Effective Decision Making Checklist for Every Entrepreneur
An entrepreneur’s decisions affect the success of his products, the loyalty of his employees and the overall success of his business.
In order to make the best decisions you have to think critically and quickly. You have to avoid flaws in the process which may harm the business when confronted with an important decision.
Strong business decision-making skills are an important characteristic of entrepreneurs. They should make the right choices at the right time to remain competitive in the market.
Each problem in the business world will be unique, but as an entrepreneur, you need to know which decisions to delegate. You should have informed opinions on every minute about things related to their business that demands extra time and focus needed from them.
Examining each situation thoroughly and taking a quality time out to make an effective decision is what an entrepreneur is always expected to do.
This unusual article will show you how!
6 Keys To Effective Decision Making for Entrepreneurs
Let us check out some critical decision-making techniques for entrepreneurs.
1. Have a purpose:
Every time you make a decision there is a purpose attached to it. It could be a goal that will be achieved because of the decision you made. An entrepreneur’s purpose should be to grow the business and expand the territory into new market. Therefore, the purpose should be to choose the business traits which will have the maximum growth rate.
Once your purpose is identified your decision process should become easy. The thought pattern needs to be directed along the lines of your goals. An entrepreneur needs to be sure of his goals and then make his team also aware of what exactly they need to do for the growth of business.
One has to channelize one’s thoughts and make decisions in every walk of life, not only in business. Entrepreneurs also need to go beyond the basic skills of collecting information and take wise decisions for the benefit of business.
2. Test your biases:
Whenever you think through a problem your thought process naturally gets affected by biases such as your point of view and your assumptions about the situation. Each bias will affect your reasoning. Such biases will make you overlook the blind spots in your logic.
That’s why when you face a problem you tend to view the problem only from your point of view. It will further narrow down your thinking capacity and you will not be able to come up with effective solutions. Instead, if you look at the problem from others’ point of view you may get more alternative ideas to solve the problem.
It is the biases you have that block your mind from free and critical thinking. Because of biases you won’t be able to approach any problem in the right way. Consider for example a vegetarian who thinks non-vegetarianism is all bad. This is just an instance of a bias. So, seeing things from the right perspective is very much essential for your business success.
3. Implications of your options:
Every decision you take and every choice you opt for will have its own consequences. You should anticipate the results before making a crucial decision. It is applicable to all human beings, more so for entrepreneurs because a small lapse of an entrepreneur may turn out to be a huge loss for the entire business at times.
Therefore, an entrepreneur must view a single problem from different perspectives. He should also be able to foresee the pros and cons of the decision he is going to make.
Ideally, an entrepreneur must put himself in the shoes of stakeholders and think how they will feel in response to each of the options he has taken. With each critical decision you take as an entrepreneur, you will begin to learn more new things about your business.
4. Seek Professional Advice:
Entrepreneurs must seek the advice and help of professionals too in business endeavors. Getting input from others is an excellent way to collect various ideas which, otherwise, would not have come to you.
5. Create An Implementation Plan:
An implementation plan can be created before putting one’s solution into action. Implementation planning should consume as much time as the business decision-making process itself. A solid implementation plan involves good resources, effective management and evaluation.
6. Leverage On Technology:
A business decision-making software package is another handy option available in the digital world of today. Large quantities of data and complex calculations require complex decisions too in business. These software packages help entrepreneurs to organize data, plot graphs, and other analytical tools in a user-friendly manner.
Each entrepreneur must have a sound knowledge of business deals before actually venturing into business in full throttle. Every step in business must be taken after a thorough investigation of the methods, consequences and long-term advantages and disadvantages. Things may turn upside down even if a business owner leaves a single loophole unattended. Therefore, the risks involved in business must be navigated with wise thoughts.
I am Dora Houston, currently working as a writing expert at Essay Guardian, which is an online platform for custom essay writing service and other writing assistance. I am also providing aid to students on career possibilities and other academic success related topics. Besides, I enjoy writing about current trends and innovations in education, technology, motivation and traveling.
- Published in Management, Thought Bank
Outsourcing Checklist For Entrepreneurs: How To Know When To Outsource
You are going to need help to build your business, there are two ways to go about this; you can hire people on full time basis [employees] or you can get external help [outsourcing].
