I’m not sure if we were more surprised or disappointed. In either case, it got me asking questions.
What caused this business to fail? What could the owners have done to prevent its doors from closing?
Based on my experience, here are three significant ways small businesses or business units can avoid failing:
- They create a realistic plan. Many businesses don’t have a plan, and if they do, it’s often short-sighted and/or incomplete. Realistic plans have to leverage your strengths, minimize your weaknesses, maximize your opportunities (current and emerging), and thoughtfully address your threats (current and emerging). Good plans result from creative thought and deliberate, mindful strategies and actions.
- They have competent leadership. Leaders must possess the skills to establish strong employee relationships and the ability to build a focused, engaged team. Caring, creativity, consistency, communication, and attention to customers are key.
- They use time efficiently. Leaders have established priorities, are highly productive, and avoid firefighting. They solve problems before they occur, are focused and purposeful, and think issues through in advance. They plan.
Perform a reality check on how well your business or business unit(s) is doing in these three critical areas.
To do this, spend at least half a day with key members of your team to review the business’s performance in each of these areas. Give everyone the assignment of assessing one or more components of these three points. Be mindful of any “rose-colored glasses” they may be wearing.
If you’re thinking, “This isn’t necessary; our company is big and stable; we’ll never go out of business,” think deeper. Even if this is true, ask these questions:
How could we become more profitable and return more to our shareholders?
Could the business, division, or unit you lead be shut down for less than stellar performance?
Are you doing the things today (this quarter) that will assure your business will be good tomorrow (next quarter)?
Keep your eyes open-always.