Biggest problems facing small business may be small business

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Ask any businessperson what the biggest problems are that they face in this or actually any economy, and they will invariably list three or four external issues that have a negative impact on their business. While the issues they list may be real, they are probably impacting every business to some degree; they all deal with them differently.

When I was doing research for my book, “Bottom Line Focus”, I ran across some interesting data that validated the theme I was using.

In the United States only about 3% of all companies provide the majority of revenue and job growth. They were referred to as high impact companies.  They went further to say it took an average of 17 years to become a high impact company.

What was disturbing was that after 4 four years 75% are no longer high impact!

My experience tells me that there are several reasons for this, but most all come back to leadership issues. A small business finds a profitable niche and the founder is hands- on. It grows quickly and adds people without clear vision and adequate processes. The business grows beyond it’s ability to execute. For the record in m coaching business small business is any organization with less that 500 employees.

In my research I found from numerous sources that the following is fact:

·     Over 50% of small businesses do not have a documented strategy or business plan.

 ·     Only 10% of businesses execute their strategy.

 ·     75% of business improvement initiatives fail due to lack of sustainability.

 ·     85% of leadership teams spend less than one hour per month on strategy.

 ·     On average 95% of employees are unaware if or don’t understand the company’s strategy.

 All of these factors can be traced directly to leadership. While external factors certainly impact business my advice to clients is to take care of the things they have direct control over and they will be in a much stronger position and have more options in dealing with the external issues that they have limited control over.

One of the most common things I run into on a regular basis is management so busy with fighting fires and hand holding poor processes that they tell me they simply don’t have time to develop a strategy. It is hard to convince them that having a solid foundation with a thorough S.L.O.T. analysis would go a long way in identifying root causes of current problems and inadequate processes. It is also a great forum to develop a team approach to strategy, vision, and problem solving.

The planning process is also useful in developing leadership qualities within the management team, as well as identifying potential weaknesses within the management structure.

Successful businesses develop management teams that function together to empower employees to innovate and solve problems. Unsuccessful companies often don’t progress beyond the point of a top down management style that becomes less and less effective with growth.