Business Improvement In Practice And Process: How Small Businesses Get Ahead Of Their Competitors

Recently I met some business coaches for a self-run seminar on business improvement. Our aim was to explore how we help SME clients to improve their businesses, contrasting and comparing our approaches. As we shared our client experiences, we noticed there were basic four approaches that we follow with variations to suit a specific small business:

Moore’s Law

Gordan Moore noticed that there are trends in technology: IT hardware performance doubles every two years; the price of technology halves as the cumulative sales double; and the number of World Wide Web pages doubles every nine months.
If you look out for the market trends that will impact your products and services, you can focus your business improvement efforts where the trends will help you to improve what you offer your customers.

Kaizan

Kaizan groups break down your business processes into components that you can monitor for performance. Within the measurements, the group seek instances of best performance that if adopted generally could improve the performance of the whole business.
You could extend this by seeking out best practices not just in your own company by in your suppliers and customers. When you have found how other do a process quicker, cheaper and to a better standard, you apply this benchmark to improve your own performance.

Continuous improvements

Total Quality Management looks for annual improvements using the skills and insights of your whole team. Small groups focus on a specific process, explore how it works, collect ideas to try out and then adopt the changes that improve the process.
Thus you could target specific areas that you want to change this year and encourage your staff to suggest improvements. Each suggestion is treated as an experiment run as a project (with a fixed goal, fixed start and end dates, a cost and effort budget and open reporting). Where the improvement is shown to be effective, it then becomes part of the accepted practice.

Groves corollary

Andy Groves believed “only the paranoid survive” so he created competitive pressures on his company before his competitors did.
In this approach, you watch your competitors constantly, check their performance levels, assess their products and improve before they do. A success is when you recognise new opportunities and develop the capability to exploit it before others do.

The key message that we picked up from our coaching meeting is that to leave your competitors behind, you need to invest effort and energy into improving your business.
The method that suits particular clients will depend on the people involved – whether they prefer to generate their own changes, be inspired by the achievements of others or watch what is happening in other businesses and industries.
So the final question is “How will you go forward?”

Entrepreneurs Buy a Business With One Eye on Selling It

Entrepreneurs don’t do this because they are in a hurry to sell the business; they do this because it’s a great double check on the value of what they are thinking about buying. When you change your perspective to selling a business sometime in the future, you force yourself to think about whether that product or service will still be demand at that time. Maybe you can see it even more in demand — maybe less so. If you think it will be less in demand then you need to start thinking about how you are going to change the business, or maybe forget about getting involved altogether.

At the same time you are going through this exercise you will be thinking about who will be the likely buyer. Will it be someone like yourself, or will you have grown the business so that it will be beyond the reach of an individual, that it will be bought by a company or by an investment group, or by a wealthy non-owner investor. If that’s the likely scenario, then you should be thinking about how you will operate the business. You should give more thought to operating it as a by-the-book, pay-the-taxes business and not as your personal cash cow. It takes a lot of explaining to get someone to buy into the fact that the business is worth more than the books show because you have been taking cash out and not including that money as sales or that you really don’t need all those family members listed on the payroll.

Having an idea what you might do in the future will help you make decisions about the entity you choose to take ownership or whether you buy or lease assets, or how you structure the relationship with any investors or minority partners you might take in. It’s always much more difficult to unwind a situation that has become a hurdle than it is to set the relationship up correctly at the beginning.

Keep in mind no thoughts you come up with or plans you might hold in your head have to be put in place. It’s just better if your actions are based on as complete a plan as you can envision.

For example I know a fellow who bought a business and took title as a Limited Liability Corporation (LLC). He put in all the money, gave himself ninety percent ownership and named himself the Managing Member. His named each of his four children as members with two and one-half per cent ownership each. It was his plan to gift each child a percentage of the business each year, to the limits of the tax gift rules, so that at some point in the future he would have five percent and they would have ninety-five per cent of the ownership tax-free. This was a great idea.

Problems arose when one or two of the children, now grown with families and adult issues of their own shaping their interests, looked at their individual holdings in this “family business” as assets they would like to do something with more in keeping with their own priorities. The father, now unable or unwilling to raise the cash to buy out those who wanted cash, was forced to sell the business he envisioned would have been in the family for years. Had he formed a family trust and made the trust the eventual owner of the business, then no single person could have forced a decision — the trust would have had to act as a unified voice.

As the buyer of a business you should look at the future with realistic eyes and as much imagination as you can bring to the questions you see ahead. If the future is strong and you are capable you may very well be launching a business that someday may be a great candidate for a public offering. Don’t be constrained by what is in place or by your own seemingly limited background.

Remember — management is cause, all else is the result.

