There are many challenges in business that are hard. Many of the challenges facing the owners of small and medium business enterprises (SMEs) are also shared in common by the CEOs of small, under-resourced organisations. Here are some of those challenges:
There is always too much to do. Deadlines to be met, crises to be dealt with.
If it’s a new business there will be staff to recruit, systems to establish, new suppliers and customers to be found.
If you’ve bought a second-hand business or taken a CEO job in an existing organisation, it will be a bit like buying a second-hand car. As you head on down the highway, you’ll probably discover there are a few things under the hood that could do with a tune-up.
If you’re the business owner or the CEO, you won’t have a boss from whom to seek guidance about the problems that are inevitably arising. It’s lonely at the top.
On the other hand, you will be the person from whom the staff will want to seek guidance and engage with on a number of levels. If you want a happy workplace you’ll need to be both visible and engaging.
This list of challenges is exhausting, but not exhaustive. So, it’s little wonder that a recent study found that CEOs work more than 60 hours per week on average and that they work both on weekend days and when they’re officially on holiday. The work of a CEO or SME owner is relentless.
In the face of grueling schedules and challenging workloads, the biggest challenge of all is to avoid getting trapped by the daily “urgent” tasks and deadlines of the business to the exclusion of the single most important activity of CEOs and business owners – THINKING.
Because good productive thinking takes something that CEOs and SME owners lack most – TIME.
Irrespective of how successful a business is, there is always a lot to think about:
Business planning issues – strategies, goals, objectives (including tracking performance)
Monitoring the changing operating environment
Dealing with various business shocks
Improving organisational culture
How to be more effective as a CEO or business owner
Anything that’s keeping you awake at night.
Some people say that good productive thinking takes not only TIME but also SPACE. That’s why some management teams go offsite for periodic meetings or planning retreats. No matter how busy a CEO or business owner is dealing with the day-to-day operations of the business, it’s important to regularly get out of the business and put in the thought required to work effectively ON the business.
The time spent doing the hard thinking always pays dividends – more time devoted to productive thought about the business will make every other aspect of the business easier and less time-consuming.
Would you rather spend your time dealing with day-to-day crises, or avoid most of those crises by thinking about the business?
If you could spend more time thinking and less on the daily business grind, what are the issues that you would like to solve first?
Our business owner boards provide the environment to regularly step outside your business and do some hard thinking. Click here to find a board near you.
If you have a one-person business, then you do it by yourself. Maybe you trade securities on the exchanges that facilitate that trade, or you have a drop-shipping business and sell stuff on Amazon or Shopify. There are many examples of great one-person businesses.
But most businesses are not one-person businesses. They range in size from small businesses that involve two or three people right up to large corporations that employ hundreds or even thousands of people. And one of the most important assets that these businesses all have is their team.
Why The Team Matters
The team is the single most important factor in determining success. A dysfunctional team can destroy any enterprise, no matter what other factors that it has in its favour whereas a great team that’s focused on its goals and objectives, and works well together, will prevail even in very difficult circumstances.
So it’s well worth putting time and effort into building the best possible team that you can.
When it comes to teamwork, sports analogies are just too apt not to embrace – so think about the ALL BLACKS.
Every team has a culture and it’s better for the business owner or CEO to be proactive in fostering a positive team culture, rather than hoping that the right culture will develop organically.
Most successful businesses have a written business plan, and it’s important that’s shared with the team so that everyone can focus on achieving the business’s goals and objectives. But it’s also useful to document the characteristics of the team culture that you want to achieve and rules for how the team should interact. This will help in several ways:
The documentation task will assist in clarifying your thinking about culture.
It will provide a reference point that the whole team can use.
It will help inform staff selection.
It should be used in staff induction.
The culture needs to:
Provide a safe environment where team members feel free to ask questions, make (and own up to) mistakes, challenge ideas and each other
Foster trust and mutual respect
Encourage open communication and the sharing of skills and knowledge
Encourage staff development through training and the acquisition of new skills.
A positive workplace culture will boost morale and employee satisfaction, and foster camaraderie and loyalty. This will increase productivity, improve customer experiences (happy employees will interact far more positively with customers as well as with their coworkers), lower staff turnover, and, assist in recruitment.
Staff Recruitment and Selection
To build a great team, it’s important to put time and effort into rigorous selection. Think about the ALL BLACKS again.
Sound recruitment practices require some investment of both time and money. But failing to recruit well can be even more costly in terms of damage to your team and your business. It is generally better to put in the time, effort, and money to recruit and select carefully.
