| Starting a new business has a tremendous upside | | | | small businesses are started and are doomed to |
| but there is an equal, if not higher, risk of failure | | | | failure before the first widget is produced. |
| and loss. As noted many times in our material, | | | | Therefore, one must be diligent to be realistic |
| statistics show that 80% of new businesses fail | | | | when doing the business plan and then assess the |
| within the first 5 years. Due to this statistic, we | | | | good and the bad. View the project in realistic |
| stress a well designed and thought out business | | | | terms, not in terms of hopes or goals. If the plan |
| plan coupled with an enormous amount of | | | | shows poor cash flow or multiple year losses, |
| research and planning and use of that data in the | | | | redesign it or terminate the project. |
| implementation of the start-up business. | | | | Another example is the failure of companies to |
| Lately, life has been little better for existing | | | | hold annual or semi-annual strategy or |
| businesses which are failing at an alarming rate. Of | | | | assessment meetings to examine not only the |
| course this is due to the unique economic and | | | | external forces affecting the business but the |
| banking conditions that currently exist. Most | | | | internal personnel and systems. If you were lost in |
| business owners have not experienced similar | | | | the woods would you simply keep walking in |
| economic issues and could not recognize the | | | | hopes that you might sooner or later find your |
| signals prior to the damage. They kept operating | | | | way out? Well we hope not. It would be wise to |
| as they always did, never stopped to evaluate | | | | stop, look for landmarks, your surroundings, the |
| the environment around them nor did they take | | | | weather, your food and water supply, and your |
| timely action when the obvious was upon them. | | | | physical situation and then design a plan that fits |
| When businesses come to us for consultation | | | | the results of the assessment of your situation. |
| they expect an immediate answer to their | | | | This gives you the best hope of getting home |
| problems. Yet they typically do not have an | | | | safely, as compared to the random and unplanned |
| analysis of the situation for us to review, they | | | | attempt to just keep walking and hope for a |
| just give us the symptom and request a solution. | | | | good outcome. |
| This is immediate proof that there is not internal | | | | To properly assess your company to find its |
| company analysis or evaluations being performed | | | | weaknesses we suggest that the company's |
| on a regular basis, if at all. Once we suggest that | | | | senior management ask themselves these |
| an analysis must be done prior to being able to | | | | questions.* |
| help them with their problem the expense of that | | | | How clear is the direction of the company? |
| is objected to. Our response is always two fold; | | | | How well do you understand the critical |
| We request the time and support to prepare an | | | | opportunities and steps needed to take the |
| assessment from which we then attempt to | | | | company to the next level? |
| carve out a solution. When one is sick and they | | | | How well do people understand the strengths and |
| call the doctor, do they receive a prescription or | | | | weaknesses of the organization? Why? |
| treatment option over the phone, of course not. | | | | How effective are changes in only one part of |
| There first must be an examination after which | | | | the organization without understanding or |
| the prescription or treatment is prescribed. There | | | | considering changes to the whole? |
| must always be an assessment of where one is | | | | These questions and the thought process that |
| and what the options are. Too many businesses | | | | they will hopefully stimulate are the initial steps of |
| never perform this and if they did they probably | | | | Assessing Your Organization for High |
| would not need us to diagnose the problem. | | | | Performance*. These same questions must also |
| We then explain that every business is perfectly | | | | be considered when designing the business plan of |
| designed to produce the results that are being | | | | a new company. The systems will interact and |
| attained. In other words, bad production, poor | | | | therefore the different systems must be |
| quality, inadequate response time, etc are all a | | | | designed properly. |
| direct result of the systems in place or lack | | | | To understand the concept of business systems |
| thereof. When things go wrong, one must first | | | | we will need some definitions. A system is defined |
| look internally rather than blaming the economy or | | | | as an arrangement of interrelated parts. |
| the competition, there is usually a solution within | | | | Attributes of business systems are*: |
| the organization. | | | | Each element of a system has an effect on the |
| When starting a new business these same | | | | whole |
| concepts must be adhered to in the design of the | | | | The various parts of the system are |
| business plan. In other words, you must design | | | | interdependent |
| systems into your organization in order to make | | | | The sum of the parts is greater than the whole |
| it run efficiently and then you must continually | | | | An organization is a living system, dependent upon |
| evaluate the systems. Even a "one person" | | | | its external environment for survival |
| operation needs organization and a system; | | | | As a living system, an organization is "open" to |
| otherwise things are not done in a manner to | | | | influences and transactions with its environment |
| assure consistent results. | | | | Into this system go energy, raw materials and/or |
| We point this out to discuss the topic of self | | | | information. The system processes this input and |
| analysis. Many of the problems in large and small | | | | then produces products or services. The recipient |
| businesses exist in the organizational elements of | | | | of those products or services as well as the |
| the company and are not looked into because | | | | participants in the system then should give |
| these systems were typically put into place by | | | | feedback to keep the system healthy and alive*. |
| the owner and the owner can never be wrong. | | | | As importantly, the managers of that system |
| Alternatively, many times the owner may be | | | | must constantly monitor the external environment |
| willing to change but time is never taken to sit | | | | and use that information to also help upgrade and |
| down and perform a routine assessment. Egos | | | | improve the system. |
| and failure to self evaluate are common reasons | | | | Our next blog posting will take these concepts |
| of small business failure. Pride and passion are | | | | and put them into an analytical tool to help you |
| assets that the business owner must have but | | | | understand how you can use these concepts |
| they cannot be placed ahead of good business | | | | analyze your organization. We will look and explain |
| practices. A great example is the business plan. | | | | the Transformation Model* and how using that |
| This is usually written by the owner and is | | | | model can help you critique and assess your |
| designed to promote the company and obtain | | | | organization. |
| investors or bank financing. With that as the | | | | *These concepts and principles were formulated |
| rationale for its drafting, many times the data is | | | | by and set out in the "Assessing your |
| skewed in a more positive light than reality and/or | | | | Organization for High Performance", The Center |
| detailed research is not done for whatever reason | | | | for Organizational Design, Inc/360 Solutions LLC, |
| and glaring holes exist in the plan itself. Thus many | | | | Waco, TX. |