Business owners don't tend to like surprises. You crave certainty. You want to know their companies have ample working capital and the right amount of inventory.
To help avoid the many barriers business ownership can throw your way, you may want to at least occasionally review and assess your business's practices and actively search for vulnerabilities and weak spots. After all, every business runs into the occasional crisis or calamity, but not every business can emerge from one unscathed.
Consider trying some of these approaches.
1. Do a SWOT analysis.
If you're not familiar with the term SWOT, it stands for Strengths, Weaknesses, Opportunities and Threats.
Nick Kamboj is the CEO of Aston & James, LLC, a consultancy that advises prospective MBA students seeking admissions to top flight business programs. (He also spent 10 years teaching at the University of Chicago Booth School of Business.)
Kamboj suggests that all companies do an occasional SWOT analysis.
“Essentially you get a consortium of several people from various parts of your business across various roles and have a meeting for a few hours or a couple of days where you physically list all the strengths, weakness, opportunities and threats for your business," he explains.
(Granted, if you're a solopreneur, or you have one or two employees, this is going to be a small group. But it's a smart idea, no matter what the size of your company, to do some sort of SWOT analysis.)
Once you have a list, Kamboj says that you focus on the weaknesses and threats.
"Give them a numeric score from 1 to 10 to determine how important they are to your company," he continues. "Once this prioritization is done, then you look at your strengths and opportunities and see if you can leverage them to address your vulnerabilities or bolster them to mitigate any risks or issues."
You can bring your CFO or accounting people in to share how much working capital you'll have on hand if something goes wrong, and whether you should be extending a business line of credit. Ask your IT people to clue you in on where you stand with cybersecurity. Talk to your people who work on the front lines with the public and get a read on whether your employees love their work or hate it. (Toxic feelings about your business could easily spread to your customers.)
In fact, if you want, you could do a customer service-themed SWOT analysis and look solely at how you're doing on customer service. Or an IT-themed SWOT analysis. Or a ... you get the idea.
2. Determine whether one or two employees hold too much power.
You hired your employees for a reason. You can't do all of the work, and it's good to not micromanage your staff.
But sometimes people quit, engage in a firing offense, retire or become ill and need to take time off. And sometimes, a business can really feel that absence.
Anonymous internal feedback can help get things out in the open.
Kim Hawkins is the owner of Athens, Georgia-based Events Wholesale, an online discount event and wedding planning supply company in business. Hawkins' first employee worked for them for several years and knew everything about the business.
“We trained her on everything having to do with running an e-commerce business and gave her supplier and customer information without a second thought," Hawkins says. "She had complete knowledge of confidential business practices as well as all of our advertising keyword information. Little did we know that one day she would go out on her own and start a competing online business."
For Hawkins, the answer has been to have her employees sign non-compete and non-disclosure agreements. That won't work for every business owner, but whether or not you're concerned about your favorite employee becoming your worst nightmare, you should definitely be asking yourself this: Would my company be at risk if any of my key employees left?
If your CFO departed tomorrow, what would that mean for your working capital?
If you think you'd be in trouble, you might want to start having that key employee train new employees and start sharing institutional knowledge with the rest of the team.
The goal isn't to diminish your important employee, but to improve the skills of your other team members.
3. Check your technology.
Even if you're not the owner of a tech company, your business most likely relies on it. If you don't have the working capital to withstand seeing your company's records wiped out (and if you haven't thought about your technology for awhile) maybe it's time to start thinking about it again.
Nick Haschka is the co-owner of The Wright Gardner, a plant vendor in San Francisco, California. When Haschka bought the business 2.5 years ago, he quickly realized that the company's IT systems were a huge vulnerability.
“All of our records were saved on the premises, either in physical paper form or electronically on hard drives. While we had backup drives for our electronic records, those were on-premise devices that only protected us from minor equipment failures," Haschka says. “I feared that even a small fire or break-in could wipe us out by destroying all of our records."
So Haschka digitized and moved the company's file storage and accounting systems to cloud-based solutions to eliminate a potential cyber-disaster.
“I sleep much better at night now, knowing that our exposures have been greatly reduced," he says.
4. Ask for feedback.
Murray Seward is the CEO of Outback Team Building & Training. The company is headquartered in North Vancouver, British Columbia, and works with corporations across North America.
Seward's company looks for potential trouble areas by getting customer feedback. His company also regularly seeks out insights and opinions from employees. He gives them the chance to offer it in person but also anonymously.
“We encourage an open and honest environment— being open and honest is one of our core values—but not everyone feels comfortable discussing certain matters face-to-face," Seward says.
To get around that, Seward uses a tool that allows employees to routinely offer anonymous feedback. If you think about it, getting feedback in that way could yield plenty of interesting nuggets about how your business is being run. For instance, you may not know that your company is engaged in practices that are wasting money and threatening your working capital, but your employees just might. They just haven't said anything because they don't want to appear as a scold. Anonymous internal feedback can help get things out in the open.
“We gain so much by empowering our employees and giving them a voice," Seward says.
But whatever you use to get that feedback, the important thing is that you're asking employees and customers how your business can do better. With the right feedback, you may learn all sorts of things you otherwise wouldn't have—and be able to prevent all sorts of potential outcomes that could threaten your working capital, inventory or some other surprise.
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