6 Key Must-Haves In Your Business
When you are starting a business, or even as you grow it from the start and enter into a steady period of consolidation and wish to review your performance, it is useful to take a step back from the nuts and bolts of starting or running your business and consider what makes up a business.
Sure, you must have (hopefully) a great product or service and you must have customers.
But what makes up a successful business? What are the key ingredients you must have?
I created Teik Oh Dot Com in order to help small business owners implement these key ingredients that together make up a successful business, to be the small business owner’s one place to go to in order to find the practical processes to improve their business and become successful. You can subscribe to get these free tools and resources delivered directly to you by clicking on this link and signing up.
Importantly, I believe that when you start your business, you need to focus on six key must-haves in your business to set you up for success.
So let’s dive into the 6 key must-haves in your business.
The first key must-have is a strong and inspiring Vision.
When you started your business, you started with an idea. Whether this idea was a new innovation or a new way to provide a solution to customers’ problems, it was this idea that inspired you to start your business. Even if your idea was less service-oriented, even if it was just to make a better life for you and your family or to be your own boss, the emotions behind that idea was what inspired you to take that first step.
So it is important not to lose that passion. After all, any experienced small business owner will tell you that the road you are starting on is a long and arduous one. It can be extremely satisfying to work and struggle your way through the early years and arrive at your definition of success, but many get lost along the way due to the frustration of the long hours and the hard work because they lost sight of their original idea and the passion that came with it.
From the idea and the emotion caused by the idea must come a definitive Vision. Believe me, it helps to write this down as the picture of the ultimate goal. This description of the Vision as derived from the idea you had from the start will serve as your inspiration when times are hard and you need to remind yourself why you are doing this in the first place. A written Vision that describes where you want to end up also becomes the single goal that everyone in your business learns to work toward. If it helps you get there, do it; if it does not help you achieve the Vision, it is a distraction. Once you set up your Vision and you follow it every day, others in your business will understand what you are doing and why, and what they must do to help and fit in.
The definition of your Vision need not be an academic exercise.
Write down why you started your business – what you wanted to produce, how you wanted to serve, why you wanted a better way, and why you believe you could do it. This brings out the passion from the first idea. This is always a good reminder of the enthusiasm and optimism you first felt.
Then write down a description of what your business will look like when you have achieved what you started out to do. Describe it as if you walked out of a time-machine into the future and write down what you see the business selling and to whom, and what your people are doing and how they are working.
You can distil these descriptions into a couple of short, punchy sentences if you like, but remember you are not creating the Vision Statement of a large international corporation. You do not have large Human Resources and People and Culture Teams to roll out massive programs to explain what those short sentences mean to your widespread workforce (that’s down the track!). All you need is a description of why you are in your business and where you want to get to that everyone reading it can understand and everyone reading it, including yourself, can recover the passion and the inspiration when times are hard ort when you are lost about what to do in your business.
Of course, the Vision on its own is only the flag-on-the-hill, the inspiration.
You need to walk the talk in order to implement the Vision into real behaviours and real results in your business. How do you do this?
Firstly you need to remind yourself of it regularly. That means you don’t just write it up and put it in your drawer. Take a moment every day to read it and ask yourself how much you want it. Describe for yourself what you will do to make it happen. Get to know it inside out so that you understand what behaviours represent the Vision and what do not, and can explain why.
Then live the Vision through those behaviours. Operate your business as if you have already attained the success described. Call yourself and others to account on a day-to-day basis if they do things that do not represent the ideas behind the Vision.
Make decisions based on attaining the Vision. When you are faced with a choice, ask yourself which choice will represent you acting as if you had attained your Vision, or which choice will get you to your Vision faster. You can make decisions in this way about who to hire, what projects to undertake, how to finance something, what investments to make – you can use the Vision to propel your business in one direction, towards the Vision.
The second key must-have in your business is Leadership and Management.
For a small business, this is difficult because Leadership and Management are two sides of a coin and the small business owner must have both, at least at the start.
Leadership is the ability to see the bigger picture. Yes, it is about inspiring and motivating, but it is primarily about being able to understand that getting your nuts and bolts perfectly aligned may not get you the result you want. The nuts and bolts have to be the right nuts and bolts for the ultimate goal.