For many entrepreneurs, knowing when to hire full time workers is a no brainer, but knowing when to get external help is where the problem lies.
So in this unusual article, Stephan is going to outline some vital questions you need to ask and answer to help you know when to outsource or not.
Take it away Stephan!
What Is Outsourcing?
Before we begin, let’s be clear on what exactly outsourcing means:
Outsourcing can essentially be defined as the transfer or contracting of a company’s internal business related processes out to a third party of some kind.
The processes mentioned could be of any kind and the third party could also consist of anything from telecommuting freelancers or specialized third party companies that offer specific outsourced services.
Also, outsourcing does not automatically mean hiring business processes to laborers or companies in the developing world; it could just as easily involve other domestic companies, often in the same state or city. The overseas component of outsourcing can in fact be specifically be called “offshoring” in order to distinguish slightly between the third parties hired.
When Should You Outsource?
So, back to the question: when should your company outsource its key business processes? As your company grows, you know you need to outsource a business process or task when the cost of getting it done in-house exceeds the cost of getting it done externally. The cost being referred to here is both in cash and in time.
For example, the work involved with setting up software, processes and trained employees to run something like a sales process or company accounting systems can become quite high and higher still with company growth.
Outsourcing can dramatically offset this cost factor because instead of doing any of your own process development work, you are just going to pay a fixed service fee for a third party specialist with an existing service infrastructure to handle all the details of the business process you’ve specifically outsourced to them.
This will not only cost you less immediately, it will also cost you less down the road in terms of reduced software or equipment maintenance costs and much cheaper as you scale your business.
In essence, there is a basic calculation you can perform in order to see when outsourcing might be a good idea:
- Simply analyze the per customer cost comparison between delivering a product or service yourself and delivering it by outsourcing sales from companies like Acquirent.com or other processes within your company;
- factor in things like equipment purchasing cost, training costs, implementation time (multiply your or your employees average hourly earnings by the time it would take them to fulfill a given process) and maintenance.
If your results indicate that doing something like outsourcing sales, IT or accounting would be cheaper through an outsourcing firm, then you should go for the cost savings.
Additional Factors to Consider
Moving beyond the above questions of simple cost and expense, you also need to consider some other important factors that should go into your decision making about when and what to outsource.
Ask the following strategic questions and run through their consequences carefully before any specific outsourcing decision is made:
Is the activity or task that you’re thinking of outsourcing a key process that directly affects the primary service or product that your company offers?
If it is, then you should absolutely keep it in-house in order to maintain a strong and knowledgeable competitive edge over others in terms of service/product quality. And if the task is not a key component of product or service development, then yes, you should outsource it, so you can focus more intensely on the core tasks of essential product and service development.
For example, outsourcing sales processes within your company is an excellent way to save time and money on repetitive mechanical tasks since sales is a secondary task that comes after your main product (service development and delivery).
Yet while sales might be outsourced, you should not try to outsource the development and design of something like a software package that you plan on selling, since it’s a core part of your Intellectual Property and product knowledge advantage.
Will keeping a process in-house give you a competitive advantage?
This question is somewhat similar to the previous one above; if keeping a certain auxiliary part of your operations in-house costs more than it gains you in terms of needed control and knowledge, then why do it?
A software development company probably doesn’t need to develop its own entirely internal accounting processes, and if your company sells something like consumer electronics or children’s toys, then you probably don’t need to develop your own internal sales management process.
Is one of your In-house processes a commodity?
By commodity we refer to a process that can easily be outsourced and served by comprehensive existing specialized providers or even software systems which are designed to handle exactly that sort of thing efficiently and quickly.
If any part of your business isn’t a key competitive advantage, then this fits the definition of a commodity, so just outsource it and save yourself a lot of headache.
Great examples of non-core commodity processes are;
- accounting and
- payroll systems maintenance.
All of these can usually be outsourced easily.
Is the Process likely to be done often?
If you occasionally need to handle certain tasks in your business that aren’t needed frequently enough to justify a whole internal training process or tools purchase, then you should also outsource these tasks to more specialized, professional people in order to guarantee a higher quality of work per task. Trying to do complex but not frequently occurring work yourself is more likely than not going to be a waste of resources and time.
