7 STEPS TO BUILD A STRONG BUSINESS
If you lead a small business I think you are a hero because in rough seas like those of today it is difficult to be a good captain and steer the company on the right course. We work a lot, we dedicate time and energy, and we also invest money to obtain results that do not always live up to expectations.
It is a difficult job but also very beautiful and motivating! Precisely for this reason, it is essential to understand the importance of having "effective professional habits", capable of continuously generating new opportunities and keeping the company profitable.
So let's see together a few things to do to ensure peace of mind and results by running a small business:
1 - Have the courage to face reality!
It is essential to be aware that the economic situation of Italy and the Euro area, which we have been experiencing since the advent of the 2008 crisis, will be the new normality for several years to come, even if every year GDP growth is expected. 0, ..%, growth that will be insufficient to bring national production back to pre-crisis levels if not in many years.
So what to do?
It is essential to look for solutions within your company, first of all evaluating your own state of health and then the strategies to be implemented to face the market and the competition by stopping to complain and blame right and left because doing so does not serve to, on the contrary, nothing worsens the situation.
The companies that have had the courage to face the harsh reality are those that have been able to reinvent themselves and return to the area of profit and growth.
On the other hand, those who continued to be optimistic and hoped that the crisis would pass, that the banks would return to granting loans, without reorganizing themselves internally, discovering inefficiencies, today are in very difficult conditions if unfortunately, they have not already closed their doors.
Remember: It is possible to make sensible and profitable business decisions only if and first you are aware of the real situation of the company whatever it is.
"When you start with an honest and diligent effort to understand the truth of your company's situation, the right decisions often become self-evident" (Jim Collins)
2 - If you want things to change, first you have to change!
The company reflects the personality of the entrepreneur. To grow your business it is essential to improve yourself first. It is important to take part in courses, and conferences, read books and attend people who can give motivation and inspiration to their actions.
The most important capital of your company is you!
If you don't spend time improving and developing this capital you will devalue yourself so much that you will no longer be able to make a difference.
The essential thing to take a step forward is to start growing as a person by taking on your responsibilities and then as an entrepreneur by stopping justifying and blaming the market trend, politics and so on and so forth.
That it is clear I do not think at all that the politics and the choices of "a few", whose interests are certainly not the good of small and medium enterprises, have not negatively affected or aggravated the situation, but it is true that these external factors have amplified the difficulties and inefficiencies already present within your company that were not yet evident because the turnover was still there, the financial problems were masked by the banking system that granted credit without merit and everything turned ...
Looking at the internal causes of the company obliges to understand and fix what is not working and solve those problems that do not make companies have positive and excellent results.
It is estimated that the hidden costs incurred for activities that can be potentially eliminated and therefore due to inefficiencies in small businesses, account for about 4.5% of turnover.
Therefore the company can rethink its way of creating value by reorganizing its business, and rationalizing the production structure.
It will be necessary to analyze the costs of the company through the budget analysis to understand how and what activities are carried out, to make a comparative analysis of the competitors, to analyze the degree of use of the company's production capacity, the method of procurement and distribution of products.
The questions that an entrepreneur must ask himself to understand the situation of his company are these:
• Has there been a change in the company's products or services for the worse?
• Has there been a deterioration in the procedures?
• What are the radical innovations that your business has brought to the market in the last three years?
• Are the staff productive at the right point?
By answering the questions it is possible to understand if there have been gaps.
If there is a deterioration in products/services and procedures and no innovations have been implemented, the problems of your company are caused by the fact that while the world is changing your company has stopped and has fallen into immobility, bad habits, and I've always done so much…. with the consequence that you are no longer able to see the real inefficiencies and stop reacting. What are the things you stopped seeing in your company?
3 - If you want to generate value, you have to make decisions that create fear!
A company crashes when the entrepreneur begins to be afraid of making difficult decisions on an emotional level and when there are no guidelines adopted for the management of the company shared by the people who work within it.
Getting out of the comfort zone (from what you usually do) is scary and it takes courage but I'm sure you already know what you should do .. don't delay and don't wait for things to improve or change.
Do not put off:
• Evaluate with an accountant specialized in management control how to reorganize the company by reducing costs that do not bring advantage, abandon a product or a process because they are no longer profitable
• Check the financial situation of the company
• Talk to a co-worker you know is not working properly
And what are the choices you are putting off?
4 - If you want to stay on the market you have to learn how to do marketing!
In a world in which there are many companies that do similar things to each other and a lot of competition , one cannot think of not making known to the outside what the company produces or markets and implementing a good marketing strategy .
It is essential to analyze the reference market to understand what are the expectations and needs of the target customers to whom one wants to address, and following this to position one's products or services to offer a solution to their needs.
But to do this it is essential to communicate with existing and potential customers!
• Why did customers choose you the first time?