Management, on the other hand, is about aligning all the details. Once you know which are the right nuts and bolts to use, it is to ensure that they are fitted correctly.
A small business owner, needing to be a Leader, can so easily be distracted into the Manager’s nuts and bolts and lose sight of the whole. It has been described as the need to be both dancing on the dance-floor and watching from the balcony at the same time.
If you were to twist my arm, I would say that in the long-term, Leadership is the most important quality for a small business owner because management qualities can be hired. In the long-term, a Leader is required to keep the Vision in sight, to motivate people to do hard things and to inspire people to be better. A small business needs a Leader to discover new ways of doing things, new markets, and better systems. That’s not the Manager’s job. The Manager has to make sure the new markets are explored carefully and in the right way, that new systems and processes are implemented successfully.
However, in the early years, the small business owner needs to be both.
You can do this by cultivating the following.
First, understand and be inspired by your own Vision.
Second, always take a team approach. Make sure you communicate fully – take the time or find that people start to mistrust you. Seek input, after all, many heads are better than one and a Leader understands that good ideas can be developed from simple suggestions put together into a bigger solution. Delegate your work – don’t make the mistake that “it would be faster if I did it myself”. It will be, but then are you prepared to “do it yourself” forever? Learn to teach effectively by giving clear instructions, describing what a successful outcome will look like, and providing the tools and resources.
Third, develop a thoughtful approach. No business ever failed because the owner took a minute longer to think through a problem. With the Vision as your measure and using teamwork, a little extra time taken to make decisions end up with better results. As you deal with your team, develop your emotional quotient – these people are individuals, colleagues, friends, not just automatons who work for you.
Fourth, look for innovation, even if it is not your idea. Continually ask yourself and others what you can do to improve everything. How can you improve sales, how can you improve service, how can you improve the way you do things around here?
Fifth, balance inspiration with detail. Make plans. Detail the steps you need to take in order to carry out your business planning strategies, detail the milestones in large projects, set times to monitor your progress and evaluate your outcomes. From this work will come detailed methodology to carry out your ideas. You can use the Vision and teamwork to develop the detail and the watch over the processes – and perhaps in doing so start to develop the managers in your business.
The third key must-have is already mentioned above. You must have Planning rituals in your business.
Imagine something as inconsequential as going on a Sunday drive without a plan.
I’m sure that when you go for your Sunday drive you do not “prepare” a written plan, but you do have one!
You started a few days before by suggesting the idea to your spouse. You then probably discussed where you might want to go, and what you wanted to do. From that discussion would have come lists about what to bring and what to get ready and what time you needed to leave, based on where you wanted to go and what you wanted to do.
So, believe it or not, in your head if nowhere else, before you started the car engine on Sunday morning, you had a Vision (what you want to feel), a Goal (where you wanted to go), Strategies (Route A or if it looks prettier, route B), Resources (packed lunch, checked fuel and tyre pressure), and an Action Plan (schedules, things to do when there).
Without this Sunday drive plan, what would you do on Sunday morning when you start the car? The day would be full of decisions – do I turn right or left out of the driveway? Do we have time to take this lovely sightseeing detour or should we hurry to the next place? Shall we stop here and start turning back or can we spend some time here? What do we do there? Now that we’re home, did we do what we set out to do or enjoy?
Your little, informal Sunday drive plan removes many unnecessary and stressful questions and prepares you for unknown problems and decisions.
If that is what you do when you do something so inconsequential, what do you do when you start your business? Put in lots of money, open doors, hope for best?
You need to have planning rituals in your business. This means that you need a helicopter-view strategic plan that looks into the long-term and sets your strategic direction. This strategic level plan establishes where you ultimately want to go and broad strategies on how to get there. You might only do this at the start of your business, and then every 5 years or so, in order to review your direction or to reset it and look ahead the next several years.