You should only outsource when;
- The cost of getting it done in-house is MORE than the cost of getting it done externally.
- The task or business process is NOT directly linked to the product or service your company offers.
- The task or business process is NOT part of what gives your company a competitive advantage.
- The task or business process is NOT done frequently.
About The Author
Stephan Jukic is a freelance writer who generally covers a variety of subjects relating to the latest changes in white hat SEO, marketing, marketing tech and brand promotion. He also loves to read and write about subjects as varied as the idea of a location-free business, portable business management, and strategic marketing and advertising tactics. When he’s not busy writing or consulting, he spends his days enjoying life’s adventures either in Canada or Mexico. Connect with Stephan on Google+ and LinkedIn.
- Published in Management
Recruitment Checklist For Entrepreneurs: How To Hire Exceptional Employees
Unusual entrepreneurs will always depend on other people to help them in their quest to change the world and profit from purpose. Top on the list are employees.
Regardless of how talented or passionate you are as an entrepreneur, it’s pretty obvious you can’t succeed all by yourself!
To build the company of your dreams, you need a team of exceptional people. But what makes an exceptional employee? That’s the subject matter of this unusual article.
What Makes An Exceptional Employee?
An exceptional employee is more than someone who fits the job description. Finding this person is critical since hiring the wrong person can cost thousands of dollars in compensation, time and training.
It is worth the time and effort to truly learn about a person’s character before hiring. Here are some character traits to evaluate.
First, a new hire should be qualified for the job. Does the candidate have the education and skills required for the position? Does he or she have any experience doing this type of work?
Will the candidate find ways to complete challenging tasks? Is the candidate creative? Is he or she willing to learn and grow in order to advance? Look for candidates who are excited to work for you. Qualifying candidates should have a strong work ethic and a positive attitude.
A great way to assess motivation is to propose three projects and have the candidate list the projects in the order that they would prefer to work on them. Discuss the order of the projects and how and why the candidates chose this order. This information will be enlightening.
3. Culturally Fit.
New hires need to fit in with the culture of the company. Sometimes this quality is as important as a candidate’s qualifications. Candidates who are difficult to get along with sometimes disrupt the flow of productivity by introducing discontent among coworkers. Look for candidates who can communicate friendly with coworkers, customers and management.
4 Reasons Why You Need Employees Who Fit Into The Company’s Culture
1. A good cultural fit can also be a good anti-stress option. A lot of people suffer, badly, from workplace cultures where they really don’t fit. It’s like taking a size 10 shoe and wearing a size 4. I’ve done that myself far too many times, and it’s not a lot of fun.
2. The workplace culture is a major driver of workplace relationships. A good fit means good relationships. That is absolutely crucial in high pressure jobs and where interdependence creates a real need for good working relationships.
3. Bad cultural fits can cause major problems. There’s an interesting statistic floating around the US which says that 30% of US employees will at some time or other sue their employers, and that 70% of them win their cases. Bad cultural fits? Yes, and often in multiple ways.
4. Many workplace environments, particularly business units, need people who can work together well, often for long hours. The cultural fit is a peacekeeper in a place where it’s very much needed.
One way to gauge whether a candidate will fit in is to evaluate his or her definition of success. If it fits with your company’s culture, you may have a match.
Ask these two questions for insight:
What does the word “success” mean?
How have you tried to achieve success?
Candidates inevitably reveal their inner value structure. If their values fit in your company’s vision, that is good news. Other candidates will answer the question by responding, “I do not know. I have never thought about that,” which is all the answer you need.
Hiring is expensive, so you do not want to hire someone who is just passing through. You want to hire someone who will help you build your business. So evaluate each candidate’s work experience. How frequently does the candidate change jobs? Do not let the resume speak for itself, however. Ask candidates about questionable track records. Listen and take notes. When you call his or her references, compare notes.
You want to hire an honest, ethical employee. This character trait is critically important. Follow up on references, but dig deeper and go beyond those listed on the resume. Learn the names of and speak to additional coworkers, supervisors and even former professors. Looking beyond the listed references gives you a bigger picture.
6. Open to the offer.
Body language and facial expressions may be more revealing than words when you discuss salary and benefits. If the candidate is uncomfortable with the benefit package, he or she may not be a good fit. In fact, you could waste precious time training this person only to see her walk away when a better opportunity knocks.
