Business Tip: Small Businesses – don’t be an Army of one! What if you go down?
I haven’t given a business tip in quite some time, so here we go!
As you know I am a cyber security and business continuity consultant. Who needs a business continuity plan? Large corporations? Small businesses? The answer is everyone! I have decided to share my knowledge with small businesses. How can I help you? I can help you organize yourself and stop being an army of one!
Here is a story of my friend, lets call him Frank. Frank is a contractor with a large construction company with multiple job locations. He has multiple teams lets say 3-4. He has a foreman for those positions, but he is the project manager. He oversees each job site and he handles all the vendor relations and the site management with the site owner
2. Project manager
3. Vendor relations manager
4. Site manager
Back at the office he has a salesman or two, but everything must go through him!
5. Sales manager
He has a company that he uses for marketing materials, but again everything has to go through him!
6. Marketing manager
He handles all the banking deposits, all the check writing, he has a payroll company he uses, but he has to gather all the info for them. He has an office assistant, but again everything goes through him!
7. Office manager
8. He also does miscellaneous tasks, basically whatever needs to be done!
Ok so, with that quick list he does the job of 8 people!
Ok, back to the story! One day on the job-site Frank is overseeing a team on a scaffold, he slips falls 30 feet fucks up his back and is laid up in the hospital, then goes home and back and forth to therapy! While he is out, those 8 jobs are not being done! We also forgot his 9th job! Bringing in new business and securing the contract! Job 9: contract negotiations new business
Now, lets look at the financials of a small service oriented business. You have contracts. When you sign it they pay a retainer lets say 1/3 of the job. Then you do the job and 60-90 days after completion they pay you the remaining money thats called accounts receivable.
John has to pay for the materials and labor and the bills of the business such as: vehicle costs, rent, utilities, marketing etc… What pays those bills as he is waiting for the accounts receivable to come in? The answer is new business retainers. It’s a vicious circle! Well, Frank was injured! No new business was coming in! Because Frank had a small business he also didn’t have health insurance, so that’s more high payment bills he had to pay for!
What ended up happening? He lost his business! No one could pick up the pieces when he went down and no new business was coming in, so he couldn’t pay his bills! He was also living above his means! Big mortgaged house, leased high end luxury vehicles, high end name brand clothing (high credit card bills)
Basically, he lost everything! The money eventually came in, so it pulled him out of the giant hole he dug, but he lost everything! Now he is trying to rebuild everything, guess what?? He is working for someone else now as a sub-contractor.
Unfortunately, I know a whole lot of people that run their companies like this! They want to make every dime possible and not have any backup plans in place! What if they get injured? What if they get cancer? What if they die? What will happen to their company or their family they leave behind?
What could he have done? He could have had a small (bcp) business continuity plan!
A written plan that any dummy can pick up and run his company in his absence!
Ok how do we start?
1. We have to: document Franks processes! What exactly does he do?
Once we document what he does, we have to:
Identify key processes processes that the business needs to function!
Once we identify the key processes:
The hard part comes! We have to:
Backup the key processes how do we keep those processes running in an emergency or get them back up ASAP in an emergency!!
If we can’t get them up how do we:
Maybe Frank could have used a sub-contractor to take over his job sites. He would have lost about 60-70% of his profit on the job, but it would have gotten done on schedule and he would have made a small profit instead of defaulting…
Every business should have a second in charge that is trained to take the place of the owner in case the owner can’t be there! He needs to know everything!
As a business owner, don’t be afraid to fully train a second in charge! He/she can’t take your job! You own it!! But if you can’t be there they can act in your place and continue the business with the BCP you created!
Don’t give them access to write checks or cash checks, but they can deposit!
Give a trustworthy family member that ability and have your second in charge go to them in your absence.
Don’t be afraid to hire people for those positions listed above! When your company is running efficiently it will bring in more business and you will make more money to cover those positions.
Document your processes, make a bcp and delegate authority!
Feel free to contact me if you have any questions…
This entry was posted on August 22, 2013 by louisjbianco. It was filed under Business and was tagged with BCP, business continuity, business tip, delegate authority, disaster recovery, document processes, Small business.