The Stakeholders In Your Business

As a business owner or professional, you're in charge, you're the boss. When you interview prospective employees, two of the things you're undoubtedly looking for is loyalty to the company and commitment to the job. Turnover is costly, and the last thing you want is to put time and effort into developing someone to become proficient in their position only to have them leave a few months or years later.

I've always said that the ability to look at things from both sides of an issue is what makes a good leader. That being said, lets take a look at both sides of this important question. What would happen to your business and the lives of your employees and your customers if you died in a traffic accident on your way home from work today?  Could the company survive your death?  Would your employees still have a job and a paycheck to support their households?  Lets now look at this issue from an employee's point of view. Just as we don't want to lose an employee, our employees don't want to lose their job and have to start all over somewhere else.  Employees want to find a company to work for that values them and looks out for them. If they don't feel that they have job security where they are, they may start looking for something that offers more security. This is especially true with key employees. Both employers and employees are typically looking for a common denominator when it comes to security and longevity. This common goal creates a real opportunity for the proactive business owner/professional.

We're clearly talking about the need for business continuity & succession planning. The smaller the company or professional practice is, the more vulnerable the company is to the loss of a key employee or owner. Most business owners that I talk with on this topic have a complete misunderstanding of the real issues at stake and the opportunities and benefits that can come from business succession and transition planning.

I'm frequently told by business owners "I have that all taken care of." Really, I say, that's great to hear, can you tell me about that. "Sure, I have a big life insurance policy, so if I die my family will be well taken care of."  What about your stakeholders beyond just your immediate family? "What stakeholders?" Your employees to start with. "What about them." Well, will the company survive your death? Will your employees still have a job, and if so, for how long? Once you're gone, will the employees stick around to see if the company can make it, or will they begin to look for new jobs right away? What do you think the chances of survival are for the company if the employees start leaving? I'm not saying that the life insurance policy isn't important for your family, but lets not get confused into thinking your succession plan is "all set."  What if you get critically hurt or sick? What if it's your spouse or child who is critically hurt or sick? What role do you want your business to play in your retirement? Do you know what your business is worth?

To truly develop a solid succession and transition plan involves layers of underlying planning. It involves identifying and developing key people within the company. It involves business owners learning how to create leverage by strategically growing the business and delegating important tasks and responsibility. It's about building a successful company and creating an exit strategy.

Who are the real stakeholders in your business? You and your family, your partner(s) and their families, your employees, your customers, your suppliers and service providers, and your business entity itself. Focus on taking good care of your stakeholders by really digging in and working on the continued growth and success of your business, don't get caught up like so many business owners do, by just working in their business.

This is a topic with layers of issues to be covered. Follow me as I continue the discussion in upcoming posts.  

Using Your Business Plan as a Management Tool

Most small business owners don't understand the value and importance of developing and maintaining a written strategic business plan (SBP). They see taking valuable time out of their business day to develop a written plan as an unncessary task that they don't have time for and don't really need.

I've had many small business owners tell me that business plans are for large companies or for businesses who are approaching a bank to borrow money.  My response to that line of thinking is this:  All companies, regardless of size, should have a written plan.  For small companies particularly, having and using an SBP as a management tool can ultimately make the difference between success and failure.  An effective business plan can save you time and money by helping you prioritize and focus your business activities.  An SBP can give you control over your personnel management, marketing activities, finances and day-to-day operations.

Packaging your business in document form and telling the story of your company in print almost forces you to view your business objectively.  Your plan should clearly present your current position, your vision for the future, including specific measurable goals, and your detailed action plans for realizing those goals and your vision.

As a business consultant, one of the benefits I bring to my clients is that I ask a lot of questions.  By asking questions like why do you ...?, how do you...?, or why not...?, it forces them to not only explain the reasoning behind their process, it challenges them to consider other alternatives.  As a small business CEO, you should constantly be looking at your strategic business plan and asking questions of yourself, and your entire team, as though an outside consultant were asking those questions.

Your written SBP provides a valuable management tool that you can use to clarify and improve every moving part of your company.  It also forces you to measure actual results against written objectives, which, believe it or not, is all too often a key missing link for measuring the financial health of most small businesses.

My challenge to you is to make the commitment to develop or update your SBP over the next ninety days.  I am confident that you will find that the value of getting your entire business operation broken down on paper is well worth the time and energy it takes to do it.  If you decide to tackle the planning process yourself, a good resource is a book by Rhonda Abrams, titled Business Plan in a Day.  This book provides a good frame-work for most small businesses to start from.  Don't be fooled by the title though, you can expect to spend far more than 8 hours developing your plan.