A new employee’s qualifications are important. However, businesses need to look beyond technicalities. Employers who look deeper into a candidate’s character are more likely to find someone who will not only do the job but do it enthusiastically.
About the Author
Carl is a businessman who is knowledgeable of all things business development. He frequently blogs about ways business owners can better manage their staff to increase their motivation levels. He also works for Motivo Performance Group in Houston.
- Published in Management, Thought Bank
7 Powerful Turnaround Strategies To Revive A Dying Business
Sad as it may sound, the health of a business is not guaranteed forever. Virtually all entrepreneurs will face the daunting task of managing the recovery of a dying business. Every business during the course of its existence will experience a near death experience.
This is a period characterized by harsh business conditions; low sales, low morale, low cash, low market share, and low innovation. Some recover from this and bounce back stronger than before, and some don’t.
There are many factors responsible for this near death experience; those that are self inflicted like; a major project failure, incompetent management or poor financial control are generally termed internal forces.
While those that are not self inflicted like; government intervention, economic recessions, the presence of low-cost competitors, or natural disasters are termed external forces.
The continuous survival and success of a business greatly depends on managing these forces internally and externally. Neglecting them can spell doom for any business regardless of size!
How To Revive A Dying Business
If you find yourself struggling with a failing or dying business, here are 7 turnaround strategies to help you resurrect your business.
1. Re-Evaluate: Situation
To treat an ailment, we need to diagnose the patient. The first place to start if your business is dying or failing is to look within the company. This is known as self-evaluation or self-assessment. You have to know what the situation is and what the problem is. When you already know the circumstances, you can now take appropriate actions. When looking within, focus on the following key areas;
Does the business have a direction? Does the business know why it exists? What problems it solves and for whom? Is the business focused on the right things?
Are the right people running the company? Are the right people in the right places? Are employees committed to organizational success? Are employees properly incentivized to share in the ongoing success of the firm? Are commission plans driving sales persons to focus on gross revenues or gross profits? Are difficult policies, internal strife or the behaviors of specific individuals driving down the collective spirit of the organization? Are there bad eggs in your company that are contaminating the whole organization?
Are customers satisfied? Do they know, like and trust your brand? Is the business focused on profitable customers versus unprofitable and difficult clients? Are you targeting the right customers?
Are you offering innovative products/services? Can the business better utilize technology to create better products, reduce costs and improve competitive advantages?
Are systems in place to get work done efficiently? Are things being done in the right way? Are policies facilitating work or hindering them? Is the business structured for high performance?
Are you competitive and profitable? Are cash flows sufficient to sustain ongoing commitments and operations? Is this business largely indebted?
Re-evaluation is the most critical turnaround strategy; without it all other things are just frantic moves that will yield little results. Before you begin to act, know why, what and how affected your business is. Only through re-evaluation can discover all these.
The suggested articles below will help you get started.
7 reasons why entrepreneurs fail in business
7 warning signs of a dying business
What To DO When Business Is Slow
How To Diagnose The Problem of Low Sales
How Entrepreneurs Are Unknowingly Killing Their Business
2. Re-Define: Strategy
After re-evaluation comes re-definition. Re-evaluation reveals what’s wrong with your business and re-definition is putting the business back on track. This is where you go back to the drawing board to set the overall direction for the company. This is where you create the turnaround game-plan.
Failing in business is often as a result of not having a clear direction or having derailed from the set path. So you need to revisit the foundation of your business by touching the following key areas;
“Why do we exist as a business?”
“What need or needs are being met by this business?”
“What do we want to achieve using this business as a tool?”
“How far do we want to go in pursuit of our purpose as a business?”
“How do we intend to succeed in this business?”
“How and what must we primarily focus on as a business to be the No.1 choice of our target customers?”
“What principles, standards and tenets must we hold to be true and never compromise as a business?”
“How must we collectively think and behave as a business in order to fulfill our purpose, achieve our vision and execute our mission?”
“Who are we as a business to the general public?”
“What is our promise to those we intend to serve?”
“How do we want to be perceived by our target customers?”
“What do we want to be remembered, recognized or respected for in the marketplace?”
Business DNA: Why Your Company’s Success Desperately Depends On It!
