Managing a New Business and How To Do It Right
Managing A New Business and How To Do It Right
An Interview with N. Michael Miller
Successful Businessman, Venture Capitalist and Published Author Answers Our Questions in the third of a Four Part Interview about Managing a New Business and How to Do It Right.
Business Talk Newsletter is conducting a four part interview with N. Michael Miller. Mr. Miller is a business owner, venture capitalist and published author. Mr. Miller can be contacted at StartYourBusinessHelp.com which advises new business owners with consulting, business plan preparation and other services.
This interview will consist of four parts:
(1) Start a new business now in this economy and the outlook for starting a business in early 2011 (in the Oct 14th Edition),
(2) Funding the startup of a new business (In the Oct 21st Edition),
(3) Managing a new business and how to do it right (In this Edition), and
(4) Understanding how to keep a new business financially healthy (coming on Nov 4th).
Here is Part Three of our Interview with N. Michael Miller.
BTN: To recap the previous two interviews, we first talked about whether or not this is a good time to start a new business and you concluded that it is a great time to start a new business with the right pre-startup planning process. We also discussed funding a new business. You described several funding options along with the important emphasis that a new business must be well funded from the very beginning and some ways to make sure that happens.
Now let’s discuss how to properly manage a new business. Give us your overview of how a new owner should operate the business.
NMM: How you manage a new business is entirely different if we are talking about a retail business or a service business or a professional type business. So I will give you a general overview of what every new business owner should do in managing a new business.
I would break down what a business owner should do into these three topics:
1. Always look to improve
2. Record keeping
3. Grow sensibly
BTN: I would guess that most business owners are looking for ways to improve. How is this important to the new business owner?
NMM: The basic idea behind continuous improvement is that there's always a better way, and never a best way.
By seeking out the better way, the small business owner can make significant improvements to quality, efficiency, employee satisfaction, customer service and ultimately the bottom line.
Whether you are in a retail, service or manufacturing industry, the cost of materials and labor used in your operation is likely to increase over time. As a result, any improvements that can be made in your process will result in savings necessary to offset increasing material costs. If your small business is to stay viable in the long run, you are going to need to embrace continuous improvement.
BTN: How do the business owners you work with accept change?
NMM: One major enemy of continuous improvement is ego and self-perception. When I consult for small businesses and discuss the concept of continuous improvement, many managers are reluctant to make changes.
As with anything, change can be difficult. Moreover, when you tell an employee there may be a better way to complete a task, the employee may take this as a personal slight. For effective continuous improvement standards, all staff members need to understand how change and improvement are fundamental principles of any successful team.
There is no room for egos when it comes to building a successful business. Don't let emotional attachments get in the way of improving your processes.
BTN: Give us an example of how a business owner can look for places to improve their business operation.
NMM: Without getting too technical, there are seemingly minor changes you can make to how you view your entire business operation that can go a long way towards increasing your productivity and quality while reducing your costs.
A great example, especially for small businesses, is office organization. By making improvements to how your office operates you can see the aforementioned benefits to costs, productivity and quality.
The layout of your office can greatly affect how well your company operates. Your office layout includes location of equipment like faxes, printers, copiers, the layout of desks and departments and the visual appearance of office materials such as papers, folders, files. By improving these aspects of your office you'll see some amazing changes.
These basic examples of improving your office organization have high practical value. By starting with an organized office you are sending a message throughout your company that productivity and quality are a part of your culture. You will see decreased costs, increased efficiencies and the good feeling that accompanies a clean working atmosphere.
BTN: How does improvement translate into improving the business and getting an advantage over your competition?
NMM: Companies that accept continuous improvement as part of their operations, maintain significant advantages over competitors. For the small business, where many of the processes are being tried for the first time, continuous improvement standards can be of tremendous help.
Make sure your processes aren't a duplication of the initial run. Remember there's always a better — and never a best — way to run things.
BTN: How about the second topic of record keeping?
NMM: Business owners constantly underestimate the importance of thorough record-keeping.
Besides requiring carefully-kept records to make proper tactical decisions, business proprietors will run into a world of legal trouble if they are unable to produce proper documentation of disputed transactions or contracts.
However, record-keeping can be somewhat of a time-consuming pursuit, when done right. For this reason, most large companies employ archives divisions just to keep track of their files. Small businesses, on the other hand, do not have the resources or the personnel to devote to establishing and maintaining their archives; they must manage their records themselves.
