Today we are going to talk about business structure.
The first thing we need to ask ourselves is, “What has to happen for a business to grow?” Well… To understand this we need to ask the question, what is it that is holding a business back in particular? Once you figure out the answer to this, you can start to look at what will help to make a business grow. Sit back and have a think about what you think is the biggest limiting factor in the growth of your business.
Have you worked out an answer? I’m going to help you here. The answer is you; you are the biggest limiting factor in your business. Once you come to this realisation, you can actually structure your business so it doesn’t rely solely on you. One thing that I have noticed is many people start their business because they are good at what they do. This is pretty common. Right… So you’re good at what you do and it has led you to starting a business in that industry/ Sector. This means that you do all the work, right? Your customers expect you to turn up, you to answer the phone and you to do all the work, right?
The second reason that a lot of people start a business is that they are passionate about the area. Now, these two usually go hand in hand i.e. if you’re passionate about something you’re normally good at it. So you’ve started a business because you’re passionate about what it is you do. Unfortunately, this is a recipe for disaster as it normally means your business isn’t structured for growth. Your business is essentially structured in a way that gives you a job, and what happens is as time goes on other jobs, jobs that you didn’t sign up for such as finance, marketing and sales start to become a reality and you have to do them as well.
The third thing that you may see is that somebody might have a really good idea or product or service. Now, this is good, but it won’t necessarily get your business moving. You need to think about your business’ structure. When I talk about structure I’m talking about your mind-set behind how to grow your business and how to structure different divisions in your business so you can hold people accountable for different projects and areas within the business.
Typically when you’re starting out as a small business or sole trader you are trading your time for money. You’ll do your job for your clients and they will pay you for your time. Whatever you get paid, you typically use for your business and whatever you have leftover you use to live on. When a business starts to get bigger, you start to make money, instead of trading tour time and earning money by doing the job you start to make a profit and that profit is how you make money.
Now you need to start thinking a little differently if you want your business to start growing and becoming profitable. Firstly, you need to see yourself as a business owner. You might still be an employee within your business and that’s fine, there’s nothing wrong with that. But as a business owner, you have to also work on growing your business, and you are expected to deliver dividends or profits to that business.
As a business owner, you need to think about your business’ functions and which ones it needs to do really well. Think about it like this, every business needs to have marketing and needs its marketing strategy to consistently generate good qualifying leads. There isn’t a single business on the planet that will survive without good marketing.
The second function that definitely needs to be nailed is your sales process. You need to know that you can turn a lead into a paying customer once the lead is generated.
The next major function of your business is your operations. You have to make sure that once you have sold your product or service, you can deliver it with systematic consistency. This area of your business has to be a separate focus as it is of such high importance.
The final function that you have to focus on is the area of finance. Once you have been paid you have to be sure to manage your money really well you have to make sure that you can pay your bills and have some cash leftover for yourself, the business owner, i.e. profit.
Focus and Performance
Once you’ve got your head around the key functions of your business you can start to look at how each function is performing. You can start to set KPI’s (Key Performance Indicators) to see if you are reaching your intended targets. Once you have set a goal for a department then you can work on how to reach that goal. Once you reach this point it is worthwhile to think about strategy. Ask yourself, “how can I generate X amount of leads each week?” Work on a strategy to reach these goals, analyse your targets and see are you reaching them.
If you are definitely reaching your targeted leads your next step is to look at your conversion rates. How many leads do you want to convert into paying customers? You have to document your sales process; you must be able to follow it. By doing this you can measure the success of the sales process and understand what you have to do to generate sales.
Your operations typically should be running pretty smoothly as this is the area that you’re good at, you’re passionate about that subject. Making sure that the client is looked after and your product or service is delivered consistently is usually ok when it’s just you. But as your business continues to grow this becomes increasingly difficult.
Your final area of focus is making sure that you are profitable. Have you budgets set in place? Do you know what your breakeven point is? Do you know how many units you have to sell to make your desired amount of profit? You have to figure out what wage you are going to pay someone for each particular job within the business and as the owner how much you’re expecting to receive as a dividend from profitability. This is how you structure your business for growth; it is only once you have attained this mind-set for growth that you will actually be able to grow your business.
Now, if your business is growing and you can’t find the time to scratch yourself, then you have to look at your business structure, odds are you haven’t got it structured properly. What that means is that you aren’t able to empower your team. If your business is a bit bigger then you should have a team of people, and you should, in turn, be able to empower certain people within the team to run one of those divisions. The best way to do this is through being very clear about the KPI’s for that division.
If you have given someone the responsibility of running lead generation, you have to be clear about how many leads they have to generate and how much money they have to do so based on a budget set by someone in the finance or accounts sector of the business. by doing this you’re able to hold people accountable and give them clarity on what their responsibility is and let them know whether they are doing a good job or not.
All of a sudden you’re focused on growth. Your approach is now,” I’m growing the business. I’m making the biggest impact possible in each area of the business. I’m the owner who’s also getting a dividend but I’m also earning a wage from my business.” with that mentality you’re always going to be more successful. It is a difficult transition to change your structure and your mind-set but once you do you are much better geared and equipped for success and for business growth.
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