You use this strategic plan to set annual business plans. These look ahead for a shorter period of time, perhaps 1 to 3 years. Since the timeframe is shorter and the unknowns are thus more predictable, this plan lays out the detailed year by year milestones for the high-level goals and strategies. These plans are prepared every year and are also helpful in quantifying, through budgets, your financial decisions and expectations.
The strategic plan/business plan process allows you to set big-picture goals and then break them down into achievable and detailed step by step things to do in order to get to those goals. The 5-year/annual process allows you to recheck your progress more effectively and allows you to adjust for changing inputs such as the state of the economy, new legislation and so on.
A critical part of planning will be your marketing plans.
Again these should derive from your big-picture strategic plan, and can also revolve around a 5-year strategic marketing plan and a series of annual marketing plans. However, if your driving strategic plan is comprehensive enough, you may only need shorter-term marketing plans that deal with annual marketing strategies.
Marketing plans allow you to detail the value of your product or service to your target customers, what those target customers are seeking, and how to put the value in front of them in a way that they will most likely respond to. It is not an advertising strategy, it is a more holistic plan to get in front of your customers most likely to buy your product.
Systems and Procedures together is the fourth key must-have in your business.
Think of having systems and procedures as the backbone of consistency in your business.
Your procedures are simply the standard steps you take when you do anything, for example, procedures on how to record a sale. Your systems are a collection of procedures that provide an outcome, like a marketing system that may involve a number of procedures from planning to implementation to sales and to recording the sale.
Put them together and they represent “how we do it here.”
The most famous example is, of course, McDonald’s where they have detailed systems and procedures from branding and physical equipment set up to how to cook a Big Mac.
Systems and procedures ensure that you do what you do consistently with a predictable outcome every time. This means that customers know what to expect from quality to the level of service, and it becomes your brand on service delivery.
If you don’t think this is important, think of a time when you checked into a luxury hotel and were disappointed. I will stake penny to the pound that your dissatisfaction was caused by an inconsistency that belied their luxury status. Perhaps it was the fact that on different days, room-service left fresh towels, but not on every day. Perhaps on one day you returned to your room and found a complimentary bottle of water, but not on another day. All it would taken to have given you a consistency of customer service is a simple room-service check-list!
Systems and procedures also mean that you need to get less involved in the day-to-day mechanics of running your business if everyone can turn to a manual and see what to do. Having systems and procedures means that you can actually automate large parts of your business through the proper training of staff on “how we do it here.” It helps in replacing staff so that you are not constantly retraining new staff. It stops you feeling like you have to do everything yourself or that “it would be faster to do it myself”, or to keep stepping in to correct mistakes.
One particular system to pay attention to, especially at the start-up of your business, is your people model. This should consist of your organisation chart and position descriptions of every position in the organisation chart. An organisation chart is a picture of who works in the business and how they relate or are reporting to each other, broken down into departments or responsibilities. Position descriptions are descriptions of what each position does, who they report to, who they are responsible for, and their main duties and responsibilities.
When you create your organisation chart, don’t stop at describing what it looks like now. Instead, describe your organisational people structure as if you had attained your Vision. Populate your chart with all the positions that you envisage you will have onboard at that time. In this way, it forms the “strategic plan” of your people, allowing you to see ahead and identify the skills and abilities you will need. Another tip is to never work with people’s names. If you do, you become tempted to put people into positions that they seem “suited for” instead of including the required positions. Draw your organisation chart out, in full and without fitting people in, describe what each position does and is responsible for, and then and only then populate it with your current employees.
Sometimes, one name may appear in several position boxes (especially yours!), but this is fine. This reflects the fact that your business may not have developed to the stage where you can populate it with different people but it makes you aware of who to find next. As well, this allows key staff to “trial” positions as described by position descriptions, so that when a new person is found to fill that position, they can simply hand that position description over, train them in their specific responsibilities and in the procedures used by that position. Imagine how much work this cuts out during succession and replacement of staff!
I want to draw attention to a specific system, which is the fifth key must-have in your business, which is Marketing, Sales and Customer Service.
Ultimately, your business is successful only if you fulfil customer expectations and sell things, so your marketing, your sales system, and your customer service must be finely tuned to satisfy them.
