Is your Business in trouble? – Part 3 – What do I have to manage?
Wednesday, March 3rd, 2010WHAT DO I HAVE TO MANAGE?
Most small business owners find it difficult to manage every aspect of their businesses, just because of the time it takes.
There’s so much to do, and so little time – usually! However, there are a few basics that simply have to be done – and regularly – if you want your business to succeed.
Before we look at what is included under the heading of “management”, we need to be clear on exactly what “management” really is.
I like the way Stephen Covey draws the distinction between ‘management’ and ‘leadership’ because I believe it helps us to understand more clearly what those terms actually mean. Covey says this:
“To differentiate, Peter Drucker has this to say: “Management is doing things right; leadership is doing the right things.” So, Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall...” (Emphasis: mine!)
However, in most small businesses there is no clear distinction between management and leadership – the two functions are usually in the hands of one person; – in most small businesses, you have to be a bit of both.
You have make sure you do the right things, and that you do them right as well.
In today’s economy, this is becoming more and more necessary, and this issue of management or leadership is blurred. The problem most small businesses face is that good leaders do not always make good managers (and vice versa) and this is something they will have to face up to.
Good management skills are essential to the ongoing well-being of any business, so if your business is lacking in this area you will need to make some changes.
Fortunately, certain management skills can be outsourced (and for a reasonable cost) so don’t put it off if you need it! As the business owner you don’t need to do everything – and no doubt, you will not be competent at everything.
The three key areas, which are easily outsourced, are
- financial,
Doing it this way means that you can acquire highly professional skills at a fraction of the normal full-time cost.
Michael Gerber, in his acclaimed book, “The E-Myth”, says that most small businesses are started by one of three different types of business owner – the Technician, the Manager and the Entrepreneur. He goes on to reveal that over 70% of small businesses in the USA are started by Technicians. This is probably true in South Africa as well.
This revelation tells us a lot about the problems many of us face in business.
As a result, when Technician-owned businesses get into trouble, the owners can’t even spend time doing what they love because their time is taken up putting out fires that break out because of poor management – and they’re usually not equipped to put them out!
Managers are, according to Gerber, also generally not very good entrepreneurs because they tend to spend too much time ‘managing’ and can even lack the technical (technician) skills and vision (entrepreneurial) to grow the business. Give a good manager something to manage and he will spend all his time doing a great job of it, even if it produces nothing and goes nowhere! I have come across excellent managers who would manage a business into oblivion and do a damn good job at it!
Entrepreneurs, says Gerber, are the visionaries, the ideas-men! They too have limitations in that they can lack the management skills so necessary to take their newly formed businesses to sustainable levels. They can see the next challenge so clearly, but often have no desire to get involved in the process that will get the show on the road. Very often, they confuse management with control, being reluctant to release control. They can also lack the technical skills necessary for the job. However, Entrepreneurs are more likely to outsource those skills they lack, and in this way, are more likely to get the job done.
So what does it take? Well, – the ideal situation would be to have a nice balance of all three but that would be a fairly unique individual, and highly unlikely.
Gerber suggests that the key lies in setting up a business management system that is simple yet efficient, and which will enable the business to operate even if the owner wasn’t there. As Gerber puts it, spend time working ON your business and not just IN it!
Almost without exception, whenever I have been called in to help someone who is in trouble, I have discovered that the single most common complaint they have is – “I can never leave the business for a moment, I’m working myself to a standstill, and all I ever seem to do is put out fires!” This paints an entirely different picture to the one Gerber envisages doesn’t it?
At the same time, let me say this: Business is all about people!
No matter how good your systems are, if your people lack capacity, or vision, or are poorly led, even the best systems are going to struggle to cope. I believe that every business owner should strive to have efficient systems in place, and then spend time leading their people!
There are hundreds and perhaps thousands of very good books written on the subject of management. I am not going to even try and replicate them. All I hope to achieve is get small business owners to focus on their core competencies – their strengths, – and outsource the skills they need in the areas where they are deficient.
Since Management is essential to the wellbeing of every business, I believe that there are seven key areas that small business owners – even if they’re not good managers – need to focus on: (and in no particular order of importance). The first one – the most important one, I believe – is Cash Flow Management – and I’ll address that in the next newsletter.