3. Re-Employ: People
Hardly can you turnaround a dying business without talking about the people behind it. A business cannot function by itself, people make it function. People make or break your business. This is why you need to re-employ. To resurrect a dying business, get the right people on board and get the wrong people off, period!
To learn more about the qualities of the right people, make sure you click on the suggested article under further reading below.
The Almighty Formula For Business Success!
4. Re-Innovate: Product
Lack of innovation is one of the warning signs of a dying business. It is impossible for a business to remain relevant in the market if it fails to introduce new products/services. People change, market change, technology change and so must your business. If you refuse to change, by constantly innovating your products/services, you are doomed. To bring your dying business back to life, do something new!
How To Unlock The Power Of Creativity For Cutting-Edge Innovation
How To Create An UNTAPPED Market For Your Business
5. Re-Brand: Marketing
One of the consequences of a dying business is the negative impact it has on the brand. Your customers begin to lose trust in the brand as their satisfaction level declines. Negative word of mouth marketing starts to spread and the brand is no longer known, liked or trusted in the market. To correct this negative association with the brand, you have to kill the old brand and create a new one!
This doesn’t necessarily require a total change in the brand name; only do this as a last resort. What rebranding means is to give your business a new meaning, a face-lift and a new brand identity. This is why in almost every turnaround situation; the company comes up with new marketing campaigns, new logos, new brand colors, and new slogans to let the market know that things are not the same as before.
Corporate Branding Strategy 101
The 4 Elements Of Effective BRANDING
6. Re-Finance: Money
As much as I would like to tell you that you don’t need money to resurrect your dying business, we both know that would only be a lie. One of the most obvious signs of a dying business is lack of money. You are almost out of business because you are running out of cash. So to get your business back to life, you need to pay close attention to finance.
The easiest option would be to seek external funding, but this can be a very daunting task especially if the money in question is much. So what do you do? Start sourcing for funds from within the business by doing the following;
Take from your personal savings.
- Sell off some of your fixed assets to raise immediate cash.
- Cut costs by reducing your operational expenses. Look for every unnecessary expenses and cut them off. Lay off every redundant staff. Stop every extra incentive or benefits for a while.
- Don’t try to solve all your financial needs at once; it will only further put you in more financial mess. Break down your business financial needs into sizeable chunks tied to specific needs and begin to fill them with the excess funds gathered.
- Seek for strategic alliance from your partners like your suppliers, they can offer you trade credits.
Only after you have exhausted these internal funding options should you seek external sources like; borrowing from family and friends, angel investors, bank loans, factoring, hire purchase, equipment leasing etc.
7. Re-Work: Execution
After all is said and done, there is no way to bring your dying business back to life by mere words; you need to do the work. And not just as you have always done before, you need to re-work the way you used to work. You’ve probably been engaged in random work rather than focusing on performance-driven work or goal-oriented work.
It is one thing to work and it is another to align your work with the strategic goals of the organization. Only by doing so can the business be saved from dying. Every work must be broken down into processes, must have a owner and must have a goal or key indicators to track performance.
Over to You
What new thing or things did you learn from reading this unusual article?
Have your business ever experienced a near death situation and how did you recover from it?
What other ways besides these 7 listed above would you recommend for reviving a dying business?
- Published in Management, Thought Bank
MANAGEMENT 101: Structuring Your Business For Sustainable Growth
This is the second unusual article of the Management 101 series, in the first post we looked at how to organize your business for sustainable growth using 3 key managerial principles of culture, structure and execution.
I discussed the first managerial principle of culture in the first post, in case you missed it, you can read about it by here; MANAGEMENT 101: How To Organize Your Business For Sustainable Growth. In this unusual article, we’ll be discussing the second managerial principle; structure.
Structure: How To Systemize Your Business For Sustainable Growth
The word structure within the context of management is often generally associated with organizational design [organogram] only. While this is true, structure does involve organizational design but is not limited to it.
The word structure fundamentally means a system of parts; a way of linking different parts together into an integrated whole.
Structure refers to the preservation of culture. The arrangement, building or organization of different parts into a whole such that the core essence [DNA] of the organization will still be retained. It refers to the creation of systems and processes that are specifically designed to reflect the organization’s DNA; purpose, vision, mission, values and brand.
