Common Sense Entrepreneurial Management

In contrast, smaller, entrepreneurial companies in general do not do a very good job of strategic long-term planning, not because they don’t go through the process, but more so because they have to utilize more of their available resources to react more quickly to changes in their business environment. The smaller business does not have the luxury of unlimited resources like the Fortune 500, both monetary and in personnel to address these changes without either abandoning or steering way off course of their long-term plans. This is why it is important that the small business plan not be overly aggressive when starting out; they need to take the tortoise approach, not the hare.

Whereas the Fortune 500 company has the ability to adjust to these changes without major disruptions in their operations, the small business entrepreneur must aggressively attack the challenge to his business to maintain its position, or simply ensure that the business stays open. Larger organizations have a great advantage in that they can analyze the data causing their business environment change, throw resources at it, review the current situation, and formulate a well-thought-out plan of attack. The small business owner and his team have to be more reactionary to the data, leaving themselves open to a higher margin for error should their solution or countermeasure be proven wrong.

The same rules that one would suggest to a smaller, entrepreneurial company to follow when planning, executing, and adjusting to surprise changes in the marketplace are the same ones you would expect to find in large companies. The rules to ensure a higher rate of success would be to develop a short and long-term plan, build in a safety net, including a reasonable amount of time to adjust for changes that may cause you to have to veer off course, a plan to reset or refocus back on the original plan, and build or secure the necessary resources to support the plan over its lifespan.

The entrepreneur owner, at times, can put his or her own company in trouble because they either did not formulate a long-term strategic plan, are not working the plan they did create, or the plan they did create was flawed. This inability to follow a long-term plan creates the knee-jerk reaction to every situation they face. Decisions are made on the fly, action is taken without analysis, and the risks start to be larger than the rewards.

The first critical path you must determine is what the right size of your company should be. It is better to “right size vs. downsize.” Starting out, this may be difficult and probably will mean you, the owner, will have to do more of the selling or physical work than you would like to. You may not want to hear this, but I feel this is a good thing for two reasons, especially when just starting out. First, it allows you to control your wage expense in this critical stage of the business. Secondly, it allows you to maintain the feel of the business and stay on the front lines with your employees and customers. There is nothing more motivating for an employee than to see the owner in the trenches with them, moving the business forward. Building a strong team that works well and plays well together will always give you a solid foundation.

I have seen and been involved in many companies where errors have occurred in hiring the right number of people for the current or projected business. I have seen exuberant owners hire people, just to end up terminating them a few weeks later because the business slowed, or something good that they were expecting to occur in the business didn’t materialize. One of my most vivid memories of this type of thinking happened years ago, when an owner told me to hire a new staff member because business was going pretty well. After the interviewing and hiring process ran its course and I selected my new employee, the owner came in on the employee’s first day on the job and told me to fire her because business was slow. Unfortunately, this type of behavior was an inherent flaw in the owner. He ended up terminating her and I resigned.

My point in sharing this story is this: as an entrepreneur, owner, or manager, your decisions and actions affect more than just yourself; they affect the people around you, your current employees, and the ones you will want to add to your existing team someday. It is better to hire one or two employees fewer and have them busy than to over-hire and have to let them go. As a human being, you should always be concerned that you’re doing your very best to treat others fairly. Hiring help without good, sound business reasons, then terminating their services is unacceptable.