Recessions have historically been regarded as a normal part of the business cycle. They were seen as a fact of life but also as having a positive aspect in that tougher times refocus businesses back onto the basics; eliminating some of the excesses and bad habits that may have crept in during the good times. These leaner, meaner, refocused businesses then lead us into a new period of prosperity.
As a region we seem to be holding up well in the midst of what is a significant global financial event. And, in the New Zealand context, we are doing considerably better than Aucklanders, who have been struggling for some time. In fact there may be an opportunity to attract some of them to South Canterbury to assist with our skill shortages and to position ourselves for further growth.
Some local businesses will have noticed a downturn in business opportunities. Others will see the world as unchanged. But either way it is an appropriate time for each to be considering what the characteristics of a well run business are and how they are measuring up against them. Being proactive now, even if the warnings turn out to be for nought, is hardly a bad thing.
The list in front of me runs to 20 characteristics – which aren’t going to fit into a 500 word article, certainly not with any explanation attached. Nevertheless the section headings themselves are a good self check list. I have summarised some into groups.
Personal capacity and development (leadership)
- Excellent customer knowledge and service
Excellent product/industry knowledge
- Excellent systems and analysis of results
- Excellent cash control, stock management, work In progress control, debtor control and cost control
Excellent staff management, motivation and communication
- Excellent marketing expertise/the ability to assess market place opportunities
- Ability to change with market conditions/prices review
Excellent assessment of competitors
Adequate capital base
Use of professional advisors: accountant, banker, solicitor
- Networking
- Excellent planning
Excellent quality control
Excellent management/administration
These are the nuts and bolts of a well run business. They may seem obvious. But being obvious and being completed at a high level across the board can be two different things. I asked a local business man last week why a particular strategy, which had been successful for him, was no longer being pursued. His answer was that the good times had moved their focus away from the basics. They are now revisiting them.
Marking your business out of 10 for each of the characteristics listed above might be a good start to identifying weaknesses and then beginning to address them. Some thought as to the ingredients that made your business successful in the first place and whether they are still in place, albeit in a modified or improved form, would also be time well spent.
By Stephen McFarlane