• Why do your customers still keep choosing you today?
To answer these questions it would be useful to do a survey of current customers to understand what they are looking for from their supplier in order to be able to focus on the areas and processes of the company to improve.
Customer means turnover and it is therefore essential to put it at the center and try to be useful to him and give the best of our product and / or service so that he can perceive the value of our company and the interest in doing things well, naturally without abandoning the margins. . By putting the customer at the center, the profit will surely come!
The risk is that when the entrepreneur no longer has a shared project, he stops promoting and over time the company dies.
5 - Periodically dedicate time to the financial and economic management of your company with the help of experienced management control professionals!
Today, not using tools that go beyond simple accounting to calculate the taxes to be paid at the end of the year or checking the congruity with the sector study is absolutely no longer sufficient and indeed I would say that it risks compromising the continuity of the company.
If the captain were to drive the ship only on the basis of his own feelings without looking closely at the control cabin, the weather conditions, the fuel stocks, we would surely consider him a fool and he will have a high probability of being shipwrecked in the middle of the sea.
The entrepreneur is like the captain of a ship and also a madman if he tries to manage his company without a "control dashboard" that regularly provides him with some essential data, turnover, margins of products or services, liquidity , the productive organization.
You can't get what you don't measure .
The lack of measurements, the sensation of the financial aspects and the economic marginality of products / services or orders is one of the main problems that afflicts companies and that determines the lack of profit that is often justified by attributing blame to rain without looking at oneself. inside.
In reality, a company exists to earn money and if you do not constantly and periodically measure liquidity, profit, turnover, you cannot understand if the company is managed well or badly.
Treat all costs as if they were an investment and demand a return from them!
With the money you spend on that cost, you should buy a value attached to that result.
Management control is the entrepreneur's guide that serves to analyze financial statements from a strategic perspective, to build a path to follow and make the correct decisions in the short and medium-long term by intervening in inefficient areas in order to increase profits.
6 - Define 3 - 5 year goals!
It is essential to define a business plan that defines how the company intends to obtain sufficient profits and cash flows for the lenders and for the partners who have invested in the company.
It is important to define medium / long-term objectives by defining which products / services you want to focus on, which market you want to operate and position yourself in, which customer needs you want to satisfy for the development of your business and define a path to reach and control a final balance if the objectives have been achieved and the reason for the deviations.
A business plan allows you to evaluate the profitability of the company and the financial projection of these choices over a period of at least three years.
If you don't know where you want to take your company, so you have not defined your goals and to have them clear it is important to write them down and translate them into numbers, no matter how hard you work and be efficient, you risk getting carried away by everyday life and following what is requested at the moment by that customer, this or that collaborator running after their priorities. It's like getting into the car with your family without first checking that there is oil in the engine , if there is enough petrol and even worse… without having a destination to reach…!
This way of doing things will create inefficiencies within the company that will have repercussions on the economic, patrimonial and financial side.
It takes courage, determination, a lot of passion and the desire to reach the goal.
"When you really want something, the whole world conspires to make your wish come true." (Paolo Coelho in the book "warrior of light").
First of all it is therefore necessary to believe in yourself and be aware of your strengths, the value of your ideas and the great person that you are and accept the challenge to move forward.
"If a man is not willing to take any risks for his ideas or his ideas are worth nothing or he is worth nothing" (Ezra Pound).
7 - Create a team of people who share your values and motivate them because the right people determine the success of a business.
Motivation starts with you .
It is the business climate that is directly determined by the entrepreneur that makes the collaborators feel good, grow and make a difference.
How can collaborators be motivated if the entrepreneur himself is not a model and manages his company lightly or incompetently?
Of course, when a company has problems from an economic point of view, it does not improve its situation only with motivation, but targeted interventions are needed to reorganize the company.
But it is also true that if once the management of the company is framed efficiently, the motivation of the staff is not accompanied after a short recovery, things will end up worse than before.
This stage is closely correlated with the need to leave the comfort zone to eliminate compromises and inefficiencies and understand what actions to implement aimed at recovering relationships with collaborators and addressing them if they are no longer efficient.
Often a wrong person is enough, this is not only true for employees, but also for external collaborators or partners, in a key function to make the budget unattainable, to demotivate customers, and make bad choices from a production or financial point of view.
When was the last time you held a meeting and communicated what is the company's goal and the project it wants to carry out?
The entrepreneur has to do hard work by dedicating time and energy to their business!
But what do you think hard work means today?
After industrialization, working many hours a day was synonymous with an economic improvement.
Today entrepreneurs continue to work many hours a day to collect little or nothing!
Of course, it is also important to work long hours because it means that there is passion in what you do, and that you like what you have chosen and this is an essential element for the success of any business.
Today the concept of work that makes you progress on an economic level has changed, working hard means facing or doing those things that cause you difficulties on an emotional level.