You will find more about this topic in chapter nineteen in my book.

The next articles I post will be dealing with making the business opportunity you buy become successful, I hope you continue to read about and profit from what I have learned in my thirty-year career as an entrepreneur.

The author can be reached at http://www.businessstrategyartconsoli.com

8 Key Questions to Ask Before You End Your Business

Even with extensive research and planning you still may come to a point
where you need to reevaluate your business strategies. Knowing when to
“take a loss” and move on to something different is key to the
successful future of an entrepreneur. You have to first ask yourself
are you giving up or simply redefining your plans? You don’t want to
get into the habit of moving on to quickly simply because things didn’t
go as you expected.

Even with extensive research, using this site, and planning you still
may come to a point where you need to reevaluate your business. Knowing
when to “take a loss” and move on to something different is key to the
successful entrepreneur. You have to first ask yourself are you giving
up or simply refining your plans? You don’t want to get into the habit
of moving on to quickly simply because things didn’t go as you expected.

Below are some questions to ask yourself when your business seems to be going nowhere:

How well did research my market? Many times a business will fail
because they have jumped the gun, especially in the area of market
research. You may think you know what your market wants but that is not
enough. Complete a thorough investigation before investing too much
time or money into any venture. If you feel you’ve conducted the right
amount of research ask more people about your failed endeavor…your
new survey questions may include, “Why wouldn’t you buy this product?”
or use a simple rating system which will allow you to determine just
where you went wrong. The key is introducing products to stay in line
with trends but you don’t want to be too far ahead of the game. Think
of the artists that our society only appreciates years after they’ve
passed away!

Is your pricing level correct? If you’ve set your prices too high or
too low you can have serious problems. Too high will discourage much of
your target base from becoming customers and too low could possibly do
the same thing in addition to losing you money. Each way will ensure
you won’t ever see a profit for your new business. Instead of quitting
right away, adjust your pricing to adequately address your markets and
then try some grass roots advertising to gain your market’s attention
to your new affordable or accurate rates.

Is this the right business for you? Despite completing the worksheet in
Chapter 4, you may still find yourself in an industry or business type
that just won’t work for you. Are you a carpenter who suddenly wants to
become a web designer? Unless you’ve got some design training, you
should hold off any and all efforts to start your business. Make sure
it is a business that utilizes your existing skills and talents. Don’t
get into something that is currently beyond your reach.

Do you have enough capital? Lack of adequate capitalization is one of
the many reasons a business can fail. Although, you can start a new
business for less than $500 in some cases, you still want to address
all the concerns listed in Chapter 4. Give yourself some time to save
money and create a back up plan so you will feel comfortable and
capable of starting a new venture if the original one doesn’t pan out.

Not enough networking? No one can buy from you if they don’t know about
you. Networking doesn’t have to be an “in-your-face”, phony type of
approach. It is merely letting people know what you do and how well you
can do it. When meeting friends and associates, be sure to leave your
business cards with them. Many of your friends will be the first to
refer you when they discover someone they know who is looking for your
product or service. Also become active within your community doing
something you enjoy. For example, if you have a record label, why not
sponsor a talent showcase with other area businesses? Or why not
volunteer to help children in your community.

How realistic are your goals? Don’t set yourself up for failure by
setting your goals too high. Make sure your business planning reflects
sound research and estimations. You should contact experts in your
community to help you keep your feet on the ground, so to speak.
Contacting a group like SCORE (Service Corps of Retired Executives) for
example is a good way to get sound advice regarding your business plan.
Contact them when creating or editing your business plan and you should
be able to work with the difficulties of presenting realistic,
attainable financial and business growth goals. Contact a Scores office
near you by visiting the following site: http://www.score.org. These
are retired, successful business executive or owners who offer free
assistance to business owners just like you.

How is your time management? Not managing your time can make your
business suffer. Get into the habit of setting a schedule and sticking
to it. You are solely responsible for your success and how you manage
and organize your time will dictate how it all turns out.

Have separated personal from business? Are you still chatting with
friends when you should be working on a new project? Have you set up
separate banking accounts? Does your family friends understand how
important your new business is to you? You should ask these questions
when you realize you can’t seem to get anything done because of
interruptions due to your personal life.

So before you wrap up your new venture, be sure to ask yourself all
these questions. Mainly, you want to identify what is going wrong so
you can correct it to make your existing business work or so you won’t
repeat the same mistakes with your new business venture.

And again, the key to successful businesses is a fierce determination.
It takes many small businesses two years to turn a profit. If that’s
too long for you, consider having a partner, working part-time, or
keeping your full-time job. Try different things to make sure you don’t
give up on your new business and becoming an entrepreneur.