Healthy companies understand that there are 5 major areas of business that must be operated for the whole to grow.
Operations: This is the function you get paid to do. The first priority is to insure happy satisfied customers.
Finance: One of the most under valued areas of a healthy small business. Finance should be part of every decision made from budgeting, forecasting purchasing, materials, hiring, and compensation. Produce weekly summaries of performance as well as monthly P / L and cash flow reported. Finance also establishes relationships with bankers or lenders, and assesses the financial needs of the company for the year.
What good is doing a great job that you lose or make no money on?
Sales and marketing : According to the small business administration this is one of the two main areas why a small company fails, (the other being cash flow or finance). Many small businesses under value the cost and time needed to grow new customers and meet the cash flow needs of the company. Sales are the fuel that keeps the company running
Human Resources : As you grow you will need to focus more on good hiring practices, training, employee compensation, payroll, insurance for employee's, the owners and company, as well as legal issues. All of these have to fit into the cash flow and business plan.
Executive leadership: Business planning, vision of the future, understanding of laws and regulations that affect your industry, relationship building and the over all cohesive function of the various departments fall to the executive and senior management. When a business fails to provide this key area of responsibilities during growth the odds are it will fail, or fall back to a smaller size.
How to determine which areas are functioning and which need attention:
Does your company:
Have individual department forecasts and budget monthly?
Have a one month, quarterly and annual cash flow projection?
Have a sales forecast based on solid information?
Have formal monthly revenue of cash flow and budgets by department?
Have a formal employee review quarterly and annually?
Are job descriptions published and communicated?
Is there a formal documented training process for new and existing employees?
Does executive management or owners dedicate a minimum of two to four hours each week working and assessing the business plan and the functioning of each department?
Doe your company have a monthly report that in 5 minutes tells how each area is performing compared to plan?
Does your company utilize outside sources for key disciplines that executive management lacks experience in? Examples are:
CPA, Attorney, business consultant, other same industry executives, marketing firms, members of associations.
The greatest opportunity I have seen in working with hundreds of small and medium size businesses is within the assessment and planning areas. Few business owners pay attention to each of the above areas. My suggestion for every client I have worked with in growing or fixing a business starts with spending 2-4 hours every week assessing the areas, and then taking action on improving. If you want to be a growth company, you really do have to act like one.