4 steps to transforming a small business into a company of substance
Many entrepreneurs start a business with the dream of scaling it, sustaining it and building it into an asset that has value beyond the sum of the physical things it owns.
BY NICOLENE SCOTT
Yet business owners can all too easily find themselves getting stuck into day-to-day operations and losing sight of this longer term goal. They can lapse into ‘auto pilot’ mode, ensuring that the ship keeps moving forward, yet not charting a direction for strategic growth.
To use a metaphor from Pavlo Phitidis, author of the popular book Sweat, Scale, Sell, they get stuck in the engine r oom, when they should be leading from the bridge. Two years ago, when I stepped into the role of Finance and Operations Manager at DataCore Media, the business faced the choice between continuing to chug along nicely or scaling up for bigger things. Though growing and profitable, the business had a great deal of work to do in order to level up and embed value in its brand and operations. This has been an exciting and challenging journey. Even though there is still work to be done, we have transformed DataCore Media into a sustainable digital media company with a pathway for strategic growth.
Here are a few of things about taking the wheel at a growing company.
• Have a plan
If the hope is to create a livelihood for oneself, one can get stuck into the day-to-day work that generates revenue and work on a shorter planning cycle. However, if people want to build a company into an asset from which they can unlock value, they need a proper business plan. Most business owners have a plan in the back of their minds, but the details are often vague. Putting it on paper crystalises the milestones one hopes to achieve and a roadmap one will follow to get there. A formal business plan helps business owners to see the bigger picture. The business plan does not have to be complicated, but it needs to be clear. A good business plan should answer what the business is about: What products or services is your business offering? Who is the target market? Who are the competitors? What is the sales strategy? Does your business have financial targets/projects?
• Get the right people to do the work
Once they have their plan, business owners need the right people to help them implement it. Rome was not built in a day and it was not built by one person, after all. Focus on the different disciplines and areas in the business and decide what one should delegate to someone else. Once mapped out, these focus areas, the skills needed will become apparent. Finance, HR, operations and sales are all specialist disciplines. To give each discipline the required level of focus and attention, one needs to have the right person for the job.
• Processes and procedures are key
Entrepreneurs and employees love to hate red tape, but robust administration, policies, and processes become essential as a company grows from start-up to scale-up. From financial controls to employee performance reviews, processes and procedures are the recipe for running a sustainable business. A day-to-day operational process is key to the successful operational flow of any business. The operational team needs to know what to action, how and when. One also needs a formal employee review process for team members to grow their career path within the business. One doesn’t need to overcomplicate this. Start by reviewing and documenting the processes, then look at the structure needed to grow the business. Be ready to support team members who have been there from the start with the adjustment—it’s not easy for young, dynamic people to unlearn their old habits.
• Evaluate your progress
It’s important to regularly review the progress towards the business plan milestones. A quarterly financial review will help one understand short-term growth and profitability. Pay attention to forecasts versus actuals, client growth and gross profit, then adjust the strategy or operations as necessary. A full business review at least once a year will help business owners understand their growth or decline; highlight areas that need more attention; and give them an opportunity to appreciate what they and their team have achieved through their hard work. This will also inform the strategy for the next fiscal year.
A foundation for growth
The points above are by no means all-encompassing, but offer a starting point for building a sustainable business that can be scaled for growth. The single biggest lesson we have learnt is that operations are important, but it’s essential to keep dr iving a strategy from the command room.
For more on Datacore Media, visit https://datacoremedia.co.za/.