As consultants to “small business” we have found most successful owners and entrepreneurs do the same things to assure their success.
A ‘Small Business Manual’ does not exist. Textbooks are filled with advice on balance sheets, HR procedure and marketing issues, but little or nothing on how to triage your bills or let go a valued surplus employee. They also ignore the worth of multiple government programs designed to save money and incentivize behavior. Most Business School tutelage is geared toward roles in Big Business, not entrepreneurship.
Defining “small” business is elusive. Our informal survey got responses from having few employees to annual revenues topping out at $2 million to $50 million. By far, the most common response was a “Mom & Pop” enterprise like the local restaurant or motel. If they are private, we see little difference.
Size matters, as the larger the company, the more we can find to save. But we are keenly aware that saving $200,000 for a business doing $1,000,000 in revenue means much more than to one earning $5,000,000.
At VANCO, we concentrate on growing our clients’ bottom line. We help business owners take advantage of tax benefits and cost remediation usually available only to Big Business. Our proprietary software calculates the dollars a business can save and then efficiently arranges for their collection. Best of all, we do this on our dime: We work on a contingency basis. There is no risk and no business disruption.
While not exhaustive, we have found that successful business owners, whether “small” or larger have certain important characteristics:
They delegate. Micromanagers impede progress. No one can do it all well or efficiently any more than a fist is as good as five fingers. Trusting employees to make decisions, even bad ones, encourages initiative and promotes loyalty that often leads to good choices and smart input.
Owners make the decisions but listen to and consult with their workers on implementation and are open to, and even ask for, suggestions.
They know their numbers. Knowing costs and margins permits quick price adjustment with emphasis on profitability. Identifying loss leaders and high expenses avoids future losses.
They have specific goals for the business – immediate, annual, intermediate, and long-term – two to five years and beyond. Most have a written list with time-lines. These are selectively revealed to managers to share a vision and establish a clear sense of purpose. It may also give the owner an opportunity to ask for input and to help her appraise future Managers.
Automation is embraced to the extent it makes sense: installing a point-of-sale cash register that monitors inventory or buying an expensive mag welding machine to enhance productivity and capture more business.
Well-designed systems are in place to both expedite and monitor production. Regimens and workflow patterns have been adopted to delineate responsibility and enable accountability. Transparent systems allow for easy training and the swift integration of new hires.
Prepared to be opportunists, they always look for synergies that could allow them to leverage their in-house talent to add products or services.
Unfortunately, too few owners have developed a viable “Exit Plan” to allow them to transition out of the business.
Most successful owners join their niche business association and are friends with their rivals. They share industry information and stay abreast of business trends whether it’s the expected cost of feed or growing interest in a new service they might offer.
Per a previous article, I am a fan of The Profit and Marcus Lemonis’ mantra of “People, Process, Profit." Those seeking Lemonis’ help suffer from ignorance: They don’t know what they don’t know. They ask for help, often in desperation, to learn what they need to do to ‘right the ship.’ I suggested he add being “Open-minded” to his requirements in that successful owners must be flexible and willing to accept change. The show demonstrates that in every episode.
At VANCO we are not looking to save a business. We want to help knowledgeable owners continue their success by adding to their bottom line. We find money our clients are currently losing unknowingly and unnecessarily. Then, and only then, do we share in the savings we find.
Our best client is an educated client. Therefore, we populated our website (www.vancofinancial.com) with short videos and blog articles on business and personal finance as well as on planning. A proactive businessman or -woman will profit more by preempting problems than by facing them later when fewer options are available.
We stand ready to help clients adopt strategies and plans to become more financially efficient and effective. On our dime.
A version of this article appeared in Morning Star Business Report, December 2019.