I've spent much of the last few years working with small business owners. I have found it immensely fulfilling and a real privilege to work with so many dynamic and decent people who have achieved so much.
At the same time we know it can be very lonely running your own business. There are very few people you can turn to. You don't want to worry your spouse or family members. You don't want to impose on your friends good nature. You can't talk to staff without being indiscrete or seeming indecisive. It is difficult to know which of the many consultants or advisers out there you can trust.
As a result lessons are often learnt the hard way through things going wrong.
As a broad generalisation I've found that owners fall into one of two categories which I'm calling Type A and Type B.
This is where most owners start off. They love being indispensable. They get a buzz out of firefighting and fixing things. They love being independent. Many went into business because they hate routine, being tied down, being told what to do. Ironically they often end up as the hardest working and worst paid people in the company. Waiting for the big break which always seems just round the corner.
Many hated being managed by others so are often poor people managers themselves. They either micro manage or abdicate or (worse) oscillate between the two. (There is a massive difference between abdication and effective delegation.) There is no obvious consistency so the team finds it challenging to know what they should do or how they should do it.
More often than not they start as Type B. Something happens. Something which makes them realise they have to change if they are going to build a profitable and sustainable business. The first step is on the road is effective business planning. Just the act of planning can be transformative:
- It is a dry run. You can see what works, what doesn't work and what you need to do to increase your chances of success.
- You can anticipate and mitigate potential issues increasing your chance of success.
- Your can make sure the activities of all parts of the business are aligned.
- Your staff know and understand what is expected of them. They are more motivated and engaged.
- You now have a benchmark to measure progress against. By understanding any reasons for differences to plan, you can quickly respond. This allows you to take advantage of new opportunities and changing what is not working. And to do so far more quickly and effectively than your competitors who haven't planned.
As a bit of fun I've put together a caricature of the two types. It's not serious but does I hope contain an element of truth.
The facts speak for themselves
- 90% of SMEs that do not plan do not see their fifth birthday.
- 95% of successful SMEs plan their success (Growth Accelerator research into hypergrowth companies).
What do you think? Does this fit with your experience?