The essential task of every business owner or entrepreneur is to overcome daily problems, obstacles, and challenges in the quest to serve customers better and make a profit. I want to discuss some of the specific challenges faced by small-business owners, and then drill down to the underlying causes of those problems. This will also lay a foundation for understanding the solutions offered by the Box Theory™ methodology.
The Small Business Challenge
The Small Business Administration reports that over 500,000 businesses are born every year and about the same number die. Of startups, 33% are no longer in business after two years, and 50% are gone by four years. (SBA Frequently Asked Questions).
The Box Theory™ Way can prevent you from becoming one of these dismal statistics, behind which are broken dreams and financial devastation.
As entrepreneurs, we all start with a similar vision. We want to be independent and earn more income than we might earn by working for others. We have an idea, talent, or product we hope the marketplace will demand. Sometimes we borrow money from family, mortgage the house, or risk everything to “live the dream.” Then, like every other entrepreneur, we discover that owning a business requires all the intelligence, discipline, and hard work we can muster. To start, grow, and sustain a successful company is likely to be the most difficult thing we ever attempt.
From day one, unrelenting forces begin to work against us. We face slumping economies, cost increases from vendors, customers who pay slow or not at all, government regulations, increasing taxes, unproductive employees, stiff competition, insufficient sales, obsolete inventory, cash flow headaches, never-ending demand for new and better products, and many other challenges.
If you haven’t had some of these brutal experiences yet, it’s only a matter of time. They will come with changing market conditions, government leadership, and business cycles. So be prepared.
I believe it takes as much skill to be a business owner as it does to be a medical doctor. The difference is this: Doctors prepare for ten to twelve years before starting their medical practice. Most entrepreneurs learn on the fly, resulting in critical errors and frequent casualties. The requirements of continuous learning, self-discipline, and long hours are no less for a budding entrepreneur than they are for a doctor. Are you willing to pay that kind of price?
Your Primary Purpose
A business enterprise is made up of people, products, and processes organized to profitably find and keep customers. Companies are in trouble from the get-go when they face superior competition, low market demand, under-capitalization, difficulty reaching their target market, undifferentiated strategy, ineffective management, or a weak revenue model. Assuming those things are in order, the most likely reason for failure is that owners do not create business systems and processes that effectively carry out the mission, strategy, and goals of their organization.
As an entrepreneur, your primary purpose is not to sell, make products, or provide a service, but to be the chief architect of your entire business enterprise.
On a typical day, you design, develop, oversee, monitor, and evaluate the systems and processes that make your organization run efficiently, create value for customers, and produce a healthy profit. If you want to be an artist, machine operator, sales agent, or technician, you should get a steady nine-to-five job. Building a business is a different vocation altogether. If you don’t have the personality, skill-set, or desire to do this, you should get a partner or hire someone who does.
Your primary role as a business owner is to get the best people you can on the team, create innovative products for your target market, and develop operational excellence (systems and processes) that will attract and keep customers. When you can do this profitably, you will have the foundation for a lasting company.
Customers buy from companies that serve them best. Without concern, they allow all others to fail. It is how the customer feels about your business as a whole that matters most. Everything about your operation—advertising, cleanliness, courtesy, and knowledge of employees, return merchandise policy, product selection, location, delivery time, price, and so forth—is what they are choosing. As chief architect, your entire business is your product, and it must be exceptional throughout. When it is, YOU become the “best deal!” Creating effective business systems and processes will make your organization exceptional, and keep your customers coming back again and again!
Let’s dig a little deeper. Do you run a perfect business? If not, what problems would you like to eliminate? What parts of your organization need to improve? What obstacles must you overcome? What is eating away at your profit or preventing you from reaching your full potential?
Your business weaknesses and problems will surface from three primary sources:
- Customer or worker feedback/complaints
- Financial reports and performance data/brutal facts
- Personal frustration/symptoms of deeper problems
You will experience frustration when there are recurring events over which you feel little or no control—problems that can often be eliminated by installing an effective system.
How many of the business problems, obstacles, or frustrations below do you have?
Customer or Worker Dissatisfaction
* Our customers complain about quality or timely delivery.
* Our customer service is not as good as it could be.
* We don’t have customer loyalty or get the re-orders we expect.
* Our competitors are taking business from us.
* Orders are processed incorrectly; too many returns.
* We can’t seem to hire or keep good people.
* Our people aren’t productive or motivated.
* We don’t have accurate or timely financial information.
* We don’t know our true costs.
* Profit is lower than it should be.
* Accounts receivable collections are too slow.
* The company has missed filing deadlines or tax deposits.
* Cash flow is poor, hard to manage, and stressful.
* Labor costs are high.
* We don’t have enough working capital for needed people, equipment, or inventory.
* We don’t have enough sales.
* Our advertising isn’t working.
* The business is unorganized and chaotic.
* I’m the only one who can do some of the work.
* There is too much waste and inefficiency.
Every day, these and other frustrating business problems take hard-earned money out of your pocket. Amazingly, they all reflect the same underlying problem—a problem that you can easily fix!
Start, Grow, Fix or Franchise
Each business is unique and at a different stage of development, with different goals. However, every business owner is either trying to start, grow, fix, or replicate their business. Effective business systems and processes play a major role in each of these endeavors. Box Theory™ methodology and software can also help you in the following ways.
When you start a new business, you build everything from the ground up. You create and organize all your business systems and processes to produce sales, deliver products and services, and accomplish your mission, strategy, and goals. The Box Theory™ Way is a unique “system” to help you lay that critical foundation and get results that will impress customers right from the start.
If your company is growing, you face hazards of a different kind. Many organizations fail because they grow too fast. The primary problem is that existing systems and processes cannot meet the increasing demands. They begin to break down. Customers become unhappy. Cash flow dries up. Frustration begins to dominate daily life. An organization experiencing rapid growth can be at risk of collapse unless it re-orders itself to a higher level of performance. Box Theory™ enables you to elevate your systems and processes to accommodate the otherwise exciting increase in demand for your products or services.
The majority of business organizations have a great deal of hidden waste, most of which can be prevented. Half-baked business systems and processes rob business owners and stakeholders of thousands of dollars every year. Box Theory™ methods enable managers to fix broken or ineffective business systems, getting them to run smoothly and profitably.
Finally, if you have any ideas about franchising your business or replicating it in other markets, the most important thing you can do is systemize it like a McDonald’s Restaurant. When you buy a franchise, you are primarily buying tested and proven business systems. Systemizing is the essential requirement to replicate any organization. Box Theory™ software will enable you to create a business model that can be used repeatedly to multiply your financial opportunities.
By now, I hope my point is crystal clear. Business owners frequently fail because they do not create effective systems and processes that profitably find and keep customers. Additionally, most do not realize the underlying waste of time and materials that seriously erode profit and prevent them from meeting the high expectations of their customers.
By understanding that effective business processes are the essential building blocks of a successful and profitable organization, you can now embark upon a journey of systematic improvement.
The Box Theory™ Way will enable you to eliminate the most common problems that small and mid-size business owners face:
- Weak sales and growth
- Customer dissatisfaction
- Waste and inefficiencies
- Underperformance and turnover of people
- Poor cashflow
- Low profit
- Over-dependence on owners
Systems Thinking is a concept that will change the way you run your business. Effective business systems are the logical and practical solutions to your daily problems, and they are just waiting to be discovered!