Do you have a checklist for your business?
Anyone driving a car or operating a machine masters the procedure of checking specific items at the very beginning. Flagging any of the key items means its not safe to proceed until the problem is diagnosed and satisfactorily rectified. We see this all the time in airports, carparks, hospitals and factories.
As the business owner, you are technically the driver especially at the early stages of the business. Do you have a checklist? For business owners hoping to reduce the risk of failure, Anexuss Africa has a five-point checklist.
M for Model
Do you understand your business model?
Broadly, it’s the business model that sheds light on the problems your business hopes to solve, the resources you need and whether you are going to make money out of it. It is both the landmark and the lighthouse from where you can decide the direction your business needs to take. While it’s true that no business model is static, the starting point is always a detailed summary of all the assumptions made.
O for Owner
Have you flagged areas of conflict between you and your business?
Business owners at the early stages of business growth enjoy absolute control, flexibility, and speed. They own the business anyway! In most cases they are the sole decision makers and can overrule or ignore advisors. Decisions can be made and changed in minutes! This is both a blessing and a curse. The business owner’s personality, style of management, and capacity to run the business can be in so much conflict with the aspirations of the business that the business stands no chance of survival.
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D for Driver
Are you able to specifically identify what drives revenue in your business?
Every business should be able to identify that activity, process, task, or action that drives its revenue. It can be done through a process similar to the root cause analysis. While a school owner, for instance, may believe that revenue is driven by the number of students multiplied by the amount of fees paid by each student, there is need to dig deeper into what drives the numbers. Is it the school’s good academic performance? What drives that performance? This is because a superficial response can’t accurately determine the real driver of revenue. It is not uncommon to find businesses owners not giving key drivers the attention they deserve, most likely without their knowledge.
E for Evidence
Are your decisions based on evidence?
If employing graduate sales representatives didn’t improve the sales targets two years in a row, and as a result, business owners decide to cut costs by employing interns, then they would be using evidence to make that decision. If, consequently, sales go up during the year when interns were hired, that would equally be considered as evidence that could be used to make a subsequent decision. A good practice would a specific standard of measurement called a metric. All business need a list of key metrics!
L for Lean
Are you able to restrict your business to the resources the business needs?
Obviously, business resources – physical, financial, human or intellectual – should be used for purposes of running the business as structured in its model. It’s unnecessary to belabour this point. A discussion on whether resources meant for the business are used for the activities of the business shouldn’t even arise. However, beyond that statement, there is the question of the value gained from the use of those resources. Do the business owners apply the resources of the business in a way that brings value to the company? To go a little further, do the owners restrict the use of resources to activities that bring value to the company?
