I started a manufacturing business a few years ago. I worked hard, hired staff and invested in equipment. So what on earth do I have to confess?
The business did well. I enjoyed a great lifestyle for many years, thanks to my company. So why did I close my business 8 months ago? Why did I have to close my doors?
This is what I have to confess:
1. Patchwork Growth: I confess I was too busy, and thought I was too clever, to need real systems.
As you grow, you add on people, processes and systems in a patchwork, ad-hoc way, as and when you need them – stitching things together as you go, because who has time to synchronise and systemise your business when you are in the business of business?
The weakness in this method is that things eventually start to fall through the gaps, minimal cohesive clarity into a business, inarticulate reporting, poor visibility into the health of your business – and let’s be honest here – sleepless nights.
If you’re still using spreadsheets to run your business, you probably have the same frustration that I did.
There are great systems out there that bring everything together into one, integrated system. If you have the budget and resources you could look into implementing SAP into your business. If you need a more affordable, agile ERP solution you will enjoy QuickEasy BOS.
2. Dealing with history: I confess I relinquished control to the ‘experts’
Accountants are great at what they do – they look at your transactions and record a financial history. This is what they are meant to do. They can tell you ‘that was a bad decision’ or ‘that was a good decision’ based on historical financial data.
I am not an accountant, and as a business owner I felt a bit intimidated by accounts, so I handed over that part of the business to the ‘experts’ and I relinquished my control.
The problem with deferring to the experts is that I had no foresight into where my business was headed. What I needed, as a business owner, was someone who could forecast and plot out the future – showing me potential growth as well as potential pitfalls: what machine was wasting my money? What employee was taking too long to do a job? What client always cost us more than we quoted with every job?
You could use the help of a business coach to help you set vision, business positioning and growth, or look into using an outsourced FD, who can help you forecast your cash flow and financial planning alongside of you, without committing to a hefty monthly salary.
3. Locked-up Profitability: I confess I didn’t know where to find buried treasure
Every business has untapped profitability just waiting to be discovered; be it by reducing spoilage, or better downtime-management, or improved utilisation of your fixed assets. I confess that I didn’t know where to look to unlock my profitability more efficiently.
What I should have done was apply the Theory of Constraints as put forward by Dr. Eliyahu Goldratt.
The Theory of Constraints (TOC) helps business management see what limitations there were within each system of the business, be it old machinery, poor staff attitudes, or expensive office rent, and what bottlenecks are slowing down efficiency and, ultimately, profitability. This ongoing process would have taken time, and required some change management across the business, but it would potentially have saved my business.
Alternatively, any ERP system worth its salt would have shown me this with ease.
4. Constant Angst for the Unknown: I confess I was walking blindly into the future
Every waking minute of every day (and night) of a business owner is plagued with ‘The Fear’ – it was true for me too, and I had no idea how to alleviate it:
- The fear of whether or not the decision I just made was the right decision, or one that would bring me closer to closing my doors
- The fear of failure that inhibited me investing time to dream over my business
- The fear of disappointing my family, my colleagues, myself.
- The fear of the unknown – Where is this business going? Can we keep our clients happy? How far is that job from completion? Can I afford to pay salaries? What are my competitors doing that I should be doing better?
The saying goes ‘we only fear what we do not know’ – and that holds true for business owners.
What I needed was a helicopter view of every stage of production, every quote that was pending approval, every invoice that was waiting to be paid and every customer that was waiting to be called.
What I needed was clarity and control and my fear would have been gone, because the unknown would have been replaced by the ‘known’.
Note, I said ‘helicopter view’ – because the worst thing for a business owner, and the team, is a micromanaging control-freak. All that is needed is high level views so that there is enough information to ensure the ship can be steered in the right direction.
Get a dashboard of your business cycles – from CRM to quotes to production to invoicing to accounts – and you will sleep much better at night. You can try project dashboards like Asana and Trello, or a full business overview from BOS.