‘You are cleared for take-off.’
‘Just a moment. What does that button do?’
Let’s be honest, you’d never try and fly a plane unless you were totally confident of the controls, had been properly trained and knew how everything worked. But when it comes to a business taking off, that’s exactly what people do. They hope their business is going to fly but they often don’t understand the key mechanics involved and don’t have the right systems in place when things go wrong. Is it any wonder that so many businesses crash?
Of all the new businesses created every year, barely 40% will survive to see their fifth birthday. It wasn’t that these companies weren’t driven by people full of ambition and great ideas, it’s because there were key areas of their business that weren’t operating properly and they were unable to fix them when trouble arrived.
46% of SME’s fail due to incompetence and a further 30% unbalanced experience. With so much bad handling you can see why banks and investors aren’t exactly rushing to lend money to smaller businesses. They simply don’t have enough confidence in the person in charge. If CEO’s could show that they had their business totally under control they could solve one of the biggest issues facing SMEs- cash flow.
But the problems are out of my control you say. Yes, you can blame market forces, changes in consumer trends, currency fluctuations, new competition, but part of being in business is preparing yourself for these eventualities. You know that there will be difficult times ahead, it’s about being ready for them and proving to others that you’re fit to be in charge. Investors and employees will get behind someone who has a strong, clear understanding of their business and the market. Lack of knowledge won’t just hit your bottom line, it will affect the people you want to hire and keep.
So which part of the controls don’t you get? The evidence shows that all SME’s have failures in some part of their business. Let’s take a look at the six key areas- vision, purpose, values, market positioning, business growth indicators and strategy implementation. Research shows us that businesses tend to be weakest in the areas of vision, purpose, and strategy implementation. Why should these be problematical for so many CEO’s? Okay, back to the analogy. If you don’t have a clear flight plan, you shouldn’t really be flying. Unfortunately, too many businesses haven’t nailed down what their purpose and vision is.
Why do these two areas matter so much? It’s because their they are the principles that guide your business, unite your workforce, set you apart from the competition, and drive you forward. Is it any wonder that without strong purpose and values businesses also fall down on strategy implementation. If you aren’t clear where you’re headed, how you can put together a strategy to get you there?
And you can’t you make up for weaknesses in one part of your business by being really strong in other areas. You might as well say, ‘I’m really food at taking off, but not so hot on the landing bit.’ All parts of your business are interconnected. If you’re strong in marketing, operations and sales but weak in cash and talent, it will soon come back to bite you. Without strong cash flow you can’t hire the right talent so your marketing, sales and operations will suffer. And there aren’t any short-cuts. The only answer is to understand , implement and evolve each area.
And once you’ve mastered the key components of business strategy you must keep learning. Someone who assumes they know it all and don’t need to do any more is not the person you want at the controls. And if there’s an area you don’t like, or simply don’t understand, get someone to help you. None of us can be great at everything, but what you can ensure is that there’s an expert sitting right next to you when things go wrong. They’re called co-pilots.
There are no short-cuts to running a successful business. You need to be prepared to change what you’re doing and adopt new practices to make your operation strong enough to survive. You could of course just ignore everything you’ve just read and carry on as you’re going in the hope that everything will be fine. If that’s the case, good luck. But I’ll leave you with one final sobering thought. Only twenty per cent of plane crashes are down to the plane, eighty per cent are down to pilot error.