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Operating a business is an
exciting experience. The doors are open
for business and all is well. You have a
wonderful business plan and great enthusiastic employees. You are “the king of
the world." Is it your plan to always be
the king and to be present everyday, 24 hours a day? This is not possible or practical. There is only one reason why your business
must run without you, RISK.
You no doubt have family
members able to assist in time of crisis and there are sons and daughters you
trust to take over doing this or that, but the bottom line is when the pillar
of strength is down or out what’s a business to do? The more the success of
your business depends on one individual making the day-to-day decisions, the more
the business is put at risk to falter and fail.
Having a small business with few employees does not remove you from the
everyday issues that attack every business.
Once your business begins to succeed, as the business increases, control
begins to disintegrate, particularly if you did not plan for the levels of
growth that your business is bound to experience.
How do you eliminate small
business vulnerability? Create an
operation manual and keep it updated and stick with it. Every small business, in fact every business
must have a strategy to address five major challenges that will lead to
business failure.
Survival Strategy # 1.
Secure financial resources. A company
that does not have the financial resources to maintain current inventory or
personnel or cannot convince a bank to invest in its growth is asking for
trouble.
One way to combat this issue
is to show that you have taken the time to outline cash flow strategies. You will need to understand how business incubators can assist. They are usually comprised of a number of
small or growing companies that share services such as secretarial, accounting,
meeting rooms etc. The objective here is
to reduce some of the overhead costs associated with a single-company facility
and free up cash flow. For new businesses
this is a great option.
Credit card advances are another way of securing funds, however remember that this is a
loan like any other and failure to pay off the debt will result in major
problems later on. Customer Prepay can significantly increase your cash flow. The cost of carrying unpaid accounts
receivable can be more expensive that discounting for payment up front. Consider inventory
clearance sales if you have aging inventory taking up space in your
warehouse. If you have rental space,
office or warehouse/storage space that you could section off and rent on a
month-to-month, cash up front basis, rental
arrangements may be a beneficial cash flow strategy. Trade and barter is an old
method of getting the goods you need and many small businesses are open to this
type of product/service swap.
Survival Strategy # 2.
Know your worth. The worth of a
business is determined by how valuable a commodity it is to another business or
company for a merger or acquisition, rather than its value as a stand lone
business. If you were to sell your
business today, what industry might be willing to acquire it? Is there a small
business out there that you might want to acquire, that would be detrimental to
improving your customer base? Think
about it.
Survival Strategy # 3.
Drastic changes demand
drastic action. When demand for your company’s
products/services diminishes, with little chance of returning, you have to act
and act now. Today small businesses will
have to redefine themselves over and over in the course of its existence if it
is to stay in business. For example, you
operate a locksmith business you may want to look at partnering or learning
more about security blinds, securing not just doors but also windows. Yes, it is taking your business in a new
direction, but the market may demand it.
Survival Strategy # 4.
Transitioning for the
future is vital. It is vital that you plan for not only the
start-up of your business, but the growth of your business. Long term planning is challenging when you
are just getting off the ground, but growth in your industry may occur fast. If
you do not have a plan in place the growth spurt may take you by surprise and
stifle your potential for greater success and profit in the future. What would you do if a key employee had to
leave unexpectedly? A major supplier is
out of commission due to a fire, have you lined up other suppliers to see how
quickly they can deliver your products?
Do you know who they are and what they can do for you today?
Survival Strategy # 5.
Create an Operations Manual
that outlines the many facets, (or divisions, products and services) associated
with your business. You may want to
include supplemental information i.e.
Advertising plan, repair directives for heavy equipment, and the latest
month-end financials for the business.
Remember it is not how large your operation manual is that makes it
effective, it is how detailed you are in providing information about the processes
that go into operating your business. For example, your table of contents might
include the following.
Operations Manual
Preface – A letter from the
President/Owner
The Industry – A brief
industry overview
The Organization – Company
History, Future Outlook, Business Description etc.
Business Management – Daily,
Weekly, Monthly Reports, Quarterly Analysis etc.
Daily Operating Procedure –
Opening and Closing Procedures, Business Appearance Standards, Scheduling,
Supply/Inventory List etc.
Security Procedures
Emergency Procedures
Salesmanship and Selling –
Qualifying the Customer, Identifying Key Decision Makers etc.
Sales Policies and Procedures
– Market Prospecting, Sales Follow-Up, Order/Form Receipt etc.
Customer Service – Product
Knowledge, Return and Exchange Policy etc.
Advertising and Promotion
Merchandising
Inventory Management
Computer Systems Operations
Human Resource Administration
There is little doubt that
having an effective Operations Manual will benefit your business and assist
your employees in helping you operate efficient and profitable business. The manual will also be a major asset should
you ever decide to sell your “turn-key" business.
DETRA D. DAVIS is a technical
writer with more than 20 years experience in business-to-business,
business-to-consumer copywriting. She
creates Digital Business Card content, instructional, operational and how to
manuals for business and industry. Contact: J. Davis & Associates, http://www.jdavisassociates.com or email her at: d.davis@jdavisassociates.com
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