Archive for the ‘Business Planning’ Category

You can try to grow hair… or just buy a good hair piece!

Despite all the great advances in growing hair, some people just won’t have success. They can choose to stay bald… or just get a good hairpiece (or similar ‘replacement’). The point is that your body is your body and sometimes even the best science (or art?) can’t change it. However, there are things we can do to ‘offset’ for whatever challenge that might present. People do it all the time with artificial limbs and the such in order to gain ‘normal mobility’.

So why do some small business owners try to be somebody they are not when it comes to ‘natural personality traits’. More specifically, some owners are fabulous technicians and/or fabulous sales people who do not have the capacity to become great managers (or even great leaders). So they remain ‘frustrated technicians/sales people’ feeling like they are on a treadmill never seeming to be able to get their organizations to the ‘next level’ of growth; i.e. they take 3 steps forward and 4 steps back at each attempt. One would think they’d recognize this pattern and have the insight to recognize what they need: a good ‘business manager’ to ‘mind the store’. This happens frequently in professional practices (e.g. medical offices, CPA firm, law firms and engineering/architectural firms). It happens in business services (e.g. water testing, construction) and a host of other environments.

The owners might even acknowledge this but use “I can’t afford to hire someone for that role” as the ‘justification’. Yes, it is a bit of a ‘chicken or the egg’ scenario, but that’s where planning– and courage– come in to play. In over 4 decades of having to deal with this issue for clients, I believe there are numerous ways to overcome this dilemma — without ‘betting the ranch’. If you find yourself in this situation, drop me a line and I’ll happily take a look at your situation and prescribe some possible courses of action for your SPECIFIC situation.. at NO CHARGE. I’ll also be happy to send you a FREE copy of my new book (.pdf version) or you may wish to purchase the audiobook version at iTunes (only $9.99). Set Yourself Free-How to Have a Thriving Small Business…And Enjoy It! will give you many insights into this issue and MANY others. I hope you will take a moment to read more about it. Feel free to call me at 518.369.7101 or email me at: stan@fambizdoc.com

Business Plans – A Tool For Better Management

Things are going pretty well, you say? Sales are up. The employees are happy. There is even a little cash left over for that special project you are anxious to start. Why start messing with a good thing? “If it ain’t broke, don’t fix it.” Right? Wrong!

Many managers believe that business plans are used for only one purpose: To raise capital. While it is true that business plans are written more for this purpose than any other, it is by no means the only purpose.

An often overlooked and significant benefit of a business plan is not necessarily the Plan documentation, but rather, the process itself and its impact on the management team. A business plan requires the managers to take an objective, critical look at their business. The process can change how a business is perceived, open eyes to new opportunities or focus attention on those operations that are not adequately contributing to the overall success.

A business plan can spot potential problems before they occur.

The planning process involves setting organizational goals that are then translated into departmental goals that are then translated into goals for the smallest logical part of the business, (e.g. each individual sales representative in the case of a sales department). The textbook definition of the smallest logical part of a business is a “Strategic Business Unit.”

If you’re not concerned about impressing people, call it a Profit Center. Profit centers are organized in a manner that makes sense to the particular business. Some businesses may organize profit centers by classes of customers. Other businesses may think in terms of individual product or jobs.

Still others think in terms of lines of business. Do you have a different pricing structure for different classes of customers or for certain jobs? Do you require higher profit margins on certain products? Do certain products, customers or jobs just naturally “fit” together? Answer these questions and you will begin to think of your business, if you do not already, as a cluster of smaller enterprises.

This cluster of smaller enterprises can be thought of as an investment portfolio with each profit center representing an individual stock. Which should be invested in? Which should be liquidated? An investor has an overall goal for his portfolio. To achieve that goal he may take on higher risk investment for potentially higher return or he may accept a lower yield for proportionally lower risk.

Could your business be more profitable if some of your products, services or customers were emphasized while others were phased out?

Is each individual margin on each of your profit centers adequate to justify the risk? The answers to these questions form the basis of a business plan.

A formal business plan can help you manage your business better. Through it you can communicate your goals to others within your organization. The plan provides each manager with a common reference point. Departmental goals that are in harmony with the goals detailed in the business plan should also be in harmony with other departments.

