“I mentored one small business owner and asked what margins they aimed to achieve with their pricing,” says Stilwell.
“Not only did no one understand my question, but just about all quotes that went out the door were losing money, which explained the cashflow issues.”
Upgrading resources
Adding resources is always a challenge, particularly for small business owners who are used to being in charge of everything within the operation.
According to Stilwell, founders often fail to let go, even once their business is established, because they struggle to trust anyone else to take over the responsibilities and execute them in the same way they would.
The paradox is that they can fail to brief new starters properly once they come into the business or take them through a proper induction process, resulting in much of the information the new people need being tucked away inside the owner’s head.
“This automatically sets up any new team member for failure, or at least a challenge in mastering their new role,” Stilwell explains.
Over-interview job candidates
It’s also important not to shortcut the interview and selection process, which can lead to the wrong people landing the job, advises Peter Smith, principal of Business Profitability.
“We might be in a tight labour market, but you can’t just interview someone for 20 minutes, do a couple of reference checks and offer them the job, because you don’t know what you’re getting,” says Smith, who has run a small business, and now works with others trying bolster their profits.
“Try taking more time during the onboarding process, spending a couple of hours in the interview to really understand if they are a good fit, regardless of what the position is for.”
Two hours of your time is well worth the investment to make sure you’ve got the right person for the job, Smith adds.
“Don’t just accept the references a candidate has provided either. More often than not, they’ve provided the name of a friend they used to work with, rather than their boss,” he says.
“This isn’t dishonest, but it’s not really helpful if you’re trying to decide if they’re right for the job you’re contemplating offering them.”
Take time to build the perfect team.Credit:iStock
Move staff around
Having the right people in the right roles sounds easy, but a lot of businesses actually struggle with this, says Smith.
“I see so many businesses where staff are working onerous amounts of overtime just to fix mistakes made by others,” he says. “This can be a pretty expensive element of running a small business.”
Smith suggests that an option is to switch existing staff around to different roles. Bear in mind, however, that going through the performance management process with staff not performing adequately in their role can be quite challenging and time-consuming.
Ability to execute
Execution is about being able to look at all moving parts within your business, assessing any inefficiencies and improving where you can.
“If you’re running a manufacturing business, this means doing so with minimal waste and inefficiency. Only then can you increase your business profits,” Smith says.
It’s easier said than done, he admits. Too often, business owners can’t see a better way to execute their vision, and don’t realise that they could benefit from an outsider’s perspective.
Stepping up
The greatest challenge for small business owners is to finally take the step from business owner to CEO, and run their company as the leader, as opposed to being a “doer” involved in most activities on a daily basis.
“The idea here is that as you build your business, you let go of the day-today elements of running the operation,” explains Stilwell. “This will give you greater visibility over the future direction of the business.”
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