Q: After a rough start, my business has been growing pretty well since the economy picked up. With such a small staff, I struggle with going after new opportunities vs. managing our existing base of business. Any thoughts?
Manufacturing Client, St. Paul
A: I recently watched a very interesting documentary on the rise and fall of Tower Records. Tower started as a single small record store in Sacramento and grew into a billion-dollar global empire. But with their growth came management complacency. And when internet music downloads threatened their business, undisciplined management practices and excessive debt left them unable to respond, leading to Tower’s demise.
The fact that today’s business outlook is pretty strong doesn’t negate the need to follow sound business practices. Let me touch on my top four favorites.
First, know and scrutinize your numbers often. Everything your business does is reflected in the numbers, and sound decisionmaking depends on spotting trends and early warning signs.
Keep close with your stakeholders such as employees, customers, suppliers and bankers. When a business has problems, owners often feel isolated in search of an answer. Instead, share your concerns with these stakeholders. Difficult situations become more manageable when “your” problem becomes “our” problem.
Business plans are always important for a small business. It’s the process, not the document, that’s important. Force yourself and your team to realistically assess your strengths, weaknesses and the competitive environment. Identify your mission, and the financial and human resources needed for success.
Finally, don’t hesitate to make those tough, uncomfortable decisions. Strong sales and profit mask many workplace issues and inefficiencies. By doing nothing, you are making a decision, and it’s usually not the right one.
Even seasoned managers can become lazy during the good times, and newer managers have never managed through a recession. So now is the time to develop your sound management discipline for when the inevitable downturn arrives.
Mike Ryan is the director of the Small Business Development Center at the University of St. Thomas Opus College of Business.