Written by:
Michael Burdette
There are many small and medium sized businesses that have extraordinary products, ideas and inventions. One only has to watch ’The New Inventors’, produced by the ABC on Wednesday nights to see what I mean. Why then, do so few really make the grade?
My experience with small businesses over the past 10 years is that many lack the ability to think laterally, to plan and to seek professional advice. There are many statistics relating to the number of start up businesses that are still around after 5 years, but what is more interesting and relevant is that there are 3 thresholds which seem to consistently cause smaller businesses to fail. The first is the $1,000,000 sales milestone, the second $5,000,000 sales milestone and the third is the $10,000,000 sales milestone. It is no coincidence that these milestones are significant, but why?
When many people start a small business they are enthusiastic, full of energy and optimism, but they exercise a “bull at a gate” mentality. Everything is in their heads; they control everything and all decisions, no matter how big or small, are made by them. By the time the $1m milestone is reached they are usually exhausted, overstretched and disillusioned, spending most of every day in reactive mode rather than proactive mode. By now it is usually too late to close the doors, because they are in debt up their proverbial armpits (all secured against the family home)! The pressure becomes enormous with the final outcome being most often that they will lose everything, including their self-confidence. Those who have been smart enough to overcome this hurdle now need to overcome the next one.
As you get closer to $5m in sales, the more important it is to set up a proper structure within the company that includes;
The reality is, unfortunately, that far too many business owners, who breeze past the $1m threshold, start to get too cocky and believe too much in their own self-importance. As a consequence, they still want to control everything, be involved in everything and invariably start discounting to accelerate the sales!
These businesses end up with disgruntled staff, unhappy customers, suppliers who stop supply and a bank manager, who used to be so pleasant turning feral! As for systems and proper reporting, well they haven’t got time now, have they? This is a killer trap, what has happened is that the owner has become so caught up with working in the company that no-one is actually managing it. This is a definite recipe for disaster. Conversely, there are those who followed the guidelines to success as outlined above and breeze past the $5m threshold, but can they survive the next one?
I won’t dwell on this as most readers would fit into the first 2 milestones. Fundamentally though, the closer you get to the $10m threshold the more imperative it becomes to implement the following:
So far we have only really looked at structure, strategy and delegation when growing your business through the milestones.
For more information on these issues look at the book ’Contemplate Your Business Navel’, it is a very simple down to earth book on how to structure your company, managing cash flow, product analysis, budgeting and labour efficiency. It deals with the fundamentals of a successful business.
The lack of lateral thinking in so many small to medium businesses is a major contributing factor to keeping them small and cash strapped! Simple issues like marketing are often a ’no brainer’ in the small business community. As I said in the beginning there are so many great products and ideas out there that finally amount to nothing.
When have you ever studied demographic information before developing a marketing plan?
Have you ever called in a professional to investigate Web Marketing?
How much research have you done to discover other markets and/or marketing opportunities?
Have you ever thought out a marketing plan or strategy?
These are such obvious questions, but how many actually implement these strategies?
There is an economist in Canberra who has developed fantastic tools and workshops for micro economic information to assist in the marketing of goods and services for small businesses. These are the types of tools small businesses need to progress.
The web age is here! There has been a huge upsurge in web site development and web based marketing. Done properly, web based marketing is very successful and costs less than a sales rep, but reaches any market anywhere in the world you choose to reach. Again, there is a specialist in Parramatta who has magnificent tools to offer businesses in getting the web based marketing structure right, BEFORE you try web based marketing. The information is out there, use it!
The bottom line is THINK OUTSIDE THE BOX. You cannot do this if you are being a control freak in your business, so delegate!
When I get a call from a business owner, the first thing I ask is “Do you have a business plan or business strategy?”
If the answer is “No, but I want to do one”, I will go and visit them and sketch out what needs to be done. Invariably I have a good client here, one who wants to succeed, with this attitude we will always make a lot more money.
Too often, however, I’m told, “No mate I don’t need a plan, I’ve got it all in my head!” I suddenly become too busy and refer them to the local BEC office or equivalent.
If you don’t want to plan, strategize and delegate, please go away and don’t waste everyone’s time, because you are destined to fail!
There is not a large business in the world that does not seek the help of outside experts, so why should small and medium businesses be any different?
The table demonstrates what you can achieve with the right kind of professional help. This is a real case example.
Global economics is changing the traditional way business has been conducted in the past. This does not mean it makes it any more difficult, it really means there are a lot more opportunities out there for those who have a passion for good business practice.
Michael Burdette the author of the book, ’Contemplate Your Business Navel’ is an expert in business turnaround and has vast experience globally in this field. If you are wondering what a marmine is, there is more information on the little critter in his book. The book may be purchased through any Dymocks bookstore. For more information about the book, the marmines or other products, please refer to the website www.bookbiz.com.au.
Michael Burdette is an experienced and accomplished speaker and would be happy to talk to anyone looking for keynote speakers. Please direct enquiries to Bernice Kesbah on 0421 324 353 or Bernice@bookbiz.com.au.