Mistake 1, Part 4: Trying to do Everything Yourself (or at least too much)?

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Each business owner has their own style for implementing new initiatives, but there can be no better opportunity for a team effort than in identifying all the elements of the business. Once you have decided to go for your own systems, involve all personnel in this discussion and start with the business goals, breaking these down into a series of procedures and tasks, i.e.:

  • Set up a systems ‘office’. This can certainly be a virtual office to save costs, but there is also need for a central office or location.
  • List (or set) strategic goals.
  • Identify tasks necessary to achieve those goals.
  • Develop effective procedures for completing those tasks; that is, write the procedures manual that can be replicated from the prototype.
  • Build confidence; it’s important to get a systems design completed early to create momentum and confidence among management, staff and external stakeholders. Get some runs on the board from day one!
  • Identify transitional systems. More good luck than good management would get everything to go the systems way simultaneously across the organisation. There will usually need to be a staged transition to allow for slower segments to be implemented and for re-training to occur where necessary.
  • Create the desired turnkey environment. What worked in your pre-turnkey era may no longer work; there may be shifts, not only in job descriptions, but also for working hours, flexitime, meeting times, etc.
  • Explain this new strategy. All key employees and stakeholders need to be told what is happening and when, especially if they will be affected as above.

This process is about both simplification – finding a better way of doing things – but also creating new roles. This may require a training effort. The ultimate goal of imposing structure and instituting systems and procedures is, of course, predictability. A system is any method or procedure that simplifies or automates part of the business, making it easier for ordinary people to operate it. As one business owner said, “I’ve set systems in place – the policies and procedures – documented down to every task so that staff know exactly what they are to do and how they are to do it, and how they are accountable for doing it well.” She went one step further to ensure the business invested in training, because some tasks would be totally new tasks. “Then we train, and train them all over again.” Continued in Part 4. An extract from the book “The 7 Biggest Costly Mistakes Business Owners Make And How to Survive & Thrive” by Richard C. Cooper (c) 2011.

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Mistake 1, Part 3: Trying to do Everything Yourself (or at least too much)?

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How do you build a business that works without you?

Every business has its own unique characteristics, but there is always a flow of work that makes up the overall concept.  Your task as the owner is to identify and build your own systems, detailed in a ‘procedures/tasks manual’ (sometimes called an ‘operations manual’). Every segment of your business must have definite procedures that make up the workflow. These procedures are totally consistent with your strategic goals in the business.

Just being armed with a business plan or a set of strategic goals does not mean that running your business will be easy. Work must be done to get the systems, procedures, and organisational structure right. Ray Kroc sweated over this for a considerable time before he was confident that a franchise operator could come in, switch on the register and lights and stovetop, and deliver the same high-quality hamburger, time and time again. Every detail of the business must be handled, examined, improved and documented, and improved upon again.

Up until now, whether making a sale, negotiating with a supplier, or keeping track of expenses, it has been you, as the business operator, just getting the job done.  This is fine, if the business is just you. But if you are ready to grow into developing your ‘systems and procedures’, then a change is needed.

This exercise requires all key people to be considered. Each person in the business must ask, ‘what would best service our customers here? How could I streamline or adapt the practices, in order to give the customer what they want most easily, while at the same time maximizing profits?’

To kick off this process, ask yourself: do you have the time, the skills and the capacity to execute these activities to develop your “perfect” business model?  If not, you could plug into an existing system – which is, of course, already the domain of franchises, but also exist in many network-marketing businesses. From The 7 Biggest “Costly” Mistakes Business Owners Make (And How to Survive & Thrive) by Richard Cooper – Continued in Part 4………

Mistake 1, Part 2: Trying to do Everything Yourself (or at least too much)?

The turnkey solution

When you buy a new car, you don’t expect to have to open the bonnet and fiddle around with the bits under the hood. You should be able to just turn the key and start driving. That’s what ‘turnkey’ means. In business, it’s a system so perfectly crafted that it requires no debugging or fiddling with, or any sense that things won’t work from the outset; just turn the key, and start making money.

If your business is starting to feel more like a rut than a business, it is time to take a turnkey approach – that is, any method or procedure that simplifies or automates part of the business, making it easier for ordinary people to operate.

This is the essence of what author Michael Gerber calls the “prototype”. Gerber is an entrepreneur guru and author of ‘The E-Myth’. He often talks about how 80% of businesses fail in the first five years.  Most people become sick of working for their idiot bosses, as they call them, so they decide to start their own business, and end up becoming the idiot boss. Instead of working five days per week for a guaranteed pay cheque; they work six to seven days per week, often for no cheque at all. You may be able to relate to these sad statistics.

In his book, Gerber walks you through the steps of a business life cycle – from entrepreneurial infancy through adolescent growing pains, to the mature entrepreneurial perspective and guiding light of all businesses that succeed –showing how to apply the lessons of franchising to any business at any level. Most importantly, Gerber draws the vital, often overlooked, distinction between working ON your business and working IN your business. This is also core to our work in this book, which is ultimately about freedom, not servitude to business!

A true business is a profitable enterprise that will work ideally without you. Most people do not really have a business; they just have another job that creates a lot more stress. The idea of a real business, as Robert Kiyosaki describes in the ‘Cash flow Quadrant’ is becoming the owner of an organisation or business that will work without you having to be there. In other words, if you wanted to go away for six months, you could; it would still bring in a passive income. Most people do not know how to set up a business like that.

