Implementing systems means avoiding being bogged down by the small stuff

6 August 2012, Johannesburg - Small business owners often talk about being “married” to their businesses and are unable to take a holiday or are hesitant to leave someone else in charge. Generally, entrepreneurs seem to try to do everything themselves, often worrying about the small stuff, and are probably not seeing the benefits that the right systems could bring to their business and their lives.

A business that has systems in place is a business that is under control. Every business has policies and procedures to follow. An investment in accounting software means that finances are closely monitored, cash flow is regulated and invoicing and supplier payments are being made regularly. 

Better still is the fact that the right IT system will also help manage stock effectively. There is therefore little danger of losing a sale because an item is unavailable. Get the systems monitoring finances and stock holdings correct, and the chances of success increase markedly.

This principle of effective business management was addressed in the latest episode of the Business Coach, the Standard Bank-sponsored SABC3 series that examines the challenges facing small business owners and provides them with guidance on avoiding pitfalls when establishing or growing a small business.

“It’s common for entrepreneurs to perform certain business tasks well and avoid the jobs they don’t enjoy. The result is that procedures, policies, systems and the ‘small stuff’ – like effectively monitoring sales – are often ignored,” says Clive Pintusewitz, head of Small Enterprise and Enterprise Development at Standard Bank. “Staff with no systems to rely on can find themselves unable to work as efficiently as they should. The owner then becomes trapped within the business.”

“A lack of management systems or direction results in a business that is not performing. The bottom line is that productivity of staff and the owner is damaged,” he says.

Taking the time to put policies and support systems in place means that the business has a clear sense of direction. “Add staff training to the mix and you empower people to perform better and the business will fly,” says Mr Pintusewitz. Long-term benefits can also be derived from a “system-ised” business.

A business that is running smoothly and effectively is an attractive business.  This makes eventually selling a business easier. If a family member is to take over when the owner retires, succession also becomes simple. “It is much easier to take over a healthy business where everything has its place and administration is under control, than a business where massive effort has to be spent on putting things in place from scratch.”

Stock control systems, preferably automated, have much to offer the entrepreneur and offer huge benefits when it comes to effective business management.

“The days of a business owner examining shelves, the stock room, and then ordering on instinct, are long gone. Having a good stock control system takes the guess work out of keeping shop and offers several advantages,” says Mr Pintusewitz. These advantages include:
•          The ability to constantly track financial data, control cash flow and keep up to date with how your business is doing;
•          The ability to monitor daily, weekly, monthly and quarterly sales. This helps identify busy periods and quiet ones;
•          Knowing trading patterns means business strategies can be developed and coordinated with marketing efforts to help even out the flow of business and grow the business organically –  in other words, increase sales and profitability without incurring major costs;
•          A good system that tracks sales on a daily basis eliminates guesswork;
•          Once you know what products are selling, you also know what is not selling. This helps plan stock purchases so that more of the popular, fast-moving items are ordered and the number of slow selling items is reduced. This means money is saved and cash flow optimised; and
•          Money is not invested in items that spend a long time on shelves. Cash is therefore not tied up in non-performing assets.

“Systems are not just about control. They also significantly contribute to the business owner’s peace of mind. Have the correct procedures and systems in place and you have a business that produces an income that enables the owner to have a life and take time off when required, secure in the knowledge that the business can still function effectively in his or her absence,” says Mr Pintusewitz.

Note to the editor:

In the sixth episode of The Business Coach, which aired on 5 August 2012, we saw that a lack of systems can have a negative impact on a business. The inclination of many entrepreneurs is often to concentrate on what they know best. The result is that important, often critical aspects of the business get ignored. Fortunately the Business Coach was at hand to assist.

In the weeks ahead, SABC3 viewers will see a number of different issues that small business owners experience on the programme.  Viewers can tune in at 4pm on Sunday 12 August to see how the Business Coach provides advice and support to the owners of a business that produces faux stone products.

Contacts, media only:
Anique Human
Magna Carta Public Relations
Tel: 011 784 2598 or 076 028 0807

Comments

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