In the spirit of objectivity, it should be stated that small business owners could learn some critical lessons from big business. Below are four key practices that successful large companies do on a consistent basis. For small business owners with a vision to grow their company, following these practices is part of a road map for sustainable success.
1) Build the right team and empower them
Small business owners get great satisfaction from building their companies from the ground up and being involved in all levels of operations. To move to the next level, however, a business owner needs to build a core team – one that is self-directed and we-focused. The crucial element of delegating and empowering is to set clear expectations for how success will be determined. Large companies set specific goals at the departmental level so that leaders can manage to those expected outcomes. This allows the senior leader to use dashboards to track progress and let go of managing the minor details.
2) Work on your business, not just in your business
Easier said than done, I recognize. This was the advice I was given when I became president and chief executive officer of Park Bank. The key is to develop a strategic plan no matter the size of your business. Large companies do this consistently. Small ones do it with less frequency, but it is just as important. The strategic plan forces longer-term thinking and planning. Daily action plans should feed directly into the longer-term plan. The beauty of smaller companies is that they can be much more agile with the strategic plan and adjust more quickly.
3) Document critical business processes
For entrepreneurs this is painful, but essential. Think of the depth of knowledge that resides in your head. If someone else needed to do a particular function, what would he/she need to know? Start by listing out the functions critical to operate the business each day. For example, do you know how to access a software program if the primary user is gone? Do you know where all your signed contracts are? Checklists and flow charts are simple ways to illustrate a process or procedure. Over time, you can transition into more formal written procedures, processes and manuals. This exercise will speed up new employee training and prevent lapses in critical functions when someone leaves, which directly affects customer service and profitability. If you need more convincing, talk to any M&A expert. The existence of written procedures and processes will increase the value of your business. On the flipside, not having this documentation will decrease the financial value of your company in the eyes of a potential buyer or investor if not present.
4) Invest in good financial expertise
Excel spreadsheets only go so far as does using a family member to help manage the books -unless your spouse or brother is an accountant. To scale your company for growth, a good internal and external accountant is critical. An accessible and experienced business banker will also add real value. Having the right financial people on your team is necessary not only for accurate financial records and tax assistance, but to convert raw data into real business insights, helping you to identify trends, prevent missteps and to find opportunities. To find the right partners, word-of-mouth is very effective. Talk with your peers and advisors. They’ll be happy to share their experience and knowledge – and even make an introduction.
5) They stay close to their customer
A small business owner interacts with their customers, understands what their customers want, how they want it delivered and is often directly involved in serving them. Leading by example also reinforces a powerful and consistent culture across the company, so employees are delivering a product and experience consistent with the customer’s desires.
6) They make every dollar count
“Necessity is the mother of invention” as verbalized by Greek philosopher Plato in 400 B.C.E. Dead weight, products that don’t sell or inefficient processes can’t be hidden nor tolerated in a small company. Small business owners know how to maximize their limited resources and search for new ways to operate, sell, hire and market. Some of the most innovative ways to reach new markets and grow have come from internal creative problem-solving and from tapping into a network of advisors, many of which are available at no cost. Think of your banker, peers, universities and business resource groups such as Scale Up and BizStarts.
7) They make decisions with agility
There are plenty of reasons not to take action. There’s risk and change with every new idea – and some degree of analysis is needed. But the reality in corporate America is that decisions and change move slowly for lots of reasons – paralysis by analysis, committee overload, a quest for perfection, daily distractions or fear of failure, to name a few. Not for small business owners. They know to survive is to adapt. They make decisions, assess, adjust and repeat.