A question I often ask clients is "What are your goals for this year?" Most of the time, I just get a puzzled expression, some evidence of internal discomfort, or a look of surprise.
According to statistics released by the Australian Securities and Investments Commission (ASIC), the percentage of small businesses failing is on the rise. ASIC says that 51% of business start ups do not survive beyond four years of operation. That is a short life expectancy rate!
It appears that the biggest issue for new businesses is a lack of strategic planning. Strategic planning is an organisation's process of defining its direction, and making decisions on allocating resources to pursue this strategy.
In a nutshell, setting goals. And then working out how to achieve them.
Most businesses do have a go at a business plan. But many might see this as a discrete task, and once completed, it sits on the shelf gathering dust. Once done, they can get on to the real work of running a business!
Rather, a business plan is your blueprint, your map for achieving goals. And it needs reviewing as things change.
Rigidity limits capacity for innovation and adaptation to changes in the market.
How do you know when it is time to change? How do you know what to change? This is the importance of measuring.
Data from the Bureau of Statistics shows that 20% of businesses in Australia don’t have financial (profits, sales growth, returns on investments), cost (budget, cost per unit of output, inventory cost), or quality (customer satisfaction, defect rates) measures in place at all.
Around 30% of businesses fail to measure operational performance (asset utilisation, on-time delivery), innovation (new products, new processes), and human resources (job satisfaction, training needs).
Success relies on plans, policies, procedures and performance. Policies need to not just exist, they need to be put into practice. Your workforce not only has to be aware of them, they need to agree with the policies, they need to be able to adopt them in a sustainable way. Procedures need to be relevant and consistently adhered to.
Measuring performance provides the opportunity to assess staff – what they are doing right, where they need knowledge, skills, improvement. Poor performance leads to dissatisfaction and can impact on the culture of your organisation. Failure to address poor performance may lead to reliable, effective staff departing.
Perhaps you are great at managing your business, but struggle with leadership, difficult conversations around managing staff, or hearing what people are saying, or not saying. Empowering people to deliver results is a critical goal for any business.
If you would like support for strategic planning and action to evaluate performance against procedures, improve communication, or promote a performance culture, contact Paula to discuss the options available to meet your needs and increase the productivity of your business.