3 Basic Steps to Business Optimization
The average business owner is usually a prisoner. Instead of owning the business, the business owns him. Break FREE.
3 Basic Steps to Business Optimization
You can be sure you own a business only when your business works hard to make you money and give you a great quality of life. The business in this case is like a machine, well lubed and efficient. If you have to work all the time; keep your eyes on every little detail and have your hands in every aspect of your business in order for it to keep functioning well; then you don’t own a business but the business owns you. If you are a seasoned businessman like I am, then you surely know what I am talking about.
Your goal from the beginning should be to Own a business that makes you money and affords you a great quality of life. In that spirit, here are only three simple basic steps that you must focus on:
1) Always stay focused on the money. Like they say in sports, “keep your eye on the ball”; and in business our ball is the money. Follow the money and your goal is always to increase the profitability of the company while you streamline its operations. So; the first step is to map out the money track and make sure that there are no small holes in the boat. A small leak can make the greatest ship sink. Make a careful analysis of where the money is going, to the penny and where it is coming from. You may need a book-keeper in the beginning or a more seasoned accountant to create your financial statements; but this is one place you can’t be cheap. But either way, make sure you have the accurate report and make sure it is not such a complicated report that makes no sense to you. Put all of your sources of revenue on top. All of your expense items in the middle. And then you can track where the money is coming from and where the money is going. On the bottom is the profit. There needs to be a clear distinction between fixed costs and variable costs. You need to make sure you keep most of your expenses variable and not fixed.
2) Every small to medium sized business must have a clear functional structure and within this functional organization each individual must have a clear and concise job description with detailed procedure and protocols that they must follow. In this way the efficiency of the organization will be assured and in case there is any turn-over in the employees, the organization does not fall apart. Further, if there is ever a problem that has been identified, by following a clearly perfected and predetermined procedure & protocol system; the management can trouble shoot and identify exactly as to where in the process and by whom the problem has been created. Then you can decide if it is a human error issue that caused the problem or it was the procedure & protocols that were faulty and maybe in need of correction. In case of the latter, by changing the procedure & protocols, the future problems can be avoided.
3) Finally, it is extremely important that you do everything in the business according to a reliable P&L (profit and loss statement) that can guide you specifically to the right answers. You need to know where to slash expenses, diminish costs; increase sales and what types of sales are maximally profitable and which are of less value. You would also be able to manage advertising and marketing, administrative expenses and everything else that the business needs; all by a careful view at the P&L. No decision should ever be made without clear understanding of the P&L and the financial statements. The P&L is like the map that one needs to follow to get through the woods. Running a business should be based on science and not guess work.
About the author:
Dr. Daniel Shane Sheibani Davidson (www.ExpertBusinessConsultant.com) is a seasoned and experienced business coach who started a business from zero and built a multi-million dollar enterprise. He has earned multitude of degrees along the way including but not limited to an MBA and a Doctorate in Business Administration. He is a teacher, mentor and coach who admittedly loves to teach and help others as much as he loves to learn and grow himself. In his career he has coached hundreds of clients over the years. He specializes in helping small and medium sized business owners create a business-life balance by getting their businesses operate efficiently and without constant breakdown independent of their owners’ daily participation in the business. In short; he helps owners free themselves of the bondage of the business so that they own their businesses instead of being owned by their business.
To contact Dr. Davidson you can email him at DrDavidson@MyBusinessLifeCoach.comor via telephone at 310-212-1500.