Each day in the controlled chaos which is a small business, owners rely on what they know in making decisions that change their future, for better or worse. They are unaware of potential problems or issues that arise from these decisions until results start to appear. This is a crisis that many business managers choose to ignore and avoid thinking about by staying busy – to be busy. I always ask myself, why? Is it because staying in the comfort zone is easier than pushing for more information or perhaps it comes down to fear of the unknown. Regardless, business decisions made with partial information create solutions that cost time, energy, and money and don’t produce RESULTS!

Now that the problem is identified what are the options for an open-minded, entrepreneurial business owner to address the constant state of change which is today’s small business environment? Prior to discussing the options let’s talk about the market forces that affect small business and how they create the tipping points which lead to forced change. They include change in technology, infrastructure optimization, human capital issues, and costs related to production, business development, marketing and sales.

Change In Technology

Small businesses are just now benefiting from sweeping change in availability of affordable software platforms and applications designed to put them on a level playing field with larger competitors. Sales enablement tools, project management software, mobile applications, and online subscription marketing platforms are examples of technology that can support steady growth and  business optimization without bankrupting a struggling company. Issues arise in selection, implementation, and management of these tools which opens the door for third party support or yours truly- a business consultant.  Consultants assist in making the right decisions based on their immediate knowledge and experience leading to faster conversion to profit and lower risk exposure.

Optimization

Even now, in many small businesses. “what worked for dad works for me” is still a common thread. This trend leads to conducting daily activity in the same way as before, ignoring change in the marketplace. So what happens? The business falters, fails, is sold, or is forced to adapt rapidly leading to negative shifts in personnel, culture, and operations. Changing orientation of the business model to focus on a proactive approach to the market compels a company to find better ways to compete or optimize by doing more with less. A great example of this is the financial flexibility provided by online financial services companies like Kabbage, that offer a dynamic approach to funding everyday expenses and business emergencies through a working capital loan. Customers can obtain and manage business loans to address the constant change represented in their target market. Managing this type of change requires more knowledge than many business owners possess or have access to. Once again, a consultant can be the first step to finding a solution.

Human Capital

There is an art to managing people and most of us don’t understand the necessary components to successfully build and manage an empowered, entrepreneurial  work force. Owners lean on friends, relatives, and gut instinct rather than studying how to make human capitalization work for their business. Human capital is the total value brought to a business by the combined education, experience, and knowledge of various employees, supervisors, managers, and executives. Growing it will lead to happier employees, better products, greater revenues, and a strong bottom line. Ignoring it will cause a slow spiral to lost market share, weakened product mix, and an unproductive business culture. Examples of success are Starbucks, Southwest Airlines, and Microsoft who sponsor employee-led innovation and growth to make daily activities more profitable and efficient.

Change In Cost Structure

Businesses have always struggled with supply and demand particularly small businesses who don’t possess the asset pool sometimes necessary to support large complex deals or market initiatives. A simple shift in raw material costs can effectively eliminate a business from offering a competitive product or service.  Higher production and distribution costs simply price the product out of the market. The answer lies in constant awareness of change in production costs, effective relationships with vendors, and application of industry best practices to daily operations. Managing costs can lead to a more profitable relationship with marketing and sales as well as the final buyer and revenue growth based on value not discounting or sales.

Sales And Marketing As Part Of Business Development

Although business development is considered part of the marketing camp, we can lump it together with sales and marketing for the purpose of discussing how all three are affected by decision-making in daily operations. In many businesses short-term focus is always on revenue production stemming from financial pressures rather than linked to long-term strategy and initiatives. The adage cash flow is king creates an artificial reality that sucks you in and won’t allow open-minded behavior. Knee jerk reaction rather than careful planning become the strategy each day.  This mindset can lead to higher expenses, bad deals, and lower profits not to mention inability to leverage assets, partnerships, or liabilities. By bringing in a consultant to evaluate the situation, create an action plan, and execute, a company will become more efficient and achieve higher margins. Sales training, marketing support, and sales enablement should be the norm not the exception.

Back To The Options

Now that we have discussed some of the forces that may influence daily decisions, how  can a business manager become more knowledgeable and effective? Doing nothing and staying with the norm leads to paralysis and slow or no growth. Adding to the workforce might be an option if the accompanied costs are justified in comparison to output. In my opinion, the best option is to hire a consultant who can facilitate change, provide immediate knowledge, assist in avoiding expensive mistakes, and provide a sounding board prior to making decisions leading to sweeping change. I suspect in your business, it’s your call… Just be sure to make the right one.