Why Small Businesses Succeed

Why Small Businesses Succeed and Troubled Business Don’t

There are certain key management techniques that successful businesses follow and the troubled businesses don’t.

The American system of business management has been admired and emulated around the world. The American psyche has two prominent trains – openness and willingness to change in order to achieve a better end and enthusiasm for the future and making things better. These two traits lead to the success of our business system.

Many entrepreneurs are technical experts in what they do but they often start a business without any formal training or experience in management practices and principles. No society in the world is better or more prolific at creating new businesses than the United States capitalistic system, however, sometimes we don’t take the time to learn basic, successful management principles that have been developed by our larger companies, because we are too busy commercializing ideas and starting new ventures.

Once a business has emerged or grown to a certain level, management techniques must change or the business will run into trouble. By “management” we mean the business of successfully managing the non-technical side, the “back room” activities. As a result of inadequate management, many small businesses fail in the early years. They fail not because of a weakness in the product or service concept they have, but because the business was not properly managed in the back office.

When a critical point occurs, whether big or small, the owner or manager of a small business must evolve, morph or otherwise change from a manager of things to a manager of people and from a technical expert to a strategic thinker. It is not always an easy task because of ingrained habits developed over time but failure to grow as a manager is perhaps a major reason why a business will falter, stagnate or even collapse under its own weight.

But what do successful business owners have that troubled ones don’t?

  • First of all, owners of successful businesses have developed personal characteristics that exhibit themselves in their businesses.
  • They are committed to their effort.
  • They invariably have a positive attitude towards their business and life in general.
  • Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do.
  • So, sail away from the safe harbour, throw off the bowlines, catch the trade winds in your sails. Explore. Dream. Discover.
  • They are patient.
  • They are persistent.
  • Successful entrepreneurs understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage.
  • Failures are people who did not realize how close they were to success when they gave up.

Business Plan and Structure

  • Secondly, the owners of successful businesses have developed a business blueprint called a Strategic Business Plan that clearly describes their mission, their business concept and their philosophy of business.
  • They set personal and corporate goals in the business plan and set out specific timelines and strategies to achieve them.
  • Successful business owners develop an Organizational Structure that functions as a well-oiled machine.
  • The structure rewards those who excel in proportion to their contributions.
  • Positions, tasks, duties and responsibilities are defined and communicated and performance is routinely measured.
  • It includes all policies and procedures of the business, and encourages all associates to perform to their utmost capabilities.
  • It also disciplines those who deviate from acceptable behavior.
  • Training, job enrichment programs and incentive compensation plans are designed to encourage each associate to excel.
  • Successful business owners view their associates as their most valuable asset and resource.

Operational Support

  • The owners of successful businesses have a developed Operational Support Systems.
  • This support system may be manual or automated, financial or non-financial.
  • Support systems are aimed to support and make efficient all the activities of the organization.
  • Well-structured support systems give owners more time to be strategic thinkers by relieving management of many day to day routine activities
  • Support systems also provide critical information on sales, cash flow and other financial performance data so that senior management can take timely action as change occurs.

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