Here are a few principles that have worked well for me:
Ensure that anyone that you hire is a good fit for both your team and your workplace culture. While you may require certain skills and experience a good fit for your team (and a great attitude) may be even more important. Many gaps in skills can be adequately addressed by training and on-the-job mentoring and skills transfer. It’s much harder (and often impossible) to fix a bad attitude.
Resist the temptation to hire people like you. We all tend to have this bias, but it really does take all sorts to make a world and a good business. Diversity will bring more different perspectives and contribute to increased productivity, greater innovation, and better decision making.
Make sure that your induction process for onboarding new employees includes a session about your business’s values and culture. This is best delivered by the owner or CEO as this will help to emphasise its importance.
Embrace the culture and model the behaviour you desire
Make everyone feel safe.
Be sensitive to the feelings of others. Provide validation and support where necessary.
Don’t ever discipline any employees for making a mistake. Assure them that it is okay to make a mistake and help them to fix it.
Admit to your own mistakes.
Communicate openly and with respect.
Challenge people, and also encourage them to challenge you if they think you might be about to make a mistake.
Build the team through team events
Team meetings and other events are essential to building team spirit and a sense of belonging. So have regular team meetings with real tasks ensuring team input – not just “information sessions”.
Make sure that all members of the team get an opportunity to have their say.
Always thank your people for their efforts, and praise their achievement of jobs well done.
Encourage cooperation and help people to trust each other.
Team social events are great but group training can also be a good occasion for team building. Other events can include birthday morning teas, Friday after-work drinks, karaoke nights, etc.
Listen to your team, and don’t micromanage
As the leader in your business, you need to give constructive criticism where it is due. But this should always be done respectfully and in private and in the spirit of helping them to grow.
Listen to your team. If you have been giving them the right encouragement to challenge you, they will help you to avoid mistakes.
Don’t micromanage. If you’ve hired good people and provided any required training, there is no need. It will also destroy trust, lower team morale, and reduce people’s confidence.
Members of The Alternative Board are in the fortunate position of being able to access the collective experience and knowledge of their fellow members. A confidential and trusted environment in which your team issues can be discussed is just one of the benefits of membership. Contact us to find out more.
Rising input costs are biting into cashflow for many businesses and, as we know, if the cash dries up, other problems follow thick and fast. How we manage our cashflow in tough times is a challenging question for business owners but – as with most things – a good plan can get you on the right track.
If you’re looking to improve your cash position have you thought about how you can take stock of your products and services and focus on areas you can improve?
With this in mind, do you have in place?
A cash target i.e. two months of core capital, (two months of Labour & Operating expenses)?
Processes to improve cash on hand (see some ideas below)?
Regular Forecasting, to predict future Profit and Cash positions?
Cash flow management goes hand-and-hand with business management. If you’re looking to improve cash in your business try the following suggestions;
Focus on it – without cash, you fail!
Look for ways to constantly improve your business.
Shorten the cash cycles (the time period between when a business pays cash to its suppliers for inventory and receives cash from its customers). In other words, speed things up.
Following is a list of suggestions that could improve cash in your business. See which ones might work for you.
A daily Cashflow statement so you see what has come in, what has gone out, and what requires attention today
Adjust your billing process to ensure you aren’t missing any money owed to you and to get everything on a schedule.
Send friendly reminders to clients prior to deadlines.
Look at your terms of payment, and offer incentives for alternative methods of immediate payment (i.e. direct deposit).
Check for customer satisfaction as soon as jobs are completed, and send invoices immediately
Ask for better credit terms from key suppliers or see what expenses you can pay with a credit card (you still have to pay, but you may be holding your cash for longer)
If you are achieving 10%+ Net Profit over a longer-term (Rolling 12 months) your cash will be improving.
As inflation is rising, adjust pricing and look to improve margins and profit.
Ensure your Labour productivity is improving: $ of Gross Profit for every $ of Labour
Forecast Profit and Cash using sales and the true margins from your business
Rolling 12 numbers: COGS %, Direct Labour, Operating Expenses.
Assumptions are constantly changing so keep it updated, we suggest a re-forecast every three months and set 90 Day Goals for the next Quarter.
If you would like to improve profit and cash in your business, reach out to The Alternative Board. We offer NumerEyes reports to assess your business and work with you to achieve your Profit and Cash targets. And If you have any other ideas for improving cash in your business please let us know!