Developing a uniform and easily-understood system for recording business transactions and other decisions can help cut down on the time that you dedicate to this dull necessity.
One of the central purposes of record-keeping is to track who is being paid for what. If your company frequently pays or bills third-parties, make sure that you keep carefully organized records documenting who was paying whom, the amount of the payment, the date the bill or payment was sent, for what good or service they were paid, and whether the aforementioned payment has yet been remitted.
A well-kept archive can help to prevent expensive and inconvenient business mistakes. While the job of record-keeping is a thankless one, it is an investment towards the future of your company, not a task to be noted and filed away.
BTN: You are right; most business owners find the record keeping to be a tedious task. I am really interested to hear your thoughts about how a new business owner should grow the company sensibly.
NMM: When the time comes for your business to start growing, it is definitely good news for the entrepreneur.
Finally, the hours that you have toiled over your business concept, the challenges in obtaining financial resources and the millions of details that you have painstakingly analyzed are going to pay off.
However, entrepreneurs should not be complacent that their start-ups are taking off. The last thing you should do is leave it to grow at its own will. The growth stage of a venture needs to be carefully managed. Here are some tips I always share with the clients that I work with on managing the growth of their company.
When your business is growing, it is impossible for you to continue multi-tasking as you were doing during the start-up phase of your venture. Now, there are many more matters that require your attention and focus. Hence, you will need to delegate some responsibilities and duties to managers.
Your role, as the founder of the business, is to formulate strategic goals, set the direction of the company and lead the team in the creative path desired. It is not appropriate for you to be a micro-manager and insist on knowing all the details of operation. Doing so may, in fact, stunt the growth of the company and prevent it from taking on the opportunities that it should be.
BTN: I think that delegating is a tough thing for a lot of business people to do, it means letting go of the task.
NMM: That is a mistake that many make. Which brings me to the second tip, learn from mistakes.
No matter how much you try to avoid mistakes, and you should, there is always something to be learned from each failed episode. Think about the incident and establish ways that you could have done better. If it is an issue of your strategic plan not working out well, then perhaps you should evaluate it. If it is an issue of a lack of skill or quality in the production of your product, perhaps you need to develop competencies to address this problem.
Gather feedback from your customers, and do so consistently, especially after you have rolled out changes in product design or application. Knowing what your customers like or don't like will help you make better decisions in future.
BTN: Good point. What is another tip?
NMM: Keep up with innovation. Without innovation, the company fizzles out eventually. Product design and development needs to be constantly reviewed and worked on in order to provide new product offerings or new applications. Some companies that are unable to work on innovation stay alive by expanding via acquisitions.
BTN: Another good point.
NMM: The next tip we touched on and that is to allow changes. As the venture moves into a different stage, changes are bound to happen to the operational procedures and short-term goals. The entrepreneur should maintain a flexible stance when it comes to managing changes. The growth of the company presents a myriad of opportunities. Along with these opportunities come changes. Market conditions, which are dynamic, also require that the venture responds to it quickly and appropriately.
BTN: To conclude today, what is a mistake you see business owners making when you are reviewing how they manage their business?
NMM: Do not promise what you cannot deliver. Some entrepreneurs get carried away when making potentially large and profitable deals, especially with big names. They start to offer extremely attractive credit terms, albeit ones that put the venture in a risky disadvantaged position, in a bid to generate larger orders. They promise certain product attributes that have not yet been developed. They may also be pushed to accept short lead times.
You need to keep reality in check, and remember to protect your business from losing out. The fact that your venture is growing shows that you are on the right track, hence hasty decisions to make your business model temporarily more "attractive" than what you currently offer will not benefit its healthy growth. Keep your strategic plan in mind and that will help you make important decisions.
Be sure to watch for the November 4th issue of Business Talk Newsletter when our interview with Mr. Miller will continue with an in-depth discussion about the importance of the new business owner understanding how to keep a new business financially healthy.
You can contact Mr. Miller by calling Toll Free 877-211-6577 or email michael@StartYourBusinessHelp.com.
You can also view more information about Mr. Miller and the Company at www.StartYourBusinessHelp.com.
To get a copy of the 1st and/or 2nd interview with Mr. Miller, call Toll Free 877-211-6577.