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Fatal flaws in small businesses

What’s the most common reason for the failure of small businesses?

Our
vote would be for owner/managers who are unable to let go or move away from direct
involvement in providing goods or services to their customers. It’s not hard
to see why the boss would want to keep his or her hand in the way things are done
in the shop. After all, their very first products were probably crafted by his
or her own hands. It’s probably what they know and do best.

Consider
the client who asked us to help her increase the efficiency of production and
delivery efforts that were moving at a snail’s pace. Interviews of her employees
and observation of the crews at work helped us identify the problem almost immediately.
At every stage of the work, the boss, our client, intervened and stopped the work
to make corrections, change assignments or expedite particular orders. She wanted
everyone to perform the work in the very same way she had when the company first
started.

While she was back in the shop making widgets (working “in”
the business), who was up front working on business growth and development or
managing cash flow or setting up the financing for the new product due for release
next month? (We call this working “on” the business).

Tough
choice

In every small business that has experienced initial success, there
comes a time when the owner/operator is faced with a tough choice. He can stay
very small and stay close to the action on the shop floor or he can grow by learning
to allow others to do the work for him.

Allowing others to do the work
of producing the goods or services isn’t easy. It requires different skills
than making widgets. It requires the willingness to turn the successful recipe
(specifications) over to others for their input and improvement. The demands of
managing can also be alien and often distasteful. Managing involves working with
people, not materials.

The failure to make the leap from working in the
business to working on the business is evident time and time again in cash-management
crises, poor planning, ineffective delegation and the common complaint of key
employees: “Why bother? The boss is just going to do it all over again himself.”

Tom Aranow is a senior advisor with Harrington Daniels Advisors LLC,
Cedarburg.

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