THE CEO GUIDE FOR MANAGING SMALL BUSINESS GROWTH
Is your business ready to take off, but you don’t know what to do? Do you have an established business with the ability to attract and retain customers? Is your business struggling to fund growth and stuck in survival mode? If so, your business is moving towards its growth stage, and it is time to do some planning. Use these steps to help guide you to ultimate success.
1. Implementing systems.
List your ideas in order of importance, ease and time to implement. Start with those that are first on the list. Do not make too many changes at once. If you have several simple changes, you can implement two or three and take an assessment of each change every three months. Make changes as necessary to ensure that you are not continuing with a bad strategy. If the idea is going to take time to implement. Once you review the list of resources necessary to implement, began making a timeline for implementation. Make a weekly or monthly set of tasks and timelines to help guide you through the process. This will require you to be accountable to yourself and your business. Give the list to another employee or business partner (friend) and make a schedule to follow-up to make sure that you are on task. This is the stage that many ideas go into the drawer never to see life again. Stay focused!
2. Increased customer demands.
I am often surprised of many small business owners’ unwillingness to adjust their business models. The assumption that everything is working just fine and blame the competition for the loss of business. While most customers have “shiny object” syndrome, there is a reason why the shiny object keeps their attention. The most obvious reason is that you gave customers the option to look away. Based on the changing needs of your customer, you should be able to adjust.
But to know what needs adjusting you must talk to your customers. Simply asking questions about why they do business with you can make a big difference. If the reason is convenience and another store opens next door to you, then there is nothing to separate you. Therefore, it is important to hit your customer on many levels. If you have a small retail store, simply asking questions during checkout can go a long way. It is cost effective and does not require the customer to do anything extra. If you have a service company, you have more connection with your client and you can ask their thoughts about your business.
3. Creating a Scalable business.
Can you replicate this business and make it grow? Can you open up another location or create additional revenue streams doing the same thing in various places? If you are the one that has to do it, the answer is no. You need to have systems in place to grow your business. If the systems only exist in your head, that is a problem.
What aspects of your business are repetitive? You should make an effort to automate them as much as possible, so that you can focus on growth related activities. If you can make certain aspects of your business “plug and play”, it will help you to step back from the day to day operations and focus on the business as a whole.
This goes back to the planning concept that we discussed earlier: you have to be willing to take the time to make this happen. If you do not have the time because you are so busy running the business, then your business is never going to grow. You need to focus on solutions that will help you scale. Not every option is right for you; the only way you are going to find the right solution is to take the time to focus. Putting together multiple systems that do not work is just as bad as having no systems at all.
Focus on your core strengths. If you are the idea person in your business, then create the ideas and let other people put them in place. If you are the money person, then control that and let others focus on various aspects of the business. I am not suggesting that you become totally hands off—I am saying that you need to think long term versus right now.
4. Hiring the right people.
Dealing with customers is difficult, dealing with employees is challenging. While there is no way to have all employees function in the same way and act appropriately there are things that you can do to get off to a fresh start.
First, do a self-assessment. Before, you get started you need to understand yourself. I am not suggesting that you go to a psychologist, but that you take a leadership course to determine how you lead. This is important because different people need different types of leaders.
If you are a micro-manager, someone who is self-sufficient and can work on his/her own is not going to appreciate your “assistance.” If you are a hands-off leader, then someone who needs a lot of guidance is going to drive you crazy. This is important because you need to understand who you are before you hire someone who is not going to fit well into your organization.
Second, decide on pay. This is tricky. Most small businesses are struggling to pay its owner much less an employee. You may gravitate to paying minimum wage and that is completely understandable. However, minimum wage does not attract good and loyal employees. Minimum wage attracts those who need a job right now. It will lead to high turnover. If that is okay with you, then minimum wage will work for you. If it is not okay, then you should consider increasing the wage level.
Consider paying 2-4 dollars higher than minimum wage. If you have a sales team consider giving them bonuses for bringing in business and helping you get the word out. There is a balance to everything. You cannot throw money at bad employees, so you need to evaluate whether the persons being hired are a good fit.