Just as McDonald’s stores have been replicated tens of thousands of times all around the world, any business can be run on a turnkey basis, if it has the right systems and procedures in place.

This ‘systems’ approach allows a small business owner the means to integrate his activities via a set of systems and procedures. For a manager, this approach provides the order and predictability that is so important to the running of his or her business. For a proficient technical specialist or business owner-operator, it allows you to have the systems and procedures attended to by other people, so you can be free to do the ‘technical’ or the strategic work that you love. From The 7 Biggest “Costly” Mistakes Business Owners Make (And How to Survive & Thrive) by Richard Cooper – Continued in Part 3………

How to know when MYOB is more or less than Xero

How to know when MYOB is more or less than Xero

Published in BRW 05 February 2014 12:20, Updated 05 February 2014 17:24  @ http://www.brw.com.au/p/tech-gadgets/how_xero_know_when_myob_is_more_zs6kYfldQfv5wyake0St6N

Crowe Horwath’s Mary O’Driscoll says there is more to picking an accounting system than price.

The arrival of cloud-based accounting systems has busted open a space long dominated by incumbent MYOB, but picking the provider which suits your business best comes down to more than price.

“They’ve all got their good points and you need to be across more than one,” says Mary O’Driscoll, a principal in Crowe Horwath’s business advisory practice.

The four main players in the Australian market are MYOB, New Zealand’s fast-growing born-in-the-cloud Xero, global giant Intuit with Quickbooks, and Reckon, the former Australian distributor for Quickbooks which now has its own cloud-based offering.

Picking an accounting system is a vital yet often baffling decision for new businesses, O’Driscoll says, particularly as the players seek to attract start-ups with free trials that can convert into paid subscriptions when transactional levels increase.

The jaw-dropping performance of Xero shares reflects “the fundamental change that cloud-based accounting and bookkeeping is making to the way we do business,” O’Driscoll says.

She acknowledges that Xero is “ahead of the rest” when it comes to compatability with smartphones and tablets for entrepreneurs on the go.

However Crowe Horwath – which is a ‘platinum partner’ for Xero with more than 1000 clients using the software, but also a partner for MYOB in transitioning clients to its cloud-based AccountRight Live and Live Accounts platforms – regularly recommends a range of systems to businesses based on their needs.

“For example if you want inventory tracking, the Xero product on its own would not be sufficient – you’d need an add-on, whereas that is included in MYOB’s off-the-shelf product,” O’Driscoll says.

There is no “expensive” provider, she explains, but there is money to be saved in packaging add-ons tailored to your firm’s individual needs.

“MYOB also offers more a hybrid model. You can sync it and choose to use it offline, which suits some businesses. Obviously you can’t do that with a cloud-only solution.”

O’Driscoll says Intuit is “a bit behind in terms of its cloud product” but once localised it will offer a global heft the others lack. An example of its innovation is Quickbooks Financing, which uses the cloud-based data it already holds on its customers to try and give banks a better measure of their creditworthiness.

An MYOB to Xero case study

The choice between accounting systems was a lot easier in March 2012, when WA’s Caretech switched from MYOB to Xero, according to managing director of the wholesaler to pharmacis and health stores, Warwick Wilson.

“These days the competition’s really hotted up but back then Xero presented a unique opportunity for us,” Wilson says.

“MYOB was a specific bookkeeping system, and expensive in the sense of continually paying for upgrades. It was hard for newcomers to understand and there were no extras for sales reps back then.”

Wilson says buying Xero allowed him to redeploy “two or three” fulltime equivalents away from the books and into sales roles that can grow the business.

Cloud-based accounting in general has saved him time and money and presented opportunities to improve, for example through diarisation of all calls to and from customers and sales reps (delivered through a $35-a-month add-on to Xero called Insightly).

“The relationship with our accountant was behind the times, they were just glorified bookkeepers and if you made a mistake, you’d have to recreate everything. It was just silly compared to now where you can all see what everyone’s doing. They can be true management accountants.”

Caretech will also adopt Xero’s inventory management add-on, Unleashed, “probably within the next six months”, Wilson says.

He has one note of notion of caution for first-time buyers of accounting software – don’t expect miracles overnight.

“In the first few months you gain nothing from a system really, it’s just record-keeping because there’s not enough data in it. Only with the passage of time does it become useful, when you can compare quarter-on-quarter then year-on-year.”

Internet banking through your accounting system will be reality

One of the revolutionary aspects of Xero was its enabling of a direct feed between a company’s bank accounts and its accounting system, says HLB Mann Judd business advisory partner Tony Kabrovski.

“It matches up the invoices you’ve sent out with the monies receivedinto your account, so reconciliation becomes as simple as the bookkeeper clicking ‘yes’ or ‘no’,” says Kabrovski.

He says cloud accounting generally allows businesses to react far more quickly to changing conditions.

“With some clients now, its only February but we’re already reforecasting for this quarter because new information has come in.”

Crowe Horwath’s O’Driscoll says more direct bank connectivity is happening across the space. One example is MYOB’s deal last year with mobile payments solution provider Mint Wireless.

“In 10 years’ time your internet banking could be operating solely through your accounting system,” she says.