Are you having a tough time keeping the money you earn in your business? Are you losing money every month? Do you even know if you are losing money?
Business leaders, particularly small business owners and church leaders, are incredible people with passion and drive. Imagine that entrepreneurial spirit reinventing the world, bringing the next great idea that changes the community or leading a congregation on a tough spiritual journey. What is missing? It may be the fundamentals such as a vision or a strategy to focus your business. It may be a system to better distribute your product or idea. Your leadership skills may need to be improved to guide your team toward goal accomplishment.
An organization needs a vision, a mission, and direction. It needs an accounting system, a marketing plan, and an inventory management system. The leader needs to know what is going on in the business and how to direct its path. Having systems in place based on the right analytics reduces guessing and chaos. You can begin to shape your future with special insights you lacked previously.
I remember many years ago while in the Army, I was serving as a commander. I actually was privileged to serve as commander twice. For my first command assignment, the unit was already high performing when I arrived and I was told to not ruin it or change it much. It was running fine, but….I like to improve everything I become involved with. I dislike the status quo. I believe that you can always improve, otherwise you risk complacency. So at the end of my time as commander of this unit, I was able to improve a few small issues while still not violating the guidance given and fight through the usual contentment, but overall, the unit still performed at a high level from an outside view, and I didn’t move the needle very much. It wasn’t in my nature to just maintain a certain level.
I was fortunate to be chosen to command a second time in one of the few high visibility units on the base that were reserved for experienced officers. This unit had a critical mission, but was performing at a mediocre level. It did not have a very good reputation. I was excited for the challenge and to be able to get in there and make an assessment. There was a lot of growth potential. It was an exciting experience to really fix an organization.
As a leader, you determine your future. Having systems in place and knowing your numbers sets you in the right direction. Collect useable, but ethical data so you can analyze the trends and make better decisions.
Here are 3 areas where you need to concentrate your efforts today to move forward:
1) Know your numbers,
2) Lead your people, and
3) Improve every day,
Know your numbers. An effective accounting system will track and show transactions, costs, and ultimately where your money is going. Monthly financial statements provide a snapshot of where you are so you can make improved decisions. A cash flow statement can help to show if you can pay your bills in this period or if you need a short term loan. Financial ratios can show how liquid you are or how much risk you have assumed. Conducting relevant financial analysis can also measure your goals and projections versus actual performance.
Lead your people. Hire the right team. Set and enforce high standards. Surround yourself with high performers and provide the right incentives and key result areas and key performance indicators. Reward performance. Don’t fall into the trap of uniformity of pay. Pay is to be earned, not entitled. Bonuses should not be split evenly, but earned based on performance. Show courage when change is necessary.
Improve your processes. Having well-organized standard operating procedures provides consistency for your team. Organized and productive meetings will invigorate and not derail your efforts. Figure out the waste that your employees probably already know about, and do not accept the answer that is what we have always done. Collect your receivables and disburse your payables, on time every cycle.
This focus will help grow your business at the right pace, but ensure you have the fundamentals in place: vision, strategy, values, and goals. Perform an analysis of your strengths and weaknesses so you can take advantage of opportunities and watch for threats. Embrace analytics so you can find a competitive advantage and not rely solely on your gut instinct. Build systems with back-ups so you can create a smooth running operation where an adverse situation does not stop your progress and goals accomplishment.
You don’t have to be an expert in the understanding and application of analyst tools in your business, but you must have determination to see it through. The key is simplicity and relevant application so that you collect and keep more of your hard earned money. Also, I encourage feedback so leave a comment or email at comment@stephenmclain.com on issues you are having in your own organization which will help me to address them in this blog. Start being more engaged and focus on improvement every day.
Copyright-2016 Stephen McLain