Making the transition from being a salesperson who owns the business to the CEO of a growing business is a very difficult step for the majority of small business owners.
Statistics show that the majority of Australian businesses, and certainly the majority of businesses that we deal with on a daily basis, are small organisations with no more than 10 to 15 staff. In these situations the business owner performs staff functions and whilst this may be an important feature in cost control it may also be a feature limiting the growth of the business.
The following strategies may help business owners take the next step to enable them to manage the business they run rather than work in the business they own.
- Management must provide training to staff and provide them with budget targets, skills, guidance and direction so that they can monitor staff performance. Staff with proper training, motivation and direction are more likely to achieve the targets and budgets set for them
- Management should employ activity based costing approaches. That is, account for the cost of each division of their business so they can be certain of the profitability of their growing companies.
- Management should not assume that growth is profitable growth. They must delve into the accounts they produce to understand their meaning.
Traditionally, businesses that fail do so within the first five years of trading and strategies like those discussed above may help companies get over the hump and survive and thrive into the future. Management that can’t take a step back, then train and monitor their staff, will lose the ability to direct the growth of their businesses.
Macks Advisory can help businesses struggling with the financial effects of growth. Through processes like voluntary administration, we help give business owners the second chance that may be needed to grow and survive.
Members with queries are invited to contact Peter Macks at Macks Advisory on 08 8231 3323 or to firstname.lastname@example.org.