I am a great believer that if you are the business owner and you want to maintain something of yourself in the business why not adopt your own personality style to grow your company?
Many SME owners start a business to follow a passion or to fully utilise an existing skill, building a business for themselves.The way you grow your business from a small business with under £100K turnover and just yourself employed, to a SME with £1m+ turnover and 10+ employees will often depend on how you prefer to work. Management control can still exist, the key is to recognise your style and to ensure that you are employing the right management information tactics to complement this style.
Can you recognise your self from the styles below?
You are methodically building your business year on year. You try different approaches and always ask lots of questions and collect data to ensure you are on the right track.
Firstly, benchmark yourself against your industry and your competitors. Benchmark in terms of gross and net profit. The problem is that because you are so internally focused you may not be truly aware of what is going on around you. Being happy with a gross profit of 30% and net profit of 12% seems good until you realise your competitors are realising gross Profits of 50% and net profits of 20%.
Make sure you collect only value adding information. I define value adding information as information that either helps you make a decision or stops you from taking a particular course of action. Hence, be sure to evaluate all the information and questions you are asking; is this just collection of information for information sake or is it going to help you make that critical decision?
You are driven by high and fast turnover growth.
Your actions will be driven by aiming for higher and higher income.You will invest in those areas of your business which will yield more or bigger customers. e.g You engage in alot of marketing and sales activities and you will make quick decisions based on turnover as the key driving factor or result.
By all means go for the turnover growth but be sure to keep an eye on your cash position. After all, how many of us have snapped up Park Lane and Mayfair only to have been pushed out of the game on the next move by landing on your opponents lower end properties and we don’t have sufficient cash to pay the debt. Depleting cash reserves on strategies for sales growth that don’t pay off immediately can leave your business open to risk in terms of short term debt that needs to be paid. Don’t use the quarterly Vat to pay for items if you are unsure when you will receive the income to cover the payment to the Inland Revenue. Cash flow plan all the way and ensure that your bread and butter costs like rent, energy and payroll are covered before you splurge out on the next marketing campaign or promotion.
Snakes and Ladders:
You have no specific strategy, you just keep doing what you are doing and hope to hit a few “ladders” which will maybe lead to your business growing, often in a rather erratic way.
Put together your 1 year, 3 year and 5 year financial plan. This plan should be in terms of what investment in your business you will have to make in terms of people, equipment and financing to get you to your desired size and profit level. Just by making the plan and building scenarios around best, most likely and worst case you do not leave things to chance. By considering where the “snakes” are, you ensure you plan and allow for those potential and unforeseen events such as rent increases, losing a key customer, or even making more money than you expected! (If you have made more money what have you not done?)
Whatever game you are playing it is right for your business because it reflect you, as the business owner. If you want to win whichever game you play, ensure that you use the right management information strategy to ensure it serves your particular game plan..and may the best man win!
If you would like to discuss your business to understand which management information strategy best fits you, please do contact me via the contact details on this website.