Structure doesn’t exist for itself; it exists for the benefit of preserving and reflecting the fundamental guiding principles of the organization. The structure of a business is made up of culture [core ideologies] and other factors that shape how and why people do their jobs the way they do them. You cannot build a structure without a foundation.
Culture is the foundation on which structure is developed. If you can think of structure as everything in your business that directs, controls and influences the behaviour of your people, the flow of energy and activity, only then will you get the true picture.
Structure is the systemization of culture in order to achieve synergistic results.
This involves the creation of a systemic view of the entire business; a way of seeing the organization as a whole. Without a systemic view of the business, it’s impossible to direct, control and influence the flow of resources and activities, towards the fulfillment of set objectives. We will not know what is to be done where, why and how. If an organization is a social organism [living entity], it can only thrive and function based on a given system.
What’s A System?
A system is a combination of interrelated parts or components [inputs] that are brought together [process] for the purpose of achieving a particular objective [output]. A system in the most basic form is simply a way of doing things. The manner or technique through which a problem, goal, task or activity is being approached. There are four key elements in a system; inputs, processes, outputs and outcomes.
These four key elements form the basis of every system that exists or that is being developed.
The input refers to a set of interdependent variables that constitute the necessary ingredients needed for the development of a system.
The process refers to the set of activities, steps or task that must be undertaken in order to direct the interdependent variables [input] towards the creation of a particular thing [output].
The output is the actual thing or object that the system was developed to create.
The outcome is the original intent of the system developer. It refers to the predetermined goal, objective, purpose or end result that the output was meant to achieve. In systems development every part is necessary to ensure that the purpose for creating the system is achieved. Let’s now look at how to apply each of these four key components of a system in the creation of a working business model.
In creating a working business model, your first step is the identification of the necessary ingredients [inputs] required to make your business work. These are a list of all the necessary resources peculiar to your particular business without which your business cannot begin operations. The simple interpretation of inputs is this; “what does your business need in terms of people, materials, capital, facility, etc. [resources] in order to effectively and efficiently function in alignment with the organizational culture; purpose, vision, mission, values and brand?”
Inputs all by their self are still inputs. Processes are where inputs are put to creative use. Processes are what make inputs meaningful by creatively combining them together to create something which never existed before. Processes represent the different core operational disciplines of a business; marketing, finance, HR, production, administration, etc. They are the traditional functional departments of a business organization.
Processes are what define the hierarchical flow of relationships and responsibilities [organizational chart/design] in a business enterprise. Each of these core operational disciplines requires the development of a sub-system within the overall system as they involve the execution of highly specialized and technical duties, activities and tasks which also need to be broken down.
Marketing for example, in order to carry out its core functions will require a system with its own inputs, processes, output and outcomes that are related to how the business intends to find, keep and grow potential customers. The marketing system will cater for functions such as; sales, market research, product/service development, customer relationship management, distribution channel, etc. The same thing applies to other functional areas of the business too; production, finance and the rest. In essence, each processes of the organization’s working business model constitute a sub-system of the entire system. This explains why an organization is often described as a system of systems.
They constitute the actual products/services that were created through the interaction of inputs and processes. These are the goods the business sells or the service it renders to members of the public. The output serves as a form of feedback that allows for the evaluation of the entire system. Without the inclusion of outputs as one of the key elements of a system, all that happens within a working business model will be regarded as cost incurred and efforts expended.
Customers don’t buy costs or efforts; they pay for outputs that allow them to achieve specific outcomes. Until outputs are created, a business has no place in the market and therefore must return to the drawing board to modify her system. A system is only as good as the quality and quantity of outputs it can consistently create.
Goods/services created in the form of outputs have specific needs for which they were made. These are the needs or problems being solved in the lives of the people who buy these products/services. The contributions and impact of the organization as a result of the goods/services it provides to the society is what constitutes outcomes.
For example, the outcome for a Pharmaceutical company manufacturing Malaria drugs [output] will be the actual number of malaria patients cured as a result of using the drugs. Outcomes, just like outputs, also serve as a form of feedback that allows for the evaluation of the entire business model. The outcomes achieved must be exactly the same as the one stated in the organizational DNA. If not, the entire system must be re-engineered.
If systems are the foundation of a working business model, what then are the key systems that must be in place and are necessary for the successful creation of a business model that works?
