Is Your Baby Just a Beautiful House of Cards

by

Joan M. Ridley, CEPA, CBI, CFP^®

Researcher Bob Fangmeyer, Director of the Malcolm Baldrige Performance Excellence Program, and fellow researchers, "found that business owners think they are building solid companies that are prepared to grow, but at most, they are building a beautiful house of cards that can topple at any moment".

This Breakthrough-Small Business Results research conducted between 2011 and 2015 found that owners of businesses that have matured beyond the start-up phase report that they are "focusing on business basics" when in reality they are not focusing on engaging in process or strategic improvement. The impact is eye popping.

Witness these facts

The lower mid-market and small businesses are touted as being the economic back bone that drives our economy, and yet this research revealed:

• their share of employment has dropped from 54.5% to 49.1% (1988 to 2010)
• their share of the US GDP has dropped from over 48% to less than 45% (1998 to 2010)

Mr. Fangmeyer and fellow researchers, Michael Kramer and Kevin McCormack, Ph.D., were surprised to discover that business owners were not aware that they were not engaging in process or strategic improvement that would position them for growth. The researchers concluded that "success is random, and, small businesses lack access to practical tools used by larger organizations to succeed". They found that "the majority of small businesses are not implementing even the most basic quality management practices associated with successful, long-lived companies." "For example, they are not documenting their operational procedures, or engaging their employees in continuous improvement. This is causing their success to be random and unpredictable." The researchers hypothesized that small business success can become more predictable if startups apply appropriate best management practices earlier in their life cycle.

What does all this mean for you the business owner

The impact on the business owner if he implements these best practices could be significant:

1. His personal net worth attributable to the value of his business could grow substantially
2. He would once again become a formidable opponent for his competition
3. Employee morale and job security would increase
4. He would work less, make more money, and sleep soundly at night
5. His options for eventual ownership transition would increase

True, business owners might have a different take on why their businesses are not stellar performers such as: 1) too many federal regulations; 2) burdensome health care costs and administration; 3) quality hires are hard to find; and 4) foreign competition is pricing them out of the market. But, for now, let's go with the researchers' conclusion that businesses are not poised for growth because they lack the necessary tools.

What you can do

There is a new tool available to help the business owner position his company for growth. ManageHubAccelerator was released in January 2016. It is a cloud-based hands on tool that engages the business owner and his employees based on the criteria used by the Malcolm Baldrige Performance Excellence Program. It works well for both for-profits and non-profits. If you or your employees need assistance, ManageHubAccelerator, developed by Mike Kramer, CPA, founder of ManageHub, has assembled a team of vetted coaches throughout the country to guide you through the process. If you want to try it out, click here for a free Success Score. Although I am not officially on the coaching team, you can use my name to get you into the system. Need help or have questions? Call Mike Kramer at 800-999-9231 or 847-675-8211, or myself, Joan Ridley, at 214-692-9192.

Copyright 2016 Joan M. Ridley

 

Joan M. Ridley is President of Business Wealth Solutions, a business consultancy that helps business owners create company sustainability in preparation for management or ownership transition. She is a Certified Business Intermediary, Certified Business Exit Planner, and a Certified Financial Planner™. In 2013 she received the first Excellence in Exit Planning Award conferred by the Exit Planning Institute for her pioneering contribution to this new discipline. She is the Founder of the North Texas Chapter of The Exit Planning Institute. Call 214-692-9192 and visit www.bwsllc.net.