Posted by Martin Harshberger on Fri, Feb 19, 2010 @ 11:11 AM
The short answer is it depends on who you ask. In doing some research for this article I literally found dozens of “biggest problems” depending on what the writer wanted to sell me.
There are surveys that call out numerous external problems ranging from the high cost of health insurance, taxes, government regulations, and the list goes on.
In my current role as a business coach I find business owners and CEO’s frequently list their biggest problem as whatever is hot at the time I’m talking to them.
I decided to go with my own history on this one since over the years I seem to have developed an unfortunate and extensive history of dealing with problems.
I founded a value added logistics company in 1989 that grew rapidly from no sales and eight employees to sales of over $40MM with more than 600 employees in the U.S and Europe. I sold out of that venture after ten years and bought a small HVAC manufacturing company with a small group of investors and ran that for five years.
These companies were in different industries and on different growth paths but the problems I experienced were quite similar.
Currently as a business coach I see the inner workings of many companies in various industries.
So what are the biggest problems facing small to mid-sized business today? My version is as follows:
Cash –It’s hard to get and there is never enough. If you are a fast growth company you can rapidly outgrow your available sources, if you are an underperforming company you can’t get it. The majority of companies don’t manage it well.
Lack of a clear plan– the SBA says that over 50% of businesses that fail don’t have a plan. I can say from my 30 plus years of experience not only is that number conservative, buy most businesses don’t know how to plan. Lack of a plan worsens the cash problem by allowing you to waste cash chasing tempting diversions, and throwing money at problems.
Ineffective leadership – this issue takes many forms. In my experience it is frequently in the form of depth of leadership. The founder of the company is
hands- on and effective but has little or no management depth behind him or her. This eventually causes the company to stop growing and eventually could lead to failure.
Sales / marketing effectiveness- this leads back to planning and leadership. Many companies have not taken the time to decide what their USP is. They try to compete in conflicting areas, such as lowest price and highest service. One takes away dollars and the other adds cost. Part of the planning process should include a very clear answer to one simple question, “with all of the products and service available to my customers why should they buy from me?”
Lack of execution- this may be the biggest of all. Research has shown and my own experience backs up the following facts:
· Over 90% of strategies that are developed are never executed.
· 75% of improvement projects fail.
· 85% of leaders spend less that 1-hour per month on strategy.
· Over 90% of employees don’t know the company’s strategy. (This is a direct result of top management not documenting and communicating it)
· Well over 90% of organizations don’t have meaningful performance measurements in place.
One thing all of these problems have in common is they are all internal and within the control of the management team. Business must look internally for problem solutions and position themselves to survive in an increasingly global and competitive economy.
If you found this article helpful you may want to download our free whitepaper, "How to Recession Proof Your Business".
Posted by Martin Harshberger on Tue, Feb 09, 2010 @ 09:27 AM
The unemployment rate for large company middle managers is increasing but worse the term of their job search is also increasing with many extending to over a year.
The news isn’t getting better, a survey in June by Watson Wyatt Worldwide, reports that 52% of companies will employ fewer people than they did before the recession began. One third of the 179 U.S.-based companies polled indicated they still anticipate further layoffs, although this is down from 46% two months ago. "While many companies are planning to reinstate or reverse some of the cost-cutting actions made to HR programs over the past 10 months, most do not believe that things will go back to 'business as usual,'" the survey states
The numbers aren't encouraging. According to the U.S. Department of Labor's Bureau of Labor Statistics (BLS), 14.7 million people were unemployed (9.5%) as of June 2009 compared with 14.5 million in May (9.4%) and 8.7 million (5.6%) one year ago. The number of long-term unemployed -- people without work for 27 weeks or more -- increased from 1,621,000 in June 2008 to 4,381,000 in June 2009. Meanwhile, approximately 6.5 million jobs have been lost since the recession started 19 months ago. And the "underemployment" rate -- which includes those too discouraged to look for work as well as those working part-time because they can't find a fulltime job -- increased to a staggering 16.5% in June compared to 10.1% a year earlier
A generation ago, says Wharton management professor Peter Capelli director of Wharton's Center for Human Resources, "layoffs at this level were temporary. Not now." Even if an equivalent job were open at another company, that company will most likely not fill the position or will hire from within. In addition, Cappelli notes, in the 1990s, the economy experienced a "big wave of startups that would take on corporate people who had lost their jobs or bailed out of them. These days, we don't see those smaller companies on the horizon."
Many displaced managers and executives are turning to starting their own businesses, some for the right reasons and some out of desperation.
Going our out on their own for whatever reason can be challenging for many of them. Middle management experience at a large company does not necessarily transfer to being a top executive at a small of startup firm. I remember clearly when I made the move from a Fortune 500 executive position to founding a startup. My boss trying to convince me how foolish and risky it was told me, I “didn’t even have P &L experience”. I remember thinking what a desperate comment that was, I had a huge organization and a budget of over $40MM dollars, what was he saying?