Which leads me to my third point, find good employees. Easier said than done, I know. I have had good employees and I have had bad employees, and I did not know the difference until I hired them. Sometimes that is the case. But the more you need to rely upon someone to help you with your business, the smaller the pool you want pull from. A staffing agency is slightly more expensive, but it gives you an opportunity to work with someone before you hire them full time. Also, you do not have all of the responsibilities of an employer such as payroll. Also, make nice with people that you have enjoyed working with in other settings. Utilize your connections to find the right person for your business.
Finally, training. This is something that small businesses fail to do. Thinking that it takes too much time away from the business or that it is too costly, small business owners do not spend enough time training employees. Training does not have to be all day. It can be a small 30 minute session that reminds employees of methods of doing business. If a new problem comes up, you have can employees do a short presentation on how to prevent those problems. Make the employees a part of the training sessions.
Everyone had their own skill, agendas and talent. They were able to put their egos aside to focus on the team. Everyone cannot be a star. Sometimes doing what you do best, brings just as much reward. Making sure that you perform to your highest level is the only way the team will be the best. At the same time, you must know that everyone as a role to play. Teamwork and collaboration among rivals is the best way to ensure overall success.
Do not feel bad because you have difficulty retaining employees. You are not alone. Smaller businesses become great training for higher level positions. Big business can offer more money and more benefits than small business. That is just a fact. But loyalty in a small business can be obtained by making sure that you start off with realistic expectations and providing opportunities for employees to grow.
5. Financing your growth
When opening a 2nd or 3rd location, you should first make sure the original location is making significant profits. There will be a significant financial strain while the new location is growing, therefore the first location needs to be strong financially.
Next, you should make sure you have proper management support.. If you have someone that has been with you for some time, begin training them on opening the new location or managing the first location
Depending upon the cost to open the new location, there will be significant expenses and debts incurred up front. So for instance, if you take out a lease on a new location and hire employees for the new location. You may experience a loss in profit because the new location is not earning enough to support itself. Therefore, the first location is supporting the second financially. This drain, may cause the business to become cash poor and suffer cash flow problems.
Spending more or spending less is a difficult choice to make. I think the more appropriate decision is knowing where to spend more and spend less. You should focus on “investments” that will make your business more efficient and marketable.
Perhaps your business needs new equipment that will make it more competitive. Spending more in this area could benefit you in the long run even if the result is not immediate. Such investments can also mean that you end up spending less in wasted time and money because you can be more efficient. You can finish projects in a shorter amount of time or have less employees to complete a certain task.
Spending less in wages, interest or taxes can free up additional capital. Auditing your own finances to find where you are “wasting” money can be a helpful tool to keep you from being cash poor as you invest in your company. Working with trade associations or collaborating with other small businesses in your industry can provide more bargaining power when negotiating with vendors.
At the end of the day, you have to be willing to adjust, adjust and adjust some more. That does not mean that you need to change everything good about your business. It just means that you need to be willing to make changes (as necessary) to help your business stay competitive with larger businesses.
6. Managing the team.
You need to change how your business operates. That may mean culture and climate, it may also mean executive management. Are you the best person to continue running the downsized business? Is it time for you to start grooming someone new?
As a business owner, you need a team of professionals; attorney, accountant, financial planner, and coach. You also need people that will help you build and grow the business. You may not have enough money to fill those positions right now, but you should be thinking about it. You may even have some people in mind, talk to them about what you are doing and see if they are willing to help.
Your team should be people who are knowledgeable about different aspects of the business. Figure out your own strengths and weaknesses. Start with the weaknesses and get to know people who can help with those things. In areas that you are strong, get to know others in that area as well. They can become advisors and help you work through issues that you could not do on your own. No one knows everything, it is always good to be able to work through situations with other people.
Hiring and retaining good employees are essential to small business growth. Many small businesses lack the resources to hire top talent and find themselves fighting for scraps in the employee gene pool. Small businesses tend to be the entry point for the unemployed and underemployed. On the rare occasion that a good employer is hired, they tend to leave for greener pastures.
Many small business owners are reluctant to train employees for fear that they will steal their “secrets” and start a new business or worse go to the competition. But this fear, although grounded in reality, is what prevents a business from truly thriving and retaining good employees. Instituting a good training program will help you to weed out the bad employees and keep the good ones.
