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Structure before success is necessary.

Xani

By Timothy Clayton

 

Peter F. Drucker was one of those rare and insightful minds in the business world, insomuch as his ideas were not just of the time or driven by things he simply observed; his concepts are some of the few that ring true in any era - even with the changing demands of technology and the contemporary world.

 

His thesis Entrepreneurship & Innovation is actually a book that many small business owners will find it difficult to relate to, perhaps because the examples and templates he gives throughout the book are not exactly small fry: a “small” chain of steel mills with a turnover of under $100m or the national library system don’t really resonate with most entrepreneurs when they are starting up in their garage. Sure, most people starting out on their own adventure may dream that they are Bill Hewlett and Dave Packard in Palo Alto in the thirties, but most of us are realistic enough to know that such stellar success is not on the cards.

 

Even if Drucker’s examples are a little difficult to relate to, there is one key concept that I feel is really of value to people starting out with their own firms - and to those who are looking to enter the next phase after a period of initial steadiness or modest growth. Drucker pushes the idea of being ready with resources and the employees that will be needed for success long before that success happens. His basic tenet is that, when success does suddenly come, we need the people and resources in place to exploit it and make the most of the opportunity. If we do not already have people in place, an opportunity may come and we will not be ready to start running from the off; small business owners can be left scrambling to find people to fill hours and investing money in new resources to meet the needs of a new client. And the lack of preparation means the new client may take his business elsewhere, or that the service you do eventually provide will not be up to scratch.

 

This is why Drucker suggests getting your business structured and ready for success up to three years before the big time hits. I personally think that most SMBs are not in a position to do this; having people on the payroll doing very little is not a luxury that many can afford. However, I think there are two smart ways to get your business ready for success before it happens:

 

1) Spreading people. Instead of installing a board of directors three years before you need one, or hiring a full workforce in advance, I’m a big fan of the idea of spreading work at the beginning. This means that if you need one person working full time, it is better to employ 2 working part-time to do the job. This is because when that new big client comes along, you will be in a position to ask those people who have been working for you on a limited contract if they would be prepared to do more. It saves on recruitment, is faster and makes sure you have people dealing with the new contract who already know your company. As long as you pay well and treat people well, you may find that this method works. As an example, I was running a small business with enough work for 3 full time staff on the books; however, I ran a team of 7-8 doing that same workload. Some only worked a few hours a week, or on an ad hoc basis but, when the big contracts came along, I already had a team of willing people who I knew I could trust. The task was then to just convince them that doing more hours for us was the right decision for them.

 

2) Technology that can cope with demand. People is the hard part; with technology we can prepare our business for the future with much less risk. Even if, at the very beginning, a simple home PC fulfills your business needs, there are a number of affordable and applicable servers on the market nowadays that you can put in place in preparation for growth. The HP ProLiant Gen9 server is the kind of tool that small businesses can implement to deliver, as the company says “the right compute for the right workload at the right price”.  The advantage to implementing technology early is that once you suddenly need it, it is there and ready to go. The Gen9 server offers scalability, meaning it can be implemented at cost and will meet business needs for as long as it has capacity, but can then be easily scaled-up as the business grows. With agility being the watchword for any small business, something like the HP 5400R Switch series of networking platform is a good partner for the ProLiant series, as it allows that team of workers that the small business is compiling to interact and cooperate. One should also look to the Windows Server OS and the beauty of solutions like Flex Bundles for Microsoft Exchange, which allow companies to buy tailored solutions in packages that create savings whilst retaining their tailored aspects.

 

Taking control of a small business and making it a success is about being proactive rather than reactive: by taking care of business before it needs to be done, you are allowing yourself peace of mind and a far smoother and effective change-up when business begins to boom.

 

So, while I would say that Drucker’s advice to put the structure of a big business into a small firm is optimistic to say the least, the principle is still sound nowadays and can be adapted to meet both modern times and the needs of a smaller, thriving business.

 

Happy 2015!

 

For more 2015 success tips for your business join the Coffee Coaching community on Facebook, Twitter, YouTube, andLinkedIn.

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Xani

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