Years later I remembered that comment and how far I had come. I was lucky my startup was successful and grew to over $40MM in sales, but it was a steep climb. I really had no idea how much I had to learn in the “real world”. I had no experience with cash management, strategy, hands on marketing and sales, raising capital, handling lenders and investors, the list go on and on. All of this was done for me at some level of corporate organization.
Later on as I became a business coach I learned that many small company owners and top managers were doing what I did, learning the hard way, even many that had been in business for years.
The message to middle managers going through the job search or thinking of going out on their own is put aside the egotism everyone seems to leave a large company with and learn what smaller company needs are. It truly is a different and hands on world. Small and mid-sized companies are sorely on need of strong leadership, but you’ll have to be able to prove you’re the real deal. The issues are so common across markets and industries I wrote a book on them, positioning it to be a leadership manual for success. How do I know what those needs are? I learned them the same way I learned all the skills I needed to run a $40MM company, I learned them the hard way over a twenty plus year period or running my own businesses and coaching others.
The more knowledgeable you are about the situation of small and mid-sized business when you walk in the door, the better chance you have of walking out with an opportunity.
If you found this article helpful you may want to download our free whitepaper, "How to Recession Proof Your Business".
Posted by Martin Harshberger on Tue, Feb 02, 2010 @ 01:31 PM
The daily news bombards us with stories about major corporations failing, government spending spinning out of control, and political and corporate leaders marching off to jail.
Interestingly, this leadership vacuum exists only at the higher levels of government and industry. It doesn’t exist in small and mid-size businesses.
I know that’s a fact because the owners, CEOs, and senior executives of these businesses tell me so. For over forty years I’ve worked as a manager, coach, and consultant with hundreds of executives. Not one has ever said to me, “This company is not doing as well as it should because of my lack of leadership skills.”
Who’s to blame for their company’s problems? It’s they. Over and over again I’m told, “They don’t care; they didn’t do it right; they don’t get it.”
I’ve never understood why these executives don’t just fire “they” and hire somebody else. Come to think of it, I bet many of them have tried that, but somehow they keeps sneaking back on the payroll.
Take an objective look at your leadership skills.
Of course, the above paragraphs are meant to be tongue-in-cheek humor. It’s just my way of saying that our natural tendency is to blame others. But as a leader in business, you must objectively assess your own leadership skills.
All companies have problems. In order to solve your company’s problems, you’ll need to understand and change the leadership style that got you into trouble in the first place. Start by looking for areas where you personally can improve. Until you change, not much else will. Before you can lead others effectively, you must first be able to lead yourself.
Over the course of my career, I have known literally hundreds of executives. I can’t think of one of them, myself included, who could not benefit from some level of on-going leadership evaluation, coaching, and development.
Yet many executives, especially owners and CEOs of small businesses, find it hard to acknowledge that they have room for growth. They’re reluctant to ask a coach or someone else for help. And because they’re top dog in their company, they do only what they want to do rather than what they need to do.
Take an honest look inside your organization. How many of these issues are present?
- Excessive meetings with no agenda and no results
- Consensus-driven decision making (CYA for all us older folks)
- Lack of personal accountability
- Poor communication between entities
- Reluctance to terminate poor performers
- Misaligned and uncoordinated efforts (silo effect)
- Personality conflicts and power struggles
- Apathetic and unmotivated employees
- Inconsistent results
- Poor time management
- Reactive rather than proactive effort
- Micro-management
- Declining sales and / or market share
- Lack of teamwork
- Duplication of effort
- High employee turnover
- Substandard quality
- Numerous unresolved issues and postponed decisions
You may not want to acknowledge this, but to some degree all of these issues can be attributed to ineffective leadership.
Lead by example.
Your commitment to excellence, integrity, fairness, and open communication will be visible to people in your company. It will inspire them to rise to the performance level you exhibit.
Notice that I didn’t say “to the performance level you expect.” Expectations are mere words. When people respond to expectations, it’s often out of a sense of duty, a desire to please, or the fear of punishment.
Leadership, on the other hand, entails action. When you act as a leader, people will want to follow you to be where the action is. Your example will motivate them to grow and achieve.
Once you’ve developed your plan and communicated your vision, there will be a short honeymoon period. But soon people will be looking to you for results. Will there be real change, or will it be back to business as usual?
Simply wanting your vision to be realized doesn’t work. You need to take the lead and make it happen. When you walk the talk, people will follow. Develop a vision you believe in. Live it, breath it, take responsibility for it, and generate enthusiasm for it. People will respond.
If you found this article helpful you may want to download our free whitepaper, "How to Recession Proof Your Business".