, several investment specialists, a money manager, a financial planner, a finance broker, an insurance adviser, an assurance specialist and an experienced real estate agent with a team of professional advisors.
If you were to invest in a real estate development, you would take it for granted that you needed to hire the services of a Project Manager to advise you or to coordinate the architect, draughtsman, town planner, finance manager, construction manager, marketing manager, sales manager etc.
When we get involved in business, most of us do so with little or no assistance at all. Yet a business as an investment can and does, when well managed, outperform every other type of investment.
I never cease to be amazed at the amount of wasted effort of some business owners. They still do all the mundane jobs that could be completed by someone else. Think about your business!
What is the cost of this wasted time? What would you earn if you used this time effectively?
I know you think you are the only one who will do the job correctly. That’s an interesting belief. The fact is, that someone else is probably able to do the job more effectively and efficiently as it is the only job they have to focus on.
Meanwhile, instead of following up on last weeks quotes or network contacts (what’s that, you may well ask) or phoning existing customers to see if there is anything they require, (if you haven’t talked to them inside their buying cycle, they’re now someone else’s customer) you are bogged down doing mundane time consuming, physical work at about $5 an hour.
How much time do you spend developing new marketing strategies, analysing test and measure results, instigating relationships with other businesses and the host of other necessary activities that make the difference between a successful business and an average (going broke slowly) business.
How do you make more time and what is the difference between you and the average franchise? The answer is simple – systems.
The systems issue is not just applicable to large corporations, but as a key success factor for all small business. The benefits of being systemised are many.
Firstly, it ensures operational integrity in that everything fits into place and on time, thereby offering efficiency and cost minimisation, which all equates into lower prices which both influence competitive advantage.
Secondly, the soundness and capability of the organisation’s infrastructure facilitates (and even dictates) the scope, nature and effectiveness of the marketing strategies capable of being pursued. Finally, its streamlined smooth functioning greatly impacts on the cultural aspects of the business, by either enabling or frustrating human performance plus motivation and moral.
Take the challenge and look at your business as an investment, not just a job or somewhere to pass the time until you win Gold Lotto.
Look for a return on your invested capital as well as an hourly rate of pay in excess of your top employees.
Review what happened last year, analyse the results you achieved, see what adjustments you need to make to obtain the results you require, plan next year and look at what assistance you require to obtain the desired result.