Have you ever read a business book that looks really interesting and useful at the outset, only to find (after paying $30 to $60 for it) that the content was not that relevant after all?
I run into this all the time.
The proliferation of books and resources for small business owners has never been higher. Yet, far too often, the authors involved are taking a big business model and big business ideas, and then scaling them down to attempt to fit small business.
Most often, this just doesn’t work.
An Example
A small business is not a “little big business”. It’s like comparing the Star Ship Enterprise to driving your car. Looking at them from a larger point of view, fundamentally a Star Ship gets the crew from one place to another. Your car does the same job for you.
However, compare the operation of both vessels. Out in space, the Enterprise needs a crew in order to navigate through space. The captain will delegate to the various members of her team what is necessary to keep the ship headed towards it’s destination. She never touches the actual controls of the ship.
You on the other hand, have both hands on the steering wheel, your eyes on the road ahead, your feet operating accelerator and brakes, while you listen to the traffic report and check the GPS for the best route.
The Traditional Model of Business
The traditional business model includes three fundamental elements. Those are: Marketing, Operations and Finance.
Marketing: Gaining new customers and more sales from existing customers
Operations: Acquisition, production and delivery of goods and / or services
Finance: Profitability, Cash Flow and Capital
Each of these elements exists in a small business, as well as in larger companies. So, the model is still valid for the small business owner. But it’s just not useful.
The Small Business Owner
Like you in your car, the small business owner is usually engaged in very pragmatic, tactical activities. The biggest threat to a small business is time. The owner has too much to do, and not enough time to deal with it all.
While time issues are a big threat to everyone, the small business owner is particularly vulnerable, as the viability of the company rests on his or her shoulders.
To today’s entrepreneur, there is little point in breaking down activities consistent with the traditional business model. You’re doing all the activities at the same time.
For example, Gary is a self-employed engineer. While he is doing his sales and marketing, he better be handling payment terms (finance), or he won’t have enough to pay his staff (operations) when the time comes. Plus how he delivers (operations) will often impact whether he gets paid on time (finance) and whether his client will call him back again (marketing).
A More Useful Structure for Small Business
We use a more practical structure for today’s entrepreneur. The three elements are:
- You (the entrepreneur)
- Your products and services
- Your customers
They are always linked to each other and interdependent. All the other functions of operations marketing and finance are relevant to each of these. This provides clarity in building your business activities, consistent with your goals and commitments in life.
You continually examine and improve your skills and what you do, your products and services and how you deliver them and your understanding of your customers. With this focus, you stay clear on the next steps, without feeling overwhelmed. We’ll dig into each of these — coming soon.