10 Rules of Running Your Own Business
Published in the Australian Financial Review 28th May 2016
Many small business owners start off with the best of intentions but get sidetracked by the day-to-day minutiae. Without pro-active structure and planning, it’s all too easy to lose sight of their initial goals and a clear strategy.
Worse, they forget to enjoy the good times. As Clare Barton, director of recruitment firm Barton Mills, says: “When times are good, you take it for granted. When times are tougher, you wonder why you didn’t enjoy the good times more.
“The tough times are for getting your head down and testing your resilience and your grit. If you come out of the other side in one piece, you come out better and stronger. As business improves, enjoy it.”
After almost 10 years of working with SMEs across a variety of industries, I’ve learned from and with my clients. There’s no particular order to the following “top 10 rules” of operating on your own – it all depends on the life cycle of your organisation. I could, of course, have a “top 30+” set of rules but, as always, the reality of time management wins!
1. Manage your time through boundaries
Entrepreneurs tend to be excitable thinkers with ideas resulting in emails, calls and team meetings at all times of the day and night. This not only bombards staff but it also invites a presumption that you are your business 24 hours a day. Start as you mean to go on and use simple tools like saving emails in draft, effective diary management and find the best software (or even a simple notebook) to capture your ideas and plans for conversion at a more realistic time.
2. Know your strategy
Strategy is a living, agile piece which brings the whole business together with an agreed focus. Transparency and good communication of strategy allows a leader to lead and the team to be accountable.
As an example, if it is clear that the overall goal is to develop new revenue to finance improved resources and production, the team will understand their individual accountability. If, however, the team is not cognisant of the end goal, they may find it frustrating and contradictory for the head of business to be accepting and developing sales with limited resources to convert the work available.
Retired US business executive and author Jack Welch talks about strategy in his books: it isn’t the complicated, theoretic exercise most businesses make it out to be. The best companies and the best leaders make strategy simple – and transparent.
3. Get financial
Understand your financial goals and profit and loss. Employ a chief financial officer or work with a respected, trusted financial advisor. Financial advice is critical and will assist with achieving long-term goals, compliance and a proactive advisor can guide the business through lean times.
4. Honour your values and respect your culture
Company X showed enormous courage by telling a client that it no longer wished to work with it. The client (Company Y) was blue chip, formed 20 per cent of overall turnover, but was difficult, arrogant and highly demanding. Apart from this, Company X’s service team sighed when they were working with Company Y and morale was dropping.
It took audacity and a short-term hit to the bottom line for Company X to cease working with Company Y. The MD made the critical decision only to work with clients with aligned values. This resulted in increased engagement by the team, improved productivity and profits.
5. Do a business plan
It’s ironic but I didn’t do this! In the beginning, I wasn’t confident enough with my exact goals but they became clearer. Planning was essential for focus and direction. Decide on a “blue sky” or “big hairy audacious goal” but then manage it within your overall plan rather than allowing it to take on a life of its own. If you’re not sure how, ask for help and start with a single page.
6. Understand your core business
At the early stages of development, it seems simple to respond in the affirmative to potential clients with: “Of course I can do that.” This becomes the office mantra but be wary as it can result in product or service dilution.
There is a tipping point whereby the reactive process needs to be monitored to ensure profit. This is challenging in the early, lean times but if you divert from core strategy, ensure you return to it.
Take as an example a web design business which was hired to design and install a new website. The main source of revenue was in the construction, so when the client chose to exit after design but before construction, the project resulted in costly loss of design hours. By clarifying their core business, improving proposals and qualifying in-house costs, profit increased.
7. Remember why you went into business in the first place
How many times do I hear “this is not why I went into this business, I’m employing people to do what I want to do while I manage staff and financials!”
Recognise that this may be a path you need to tread for a period of time while you’re in set-up mode to improve your working knowledge of your business. Decide how and when you will delegate and hive off certain responsibilities when you can afford to do so.
8. Invite external guidance
Seek help through an advisory committee, friends, mentors or an external consultant. It is important to work with someone who can bring you out of the day-to-day minutiae and remind you of your long-term plans. One example of what “not to do” was the entrepreneur focusing on bringing in new business and increasing sales with fantastic turnover, while mounting debtors weren’t being managed by the accountant. An external advisor could see and correct this quickly.
9. Ensure you have a support team
Find external sources who provide that “extra support” when needed – a sounding board, a confidante, a champion, a pragmatist, a comedian to make you laugh and a peer to celebrate the wins, acknowledge and learn from the losses. I have seen this work effectively through a group of professional women (LBD Group) who leave their egos and personal goals at the door and meet for dinner to share challenges, debate and ask for help.
10. And finally, be grateful
Be thankful for the opportunities, and that you have recognised you have the skills and drive to develop the business. Appreciate the early client who gave you a chance, and those who refer and recommend your product/service. Give back through playing the “support” for other individuals – this is good business karma!