The following is a guest post to Hotel Merano from Patrick Mackaronis. Pat is the Director of Business Development for New York City-based social network Brabble. In this post, he explains how developing solid business foundations can assist in aiding small businesses in reaching great success.
Small businesses that survive beyond their initial start up phase and become successful businesses with inbuilt sustainability, are generally those which set about building sound business foundations, from day one.
Those that don’t survive their initial start up phase usually fail as a consequence of commiting one or more deadly business sins such as;
- Financial mis-management,
- Proceeding with inadequate business management skills,
- Poor record keeping,
- Sales and marketing mis-adventures,
- Critical recruitment mistakes,
- Unwillingness to seek independant professional advice where clearly desirable, and
- Personal well being affecting the business owner’s ability to act as the key driver of the business.
Avoid Financial Mis-Management at all Costs
If you are not an accountant, and you plan to develop and operate a small business, one of the first things you should do is set up a business relationship with a good local accountant. This accountant should have sound experience in assisting local small businesses to properly structure their financial systems and financial reporting mechanisms.
Equip Yourself with Adequate Business Management Skills
If you own and operate a small business and you do not have well developed business management skills, the lack of such critical skills will affect your chances of success. You can easily learn business management skills, and ample resources exist to assist the owners of small businesses to upgrade their skills in this area.
Records Management Systems are Critical
At the very least, from day one, a business owner should;
- Know exactly what records need to be created, kept, and the storage duration required by law,
- Understand the importance of safe, secure and well organised storage and provide for same,
- Implement systems to ensure that policies and procedures relating to records management are followed by all, and
- Provide for back up copies for all critical records.
Sales and Marketing Strategies Impose Discipline
A well thought out and very clear sales and marketing strategy is required to prevent negative cash flows caused by ill-considered and costly marketing and advertising campaigns that fail to deliver anywhere near the sales revenue anticipated.
Proceeding to commit funds to such activities, without the support of a definitive strategy, is a well trodden path to business failure, one that should be avoided at all costs. A strategy provides the necessary discipline to prevent costly mistakes.
Choose the First Employees Wisely
Initial hiring decisions are often the cause of a lot of subsequent pain for a start up business. Often expediency rules and little thought is given to the core essentials such as;
- Formalising roles with role statements, position descriptions and selection criteria,
- A structured recruitment and selection process that satisfies all legal requirements,
- Formal letters of offer of employment containing all agreed terms and conditions,
- Ensuring that the business cash flow can actually support full time employees plus their considerable overheads,
- Recruiting the skills required by the business right now, rather than recruiting people with skills that may be helpful in the future but come at a high cost for little return in the short term, and
- The capability of those employed, to grow with the business and become part of the desired business culture.
Utilise the Services of Professional Business Advisors and Management Consultants
The services of business advisors, management consultants, legal advisors and financial advisors can be the difference between success or failure for a small business, especially where the owner is not completely competent in all aspects of operating a business.
A general attitude of many small businesses in their start up phase is that they cannot afford to engage the services of professional advisors and business consultants. The reality is, that few can afford not to engage such professionals, as it is the providers of these professional services who can ensure the correct alignment of the business objectives with the resources available to the business and also validate that the business is operating within the relevant legal constraints.
Looking After Number One
In the start up phase of any business, the business owner is a critical resource. It is therefore beholden upon the business owner to ensure that they are initially fit for the journey ahead, and that they institute a plan to ensure that they do not burn out before the business has a chance of achieving business success. These actions will ensure that the owner remains part of the business foundations and can contribute effectively towards the business building process and the creation of long term sustainability in business operations.
Key Elements of Building a Sound Business Foundation
The key elements involved in building a sound business foundation to aid in future business success are;
- Utilising the services of an accountant as a key business partner,
- Ensuring that the management skills of the business owner are adequate,
- Identifying record keeping requirements and implementing a complying records management system,
- Introducing the discipline of a sales and marketing strategy,
- Formalising selection and recruitment policies and processes,
- Investing in the services of professional business advisors and/or management consultants, and
- Ensuring the ongoing health and well being of the business owner.
By making sure that each of these elements are key components of the business foundations, the chances of being a business owner who successfully negotiates the start up phase, and then goes on to reap the benefits of owning and operating a sustainable and profitable business, are greatly increased.