Start with an employee manual.
Even if you only have one employee, you should have an employee manual. This manual should serve to provide a minimum set of expectations between the company and the employee. It is a guideline on how an employee should act inside the workplace. It is also a set of expectations of benefits and opportunities for the employee.
If an employee is acting inappropriately, you may use the employee manual to remind the employee of certain expectations. Disciplinary actions can be addressed in the manual as well and employee promotions. You can also set guidelines for employee evaluations. Good employee training starts with a well written set of expectations.
Understand what you want and need your employees to do.
One complaint that small business owners have about employees is the lack of initiative. However, the term initiative is really code for taking on more work without being instructed. I guess in some ways that is every business owner, big or small. But it is really significant in a small business where wages are lower. Therefore, it is important to know what you actually need your employees to do.
There is nothing wrong with wanting your employee to take some initiative, but you cannot be mad at him/her if they do not. More importantly, if there are things that are integral to their job, i.e., answering phones and setting appointments. Specify, how you want things to be handled. However, if the employee has a “better” system, allow the employee to try new things. This allows those who want to take initiative to do so.
Make the training interactive.
Depending upon the type of business, you may need to have very specific and formal training. If your industry is highly regulated, then videos and manuals may be necessary to complete useful and accurate training. However, you can add opportunities for “show and tell.” Provide a half day training that allows employees to do their job and ask questions. During this time, employees should have your undivided attention. If you train during normal work hours, schedule your time so that you are available and not distracted by other business.
You have to expect a learning curve. Just because something is easy for you does not mean it is easy for everyone else. If you cannot provide clear instructions on how to do a particular task, you cannot be angry when the employee doesn’t do something the way you would. The more guidance you can give in the beginning, the better it will be in the long run.
Schedule a training at least once a year.
Preferably, it will be more than once a year. But if you are small with one or two employees, training can be less frequent. Allow employees, to explain how they do their job, what issues they are having and what they would make. Set a date for the training for a certain date each year and schedule it during the off season. This way it is sure to get done and it is not arbitrarily skipped due to other matters.
If you have employees or thinking about adding them to your business, start the training process early. Setting the tone from the beginning is essential to a good long term working relationship.
7. Increase streams of revenue.
Gone are the days of having one big client and one service or product to make you successful in business. Yes, you can make quick money doing anything. Long term success? Not so much. Especially in this economy, small businesses need to find ways to create multiple streams of income. This can be done through diversification. For the small business owner, this means creating or offering new products and/or entering new markets.
Product Diversification.
Sometimes you can offer various product types and forms. Think of an author. Their one book may come in audio, e-book and print. Those are various forms. But they may also take that same book and make a workbook, create a video series, or offer seminars. This is routinely known as repurposing content. This is a quick and easy way to diversify product.
Virtual vs. Physical. There are some that only offer online product and some that offer physical product. Another way to diversify product is to create something new that fits the same type of audience. Take that same author, as discussed above. Now let’s add wearables. T-shirts, mugs and bling that may pair well with the current audience and create a new audience.
Audience Diversification.
Yes, I know that you have spent several months, maybe years figuring out your target audience, but you can have more than one. That is especially true if you have multiple products. Different people react to different products. But think about how you can reach a different audience. If you only offer products and services to women, can you also offer it to men? Or, can you segment your audience. Business women vs work at home mom, etc.
Business diversification.
There are business, friends and business partners. Then there are strategic alliances. The concept of alliances (aka joint ventures) is usually limited to, marketing when it comes to small business. But you can use them for so much more. How about packaging your product or service with another company? Even if you take a little less money per unit, you can make that up with volume.
In addition, you can consider licensing your product or service or vice versa. This will allow you to use another business or brand to grow your customer base and expand your revenue. It also increases the ways that your business makes money.
Ultimately, your business can survive the ups and downs of the economy if it is successfully diversified. You do not have to offer 100 different products or services to be profitable. What is necessary is that all of your income is not coming from one particular source. Whether it is a product or client, if one goes belly up, you should be able to rely on something else to keep the business afloat.