- PEOPLE SYSTEM: how do you get, develop, retain and maintain a constant supply of the human resource needed to create your products/services?
- DISTRIBUTION SYSTEM: where is the product/service being sold to the ultimate consumer? What middlemen are involved?
- SALES SYSTEM: how will the product/service be sold? Who is doing the selling for you and how will they be compensated?
- PRICING SYSTEM: how much will the product/service cost? What would wholesalers, retailers and consumers eventually pay for the product/service and how would you arrive at that price?
- PRODUCTION SYSTEM: how and where would you get what you need [raw materials] to create what you sell? How do you or would you make your product/service? What is your value chain? [the processes that a product/service goes through before it reaches the final consumer].
- MARKETING SYSTEM: how do you intend to find, attract and keep profitable customers for your product/service? How would customers know about the existence of your product/service? How will you survive when competitors arrive?
- GROWTH/EXPANSION SYSTEM: how do you intend to get bigger at what you do?
To be continued…
The next unusual article of this management 101 series will focus on the third managerial principle for sustainable business growth; Execution –the application of an organization as a tool. Make sure you don’t miss it; click here to subscribe to our email list to avoid missing out!
Structure is all about systems; an organized way of doing things. Small businesses remain small primarily for lack of structure, so what structures have you put in place in your business to ensure its sustainable growth? Are there any particular challenges holding you back from putting structures in place in your business?
Would really like to hear from you, share your thoughts and comments below, can’t wait to hear from you!
- Published in Management, Thought Bank
MANAGEMENT 101: How To Organize Your Business For Sustainable Growth
Every business has a way of operating that makes it completely different from any other business in the world. Ever wondered how some companies keep attracting and retaining high performing workers while others struggle to keep just a handful?
Have you ever walked into some business premises and without being told, you could feel a sense of intense energy in the air? How come some workers find fulfillment at their place of work and others don’t? How is it that some businesses in the same industries do better than others?
The answer to all these and so many more is management. As individuals are unique such that there are never any two people one hundred percent alike, the same is true of businesses regardless of whether they produce similar products or serve the same market. What makes the difference? Management.
Management: Putting The Pieces Together
After all is said and done, the day-to-day activities of a business purely rest on the competence of management. It’s possible for a business to have a great leader and a great product, but without great management practices in place, the business cannot exist for long. It’s possible for a business to be started by an unusual entrepreneur, but without great management in place, the whole business can easily fall apart!
Business is like a puzzle, the entrepreneur paints the whole picture but management is how you arrange the puzzle one after the other, putting each piece in its rightful place. Entrepreneurship focuses on creating a business that matters [purpose-driven]; the focus of management is the creation of a high performance environment [systems-driven]. An environment where people are effective and work is productive.
The responsibility of the CEO as a manager is centered on preserving the core; that is helping everyone know what to focus on and how to focus. Management puts the whole pieces together and brings everything into proper perspective by creating an organization. Management takes everything the business is about and weaves it into one big and integrated whole known as organization. The creation of an organization is management’s core task.
The fact that people congregate everyday to work in a particular business doesn’t necessarily make it an organization. To make a business into an organization is what management stands for. This is the essence of the CEO’s role as a manager.
The organization of a business
Managing a business begins with the creation of an organization. The organization of a business is the essence of management. Without organization through management, a business is only a mob; a group of people coming together for their individual interests.
The business becomes defined by the expectations of the people who work in it rather than the other way around. If left unmanaged, the consciousness of a business will be no different than the consciousness of the people who comprise it. If people in a company are living with, for example, unrealized expectations in their personal lives and a history of disappointing relationships with people who let them down, the company will never transcend that consciousness without another force.
This powerful force must challenge them to rise beyond their disappointing past by creating a compelling and extraordinary picture of what they can become. Management through the creation of an organization is the binding force that unites all the resources of a business; human, financial, material etc. together towards the achievement of a corporate end. A business is most effective and efficient when it operates as an organization.
What’s an organization?
An organization in a broad sense is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment, including other organizations. The word organization itself is derived from Greek meaning tool.
As Peter Drucker rightly stated in Harvard Business Review [February 2006],
“An organization is a tool. And as with any other tool, the more specialized it is, the greater its capacity to perform its given task”.