Keeping calm and carrying on – that’s the current steady stance of small business owners despite the backdrop of rocketing Omicron cases, disruptive protests and ongoing uncertainty.
In The Alternative Board’s Summer Pulse Check, nearly two-thirds of business owners report their confidence is holding steady in the face of ongoing challenges.
For many, this confidence is lessened by government policy and economic conditions, although in contrast, a smaller number report that government policy and economic conditions improve their confidence.
Three-quarters of business owners report they are having to manage labour issues, including skills shortages, juggling staff absences or retention. The vaccination rollout has not had a huge impact on their workforces or businesses – a small number report staff losses but for the majority, it has been business as usual.
After last year’s lockdown stresses, when our Spring Pulse Check showed owners were at their lowest ebb since the start of the pandemic, the summer has seen business owners rally, finding ways to manage uncertainty and pandemic pressures. Chief among the stressors are rising input prices with lack of sales and supply chain issues not far behind.
To get through 2022, business owners are looking for more government or financial support however recent changes to lending conditions has not had an impact. Working capital and customer relationships are also holding steady and while the future isn’t bright, the current pulse is stronger than at the end of 2021.
The Alternative Board supports small to medium sized businesses and their owners through advisory boards consisting of other local business owners, expert one-on-one coaching, a suite of business planning tools and business mentoring.
The Pulse Check is run as a regular monitor of the sector. The Summer edition went to 3520 of our members and associates between 18 – 24 February. Results have a confidence level of 90% and a 5% margin of error.
Alfredo Puche is the owner of The Alternative Board New Zealand and the area franchisee for Nelson and Marlborough. You can contact Alfredo on 027 427 9172, [email protected], or connect with him on LinkedIn.
One of the main issues contributing to a lack of business confidence right now is difficulty in recruiting appropriately-skilled employees. The Alternative Board NZ’s Spring Pulse Check showed that 37% of the businesses surveyed were suffering due to the inability to recruit the people and skills they required.
COVID-19 restrictions have put additional strain on the labour market and exposed the problem, but it would be too simplistic to suggest that the pandemic is the sole cause. Other factors may include
Long-term underinvestment in training for New Zealanders to acquire key skills.
Competition for labour from Australia, where wages tend to be higher and living costs are often more favourable.
Significant expansion in the public sector, which leaves fewer people available for employment in businesses.
Irrespective of the causes, businesses need to think about how they will compete to recruit and retain the employees they need in the current labour market conditions.
The best way to do that is to ensure the business provides a happy workplace with a positive workplace culture so your good staff will not want to leave and others will be attracted to apply.
Business owners and CEOs should strive to create and maintain a happy workplace for their employees – and remember they spend much of their own time there. An unhappy environment only adds to their personal stress and workload.
Happy workplaces have lower staff turnover, so recruiting, onboarding and training new employees becomes more manageable.
A workplace culture where employees feel safe, comfortable and valued could make the difference between success and failure in recruiting and retaining the talent that your business needs to survive. Creating and maintaining such a workplace should be foremost among your staffing strategies.
Of course, there are other ways that you can try to compete in a tight labour market. You could try offering more money – if you are offering way above the market pay rates you are almost certain to attract a few applications from mercenaries. However:
Can you afford to increase your payroll expenditure? Remember, this is likely to be a long-term increase in your business expenses.
There is no guarantee that the mercenaries that you attract will have the attitude that you are looking for. They may only be interested in the money, and not be so interested in the long-term success of your business and may leave if they get a better offer.
You may rely on some of your best people to train the new recruits in at least some aspects of the job – so make sure there is no apparent pay gap between your loyal long-servers and the fresh faces they are training.
You could try offering perks (such as free health insurance, paid time off, kiwi saver co-payments, discounts to your business’s products or services etc). Some of these have only a small marginal cost to your business and, used wisely, can help in building employee loyalty. However, some perks can add substantially to your business costs and you need to make sure that any perks are accessible to all staff rather than a recruitment bargaining tool, adding stress and ultimately being counterproductive. A happy workplace is probably the most cost-effective strategy for recruiting and retaining good staff. In a happy workplace your employees will help in attracting the talent that you need to your business and attract more customers.
Our Summer Pulse Check is now live. The Alternative Board seasonal Business Pulse Check is gaining significant traction within the market and our voice is starting to resonate with key politicians including the Minister for Small Business, Stuart Nash. You can have your say on the constrained labour market and other issues by clicking here.