By Patrick J. Below
Patrick Below has been a colleague of Dr. Al’s for over 15 years. He not only understands the principles of planning in any size business, but also stresses with his clients that “planning” has to be developed by using an “Integrated Planning System.” He is the author of The Executive Guide to Strategic Planning and also The Executive Guide to Operational Planning. He now resides in Madison Wisconsin.
Reprinted with permission of Patrick J. Below
What does it take to successfully operate and grow a small business in today’s challenging economic times? The answers to this question may surprise you.
A recent Survey of forty-two successful small business owners and CEOs provided some insights into this important question. These are businesses that are creating jobs by making things happen. Success, in the context of this Survey, is defined by businesses that have been able to consistently increase both their top line revenue and their bottom line profitability. In this Survey, two-thirds of the companies reported being in this elite category. They’re not only growing sales but also improving their profitability. And they are doing this in some challenging and changing economic times.
What are these small business owners and entrepreneurs doing differently to achieve such impressive levels of performance? What management practices do CEOs of small, growing companies not only rely on, but are actually thriving on?
Most, if not all, small business owners and entrepreneurs have a compelling vision. That’s why they take the risks they do to start and operate their own business. Operating a small business takes a huge amount of personal effort. Perhaps the word that best describes these people is “guts.” Small business owners and entrepreneurs are the “real MBA’s” in a community. They literally and practically have to become “Masters” in all aspects of Business Administration, or they do not survive. It’s simple as that. They have neither the time nor the inclination to pursue an academic MBA. They have to learn on the job.
Unlike medium and large businesses, small businesses typically have neither the resources nor access to the resources that their “larger” counterparts have. They’re often caught in a “Catch-22.” In order to survive and grow, they need resources – especially financial and management expertise. However, they are usually too small and cannot afford to either employ or hire these types of services. So, how do the more successful small business owners resolve this dilemma?
Two distinct trends emerged from this Survey of successful small business owners. Of the forty-two small company business owners surveyed, 96% responded they “engaged in strategic planning!” The principal reasons they gave were “to accelerate our growth, improve our profitability, and help us with target marketing.” One way successful small business owners are solving their dilemma is to “do the things larger businesses do.” Despite their relatively smaller size, forty of forty-two small business CEOs surveyed rely on planning as one of the principal ways to grow their business.
What else do successful small business owners do? Another surprising response was that almost 60% of the businesses surveyed responded positively to the question “Do you have an executive development program?” Again, successful small business owners and entrepreneurs, in order to become more successful, are acting “as if” they were a bigger business. They’re spending both valuable time and limited resources developing their people, including themselves.
It’s not at all unusual for most small business entrepreneurs to genuinely believe they have neither the time nor the money to invest in the fundamentals of planning and people development. They are too busy “running” their businesses. The problem, quite frankly, is that many small business owners are so busy fighting fires and doing whatever it takes to ensure their business survives, and understandably so. It takes a tremendous amount of personal energy and drive just to keep their business afloat.
As the Survey pointed out, however, the difference between running a businesses and growing a more successful business boils down to the basics of managing a company of any size. The lesson for small business owners and entrepreneurs, particularly those who do not want to remain small, is to engage in planning and the development of people. As the Survey points out, this is how small businesses become “bigger” businesses – by acting and doing the things bigger businesses do.
An example of a small business owner who learned these lessons early in his entrepreneur career is Al Van Kirk, founder and CEO of King’s Medical Company. In 1980, he started his company by providing and financing high tech medical equipment for hospitals and medical clinics. In 1989, with only seven employees and $3 million in sales, he was already embarking on his second three-year strategic plan. In June of this year, Van Kirk will celebrate his 23rd year as a very successful entrepreneur. His company did $60 million last year and employs 356 people. When asked about his early experiences and attitude toward planning, “my first reaction,” he said, “was we were too small to do planning.” Luckily, he had a long-time friend in his business that insisted they needed to do “some planning.” They did, and they are still planning, and succeeding.