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'Getting it right' - growth or failure?
Published on: 13 March 2008
Research was carried out in 2007, commissioned by Portland Business Recovery, across a range of professional services including accountants, solicitors and banks to highlight the key aspects that growing businesses need to 'get right' that could make the difference between their success or failure.
The research highlighted that:
Entrepreneurship - There are three parts to being an owner manager of a business and being an entrepreneur:
1.Working head down on production
2.Managing the actual business
3.Putting your head above the parapet to plan for the future
Overall it was assessed that the most successful formula was 20% planning, 30% managing and 50% doing, but this does not always happen. The view expressed was that most business owners spend 95% doing, 5% managing and 0% planning, which means that they can grow the business to a certain size, but it will grow no further. This is when owner managers are particularly vulnerable and need to be aware of the limits of their abilities.
Letting Go - It is important for businesses owners to be aware that the business has no capital value to a third party until it can operate successful without them and that they can walk away from it. Delegation doesn't however mean the loss of control, provided the monitoring and control of the business is supported by an adequate reporting process. It is particularly important to have the correct management team in place so that the business can embrace other people's involvement, without everything relying on the owner manager.
Open Mindedness to change - Generally the market place for business has grown geographically and this brings in political, currency and cultural risk which companies can struggle to understand along with additional competition and 'new ways'. Companies have to have an outward-looking approach and have the ability to make internal changes to keep ahead of the market and fulfill their customers changing requirements. Companies should not automatically be reluctant to talk to competitors and other companies in their industry as this can help them learn and give them the confidence to adapt to change.
Carl Faulds, Managing Director of Portland commented: "The consensus view within the research was that the difference between success and failure had a lot to do with whether the owner manager is able to continually adapt to a new environment, to recognise the root of problems, the resources required, then actively manage constant change."
"The single-mindedness which helped get them to a certain stage in business growth can also prevent them from being able to grow further. There can still be a tendency to think that if you've got the sales at the right prices, then everything else will probably be OK, but if the company isn't managing the process well, if it hasn't got the back office to support the growth, at the very best, it's not going to be able to maxamise the profit."
Carl went on to say: "but getting it right isn't necessarily always about getting bigger. Nearly everyone says a business can't stand still, which is generally interpreted as you must grow. I think it can also mean staying the same size but, evolving- developing different products, managing changes to the customer base and so on. Maybe 'Getting it right' could be just getting what's right for you."
To assure that you are indeed 'getting it right' within your company, copies of the report can be found on www.portbfs.co.uk or by contacting Carl Faulds at Portland on 01489 550 440.
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