Your marketing is successful only if you have identified your target customer – the segment most requiring your product or service – what they need from your product or service, how to best get their attention, and how to attract them. I have already spoken about the need for a marketing plan and obviously, attention must be paid to implementing it through a systematic approach. Once marketing strategies have attracted your customer, your sales systems need to kick into place. You need procedures to close the deal, capture customer details, reach out to them, provide information as required, deliver the product and invoice efficiently.
You also need to develop the level of customer service that fits with your brand and product. A luxury brand will need to do much more than a base-level brand, but in all cases, the details of customer service matters.
This was sharply brought to my attention during a recent renovation at home.
Ten years ago I had a major extension put on my house. The builder and trades were efficient and friendly. But one thing struck me which I noticed but did not make a big deal of.
Recently I had a garage built next to the house, using different builders. While their trades were friendly, they seemed not as efficient. When I thought of this I had to admit that the work may have been done efficiently but because they did not communicate with me and manage my expectations, it felt like they were taking a long time to do simple things, whatever the reality was.
But the one thing that struck me that brought the previous builders’ customer service into high relief was the mess. The previous builders cleaned up after every day’s work! They swept, they hosed, they vacuumed at the end of every day. These new builders left the driveway covered in cement dust, wood chips everywhere. Obviously, the previous builders had a system, and they trained all their trades and trade apprentices on the procedures within the system.
What type of customer service do you provide?
The sixth and final key must-have in your business is Financial Management.
You can delegate the work to properly manage your financial responsibilities to your business by hiring a good accountant, but you cannot abrogate the responsibility for good financial management. Whether you do it yourself, or supervise someone doing it, or you leave the detailed process to your accountant, you must still make sure that good financial management systems are in place, that they work, and that you understand and have the right information regularly enough o make decisions and take any required action early.
You have started a business and invested your money. You cannot say “I don’t understand the finances, I’ll leave it to my accountant.”
As a must-have in your business, financial management means that you must start by understanding the financial reports. Even if they are prepared by your accountant or spat out of a computer, ask questions. Your objective should be to understand your financial reports sufficiently to be able to explain them to your mother and to answer any questions she may have. This means that your financial reports must be accurate, regular, and on-time produced very soon after each month at least. They need to tell you what your financial position is (what you own, what is owed to you, what you owe, and what the final position is if you closed today). They need to tell you what your financial performance is (how much you sold, how much you spent, how much you made or lost).
They also need to tell you why you are in this financial position and why you made a profit or a loss. Are you strapped for cash because you have too much stock on your shelves or because people haven’t paid you on time or because you spent money on new equipment? Did you make your profit because of your selling price or because you saved on overheads and expenses? What are the alternate effects of these reasons – will the new equipment allow you to produce and sell more? Will the savings on overheads lead to less advertising and therefore fewer sales in the future?
Financial management is also about understanding what your alternatives are. With knowledge, you can decide how much to invest and where to invest. You can choose between purchasing capital equipment for cash or under a lease-purchase arrangement. You can choose between taking out the profits and reinvesting them for the future.
And finally, financial management is also about compliance with tax and other laws. I have seen “successful” businesses go out of business because they did not file tax returns and got caught with substantial tax bills that drove them into bankruptcy. Make sure you understand your legal obligations and fulfil them.
So, those are the 6 key must-haves in your small business, Vision, Leadership, Planning, Systems, Sales and Marketing, and Financial Management.
When you start your small business, you probably don’t envision keeping it small. However, in order to grow your small business into a more substantial one, you need to pay attention to all the moving parts. Any business is made up of management, production, purchasing, marketing, sales, administration, accounts, human resources, physical premises and equipment, information technology and systems. In a small business, at least at the start, these functions are not as clearly distinct from each other, however, all apply and the small business owner will spend some time in each of these functions.
Certainly, having these all working well will allow your business to grow, but every successful business must focus on the 6 key must-haves of providing a Vision to inspire and work toward, leadership to see the big picture and look forward, planning to provide a predictable path, systems that give consistency, sales and marketing to provide income, and financial management to secure income and assets. Without these, the operational functions may work, but the driven success of the business is not necessarily assured.
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