Managing Your Business
We have been offering weekly business tips and week 14 focused on management activities and they included the following:
- Create a vision for your business
- Select and define your market
- Select and define your service offerings
- Design an organizational structure
- Define the critical success factors
- Define the key performance indicators
- Prepare activity targets and cash flows
- Organize financial resources
- Prepare profit plans
Yes, all the above are management activities, but how many businesses do a good job of performing any of these activities or even perform all of them? When you assess the list of activities, you think, wow that’s a lot of work. Where do I start and how do I get my arms around all this effort?
The problem for many businesses is that they really don’t do a good job of focusing on any of these activities. As a result they wonder why they get into trouble and end up putting out fires. These management activities are called “working on” your business in contrast to “working in” your business. It starts with having a clear vision for your business and knowing where you want to go. This is the first step in the process and leads to development of the other activities. Without having a clear vision, it is impossible to do a good job of performing the other activities.
I think working on your vision for your business should be a never ending process. The more you focus on clarifying and developing your vision it will enhance the time and effort spent on the other activities. You’ll begin to develop a better idea about your market, your service (or product) offerings, and enhance the design of an effective organizational structure.
Understanding of the critical success factors for your business will have greater clarity and focus. This leads to more effective selection of performance indicators and creates a performance measurement system that will help guide you toward your true vision. Linked to performance measurement are activity targets, goals, and objectives.
Once good financial systems are in place, it makes it easier to effectively organize financial resources and develop accurate cash flow projections. Cash is the life blood of any business. While many businesses worry about cash flows, most of them fail to do a good job of managing it and developing accurate cash flow projections.
Finally, we get to the preparation of profit plans. Most businesses fail to create a solid foundation for developing reliable profit plans. For the most part I think businesses are winging it by putting projections together with a hope and a prayer rather than utilizing a planning system grounded on reliable data and assumptions.
So, fine tune your vision and one good action will lead to another. More importantly, set aside the time and the resources to perform these management activities. Learn to “work on” your business as opposed to “working in” your business. If you can achieve this level of focus, I think the results will speak for themselves.