MASTERING PROCESS MANAGEMENT TO SAVE A SMALL BUSINESS FROM LOSSES
I’ve been there. You open your small business – it has huge potential. You just need to work hard so you afford rental space, generate enough revenue so you afford enough staff and then eventually you can stop working to grow your business full time. Maybe you have a job or you do not. Say you have a job. The orders come in streaming! Business is good – there clearly is a need for your product! After work you tend to the deliveries and satisfy your clients. But a lot falls through the cracks (you are working after all). Clients start calling you with cancellations as they found another supplier. You are frustrated, you cannot afford an assistant just yet and your dream is falling by the wayside! Oops another failed start-up.
As start-ups have high failure rates, this week we look at what small businesses in their formative stages can do to minimise the risk of losses and mistakes so that they grow without hitting the already strained budget.
In his book called JACK, Former CEO of General Electric (GE), Jack Welch shares on how his already listed company in the early 90s undertook a rigorous process of ensuring that the processes of the company are flawless. General Electric was an advanced company well into its phase of maturity. It had suppliers as far as China and the time had come for all businesses to go online as the internet era was being birthed. Under the leadership of Welch, they used an Operations Management concept called Six Sigma to ensure that all processes of the company were flawless, turnaround times were reduced, clients and staff were empowered to identify flaws in company processes and staff were adequately empowered to rectify them so as to improve the efficiency of the company.
Jack insisted to his employees that the only time GE would go into e-commerce would be if all the processes of General Electric were completely flawless. The most interesting thing is that even as early as 1992 GE was one of the biggest companies in America but its competitors were rushing to e-commerce while GE was not even moving towards that direction.
This brought a very interesting thought regarding our formative businesses and their process management. Before you market on social media and before you build a website, how seamless are your processes for the increased demand that will come with online marketing (as discussed on the last article)?
How many times has your business lost business because the client is not happy with the product or service, the time it took to get the product to the client; staff could not execute the task well, the wrong product got to the client etc. How are our employees truly empowered to be innovative and to respond in time to company challenges? Mostly how expensive is it to you when your client experiences these?
Small businesses whether run part time or full time, with employees or without, often have processes that are not conducive to their growth. Looking at the all processes of your business in detail at least once a year and reviewing if they are conducive to growth, I have discovered is the main difference between growth and a loss a lot of the time.
“Most people fail (in start-ups) because they make mistakes they could have prevented” – Bram Krommenhoek, Failed Founder [The Startup Magazine]
IMPACT OF POOR PROCESS MANAGEMENT
Big businesses focus on process management. They hire experts and buy software’s to ensure that their processes are flawless and seamless. They know how long their products take to get to the client, what the client thinks of them, they know if the client made any repeat purchases. Business in formative stages do not.
If you do not have the same budget as a big company however, fret not. There are a couple of things you can do to aim for a flawless process for your company that is being established. Here are a couple of suggestions:
- Set aside a time to look in detail at your processes in your company. If you have no idea of the processes or you admit there are no processes, consider the “cracks”/problems that your company has been experiencing - consider things such as:
- What do past clients have to say about your business in totality – consider their criticism and not their praises for now? Word of Mouth is most influential form of marketing and you want to know what is said about you – particularly the bad. Consider how often you lose clients. What are their reasons for walking away after they have placed an order or their reasons for not making a second purchase;
- How long products take to get to clients – this might be part of the above point. If your business cannot deliver in time, clients will go elsewhere;
- How do people get to hear about your business (marketing);
- Is your staff adequately trained to capture orders right the first time and to handle any queries that clients might have? If you have no staff, how are you capturing orders and making sure you do not forget any orders? How do you make sure that backlogs are minimised when the business is inundated with orders?
- How do you handle reverse supply chain (when people return things, do they get them in time and their monies back)?
- Money: This is a HUGE ONE! This is because I always you can never hide your real personality and your inner child where money is concerned! What is your process regarding deposits and withdrawals from the business? Business money after all is not YOUR money even if you are the founder. A lot of founders spend business money so much that salaries get affected. Do you have an advisor regarding business finances? Do you trust and respect your advisor? An advisor that does not feel respected or trusted will not give you much advice. This problem is so apparent that renowned speaker, Vusi Thembekwayo, often speaks of the ill-discipline of entrepreneurs to delayed gratification.
- Empower your team and yourself to develop the best processes for your company using the current resources. Improving your business processes need not cost any additional money as most material is available for free online on how best to take care of your customer and your product development
Process Management will stop your business from making erroneous orders for the wrong clients or delivering the right order for the right client only for it to get to the client long after the order was placed (this is particularly the case if you deliver using the SA Post Office). It costs nothing for you to be honest about your processes and ask yourself, “If I had a choices as a customer, would I buy from me?” – This tests the relevance of your product, your focus on your ability to satisfy the customer on what is termed customer development.
The list of things you can assess of course is not limited to this but you can start step by step to gradually assess what you, your business and your team can do better to provide a better product to the customer. Most start-ups after all fail due to their inability to focus on the product and the consumer. After many years of failing in various start-ups, experience and observation too taught me that is the one thing most start-ups miss.
IS PROCESS MANAGEMENT REALLY BENEFICIAL
My experience as a consultant is that a lot of founders of start-ups do not like formalities (by formalities I mean processes). You started a business after all because you saw a need for your product, not because you want to walk in a straight line. The best news is you do not have a boss and you do not want one. Entrepreneurs do not want to have a fixed way of doing things – because rules mean they have a boss and they are the boss! On the contrary, a fixed way of doing things can show you exactly what you’re doing right or exactly what you are doing wrong.
So how did Six Sigma exactly benefit General Electric? Well Jack Welch became one of the most respected leaders in the world. General Electric grew outside of America and stamped itself further as an international company. The main cause of this was because of his dedication to company wide process management.
Has the time come to consider getting started with strategic process management in your business?
Written By: Thembi Tabata