As the business grows, it is much easier to delegate responsibility over a particular profit center when a performance target has been set. When performance is measurable, the owner can quickly identify and correct problems. The owner will also know which managers are achieving their goals and which need assistance.

Preparing a business plan is time consuming but is not difficult. Consider forming a planning team. The leader of the team should be able to remain objective, settle disputes between different departments and be a cheerleader for the plan. Often the team may be intimidated if the owner is also the team leader. Many businesses choose to hire a consultant to act in this capacity to insure objectivity and to provide motivation. Motivation and involvement are the keys. If the managers contribute to the planning process, they will be supportive of its implementation. Above all, the managers (and their staff) must feel it is “their” plan. Instilling a feeling of contribution or responsibility in the employees insures their support of the plan and contributes directly to the plan’s success. A plan without support ends up on a shelf gathering dust.

For more information about preparing a business plan for your company, please click here to contact us or e-mail us at stan@fambizdoc.com

Getting A Physical For Your Business

Most people accept the notion that it pays to go to their doctor for a “physical” checkup. They have two objectives in mind:

  1. To identify any potential maladies that are not apparent to themselves;
  2. To identify opportunities for enhancing their overall physical well-being.

BUSINESS DOCTORS

Some management consultants traditionally serve as “business doctors” to their clients. As a natural part of their confidential relationship, they often diagnose problems or recognize opportunities for their clients which result in their “prescribing” treatment to “cure” a problem or enhance the well-being of their client’s operations.

Today, the management advisor calls this area of service Management Advisory Services and the physical exam is called an Operational Review.

OPERATIONAL REVIEW

Management consultants define this as the process to assess performance, identify opportunities for improvement and develop recommendations for further action.

In lay terms, it is “what top management would and should do to maximize its use of resources if it had the time and skill it needed.”

PURPOSE OF REVIEW

Assessing Performance

It is important to assess the manner in which activities are conducted as compared to established goals and objectives and other appropriate management criteria.

Identify Ways To Improve

Operational improvements such as increased economy, efficiency and effectiveness are key objectives of operational reviews.

BENEFITS

Before any manager commits the resources necessary to conduct an operational review, he or she must be satisfied that significant value will be received.

These anticipated benefits will fall into one or more of the following categories:

1. Identification of problems 2. Cost reduction 3. Revenue and profit improvement 4. Identification of undefined goals and objectives 5. Operational improvements 6. Evaluation of performance 7. Review of degree of compliance (policies, regulations, objectives 8. Assess management information/control systems 9. Identify trouble spots in future operations 10. Provide channel of communications; and 11. Provide independent, objective evaluation of operations.

CONCLUSION

Just as small people need physical examinations no less than “large” people, it is important to remember that small busi- nesses can benefit from an Operational Review just as much as larger businesses. Oftentimes, managers of small businesses are “so close to the trees” that they do not see the “forest”. Things may be “slipping through the cracks”, yet they may not hear the “creaking”.

The management advisor plays a vital role to his/her client by:

1. helping to evaluate the effectiveness and efficiency of the client’s organization;
2. helping to develop and implement their business plans or action;
3. measuring financial impact of plans and actions;
4. being an objective observer; and
5. serving as an information resource.

Management Advisory Group actively provides operational review services to its clients. For more information, please click here to contact us or e-mail us at stan@fambizdoc.com

Business Planning Indications of Need

1.  New or inexperienced management
2. Large work backlog
3. Low sales growth
4. Inability to obtain financing
5. Inadequate sales volume
6. High personnel turnover
7. Unacceptable gross profit
8. Low personnel morale
9. High costs (e.g. energy, maintenance)
10. Disagreement among management
11. Product/service obsolescence (lack of marketability)
12. Low personnel productivity
13. Losses or low profits
14. Increased competition
15. Negative cash flow
16. Poor or lowered market share
17. Poor or lowered credit rating
18. Customer dissatisfaction
19. Significant litigation
20. Uncontrolled inventory or work in progress growth
21. Insufficient working capital
22. Retirement of owner or other key management succession

For more information about how Management Advisory Group can help your business, please click here to contact us or e-mail us at stan@fambizdoc.com