To put it more succinctly, here’s another definition by Dr. Phil Walker
“an organization is a tool designed and put into motion by its leaders to accomplish a particular end”.
The key word in all of these definitions is the word tool. Which means the unusual entrepreneur as a manager is responsible for turning the business into a tool [organization]. How does he/she achieve this? What is this tool made up of? How is this tool created? How does one apply it? These and many more is what management as an essential business skill for entrepreneurs focuses on.
To do this an entrepreneur requires three key managerial principles for sustainable business growth;
- Culture – the programming of an organization as a tool
- Structure – the configuration of an organization as a tool
- Execution – the application of an organization as a tool
Culture: Programming Your Business For Sustainable Growth
There can be no organization without a culture. Whether explicit or implicit, the existence of a culture is at the core of every organization. The creation of an organization begins with the establishment of an explicit culture.
Culture refers to the shared beliefs, values, principles and practices of a particular group of people. Culture is the personality of the organization. It is the software that enables your organization to behave in a specific manner. It is the program that determines how your company as an organization will function.
In the world of business, this is what is known as core ideology or corporate, business or organizational philosophy. It constitutes the fundamental principles, standards, rules and accepted practices that guides and inspires every action, decision and intention of an organization. It governs much of how people think, act, interact with others and do their work.
Culture is what defines the popular business phrase; “this-is-how-we-do-it-here”. Most successful companies go a step further to institutionalize it such as; “the HP–way”, “the Wal-Mart way”, “the Virgin-way”, “the Google-way”, “the Nordstrom-way”, ‘the Disney-way” and so on. This helps to instill a corporate sense of how things are done around here into everyone associated with the business.
Culture is what shapes the function of the organization as a tool. The specific purpose, the end for which the tool [organization] was created is defined by the culture at its core. Most businesses fail as an organization because they lack an explicit culture which gives the entire company the much needed clarity and direction for sustainable business growth.
How do I mean? If an organization is a tool as was explained above, what is the purpose of a tool? Why are tools created? What do we use tools for? Tools don’t exist for nothing; they exist to facilitate the accomplishment of a specific task.
Tools are instruments for getting things done. Hammers are used to drive in nails into any kind of surface; cars are used to convey people and things from one location to another; computers are used to store, process and retrieve information and so on. We all know the essence of tools and our expectations are formed base on how well they function.
In essence, you don’t simply acquire tools for the fun of it; you acquire tools for specific reasons based on your needs. If you didn’t have needs, you wouldn’t be needing tools. Tools exist for specific reasons. What are some of these reasons?
Tools exist for two broad reasons;
1. The satisfaction of a need or needs
2. The performance of a particular task or tasks
So, an organization is a tool whose function is the satisfaction of customers’ needs through the performance of a set of specific task or tasks. Meeting the needs of customers is the purpose of an organization. An organization exists solely to satisfy the needs of the customer. An organization in other words exists as a problem solver [solution] to the target customer it serves.
Performing a set of particular task is the mission of an organization. That is, the primary assignment and objective of an organization is the performance of a set of specific tasks that enable it satisfy the customers’ needs. Without the performance of these tasks [mission], the customers’ needs will be unmet [purpose].
The extent to which the organization aims to meet the needs of the customer is the vision of the organization. That is, how well the organization strives to satisfy the customers’ needs [purpose] through the performance of certain specific tasks [mission] is the vision of the organization.
The combination of these three components; purpose, mission and vision in addition with two others; values and brand, form the basis of an organization’s culture. Together, I refer to them as Business/Organizational DNA and I have previously written an unusual article on it; Business DNA: Why Your Company’s Success Desperately Depends On It!
To be continued…
The next unusual article of this management 101 series will focus on the second managerial principle for sustainable business growth; structure –the configuration of an organization as a tool. Make sure you don’t miss it; click here to subscribe to our email list to avoid missing out!
Over to you
Sustainable business growth is not an accident that you stumble upon, but a deliberate outcome that you have to create for yourself. What steps are you taking to ensure your business is strategically organized for sustainable growth? What are some of the obstacles holding you back from implementing the managerial principle of culture in your business?
Share your thoughts and comments below, can’t wait to hear from you!
- Published in Management, Thought Bank