Why Your Business Needs To Grow Up
Innovation, Leadership, Scaling: A lot of buzz is out there when it comes to business these days.
You could get the idea that when you have a good business idea, if you could turn it into immediate sales and then grow these sales as quickly as you can, you will automatically become a successful company.
Although having growing sales is a precondition for a successful company, it is insufficient. For the majority of businesses, simply growing is not viable—you also need to be profitable.
You need to grow up.
Good management is the key to achieving this goal, in the short term and strategically for the long term.
Short term: you can do it more efficiently
It is important that your company executes on its business model effectively.
Here is a simple example:
Let’s say you generate revenue of USD 500,000 a month and your cost of goods sold is 300,000. Your net income will obviously be USD 200,000.
However, the share of this net income that is actually left for you or your shareholders, or for growing the business, depends mainly on your operating expenses, such as your personnel cost.
Let’s say, in the given example,your operating expenses are 180,000, which leaves USD 20,000 to reinvest or take out of the company.
If you are able to cut your operating expenses—the cost to run your business—by 10%, this will increase your profit by 90% to 38,000 USD.
Or, if you increase efficiency by 10%, you will add 10% capacity to use for further business improvements.
In short: how well you run your operations is crucial for your business’ success.
Long term: you can’t (and shouldn’t) do it alone
Your working day as a manager has only so many hours. A point will come (and it comes very early for most of us) where you just cannot execute on all your planned initiatives.
So, you will need others, your organization, to help you do this. As your business grows, the organization’s impact on your business success will quickly outweigh your impact as an individual.
Consequently, managing your organization effectively becomes the single most important task, far more important than working on single initiatives, as strategic as they may be.
As an entrepreneur or manager, your organization—your team—is your most powerful tool for business success.
What Is Good Management?
This blog will regularly provide you with tools, techniques, and case studies on how to best manage your company and especially your organization.
It’s not about finding the right product-market fit or building the proper growth strategy, but rather how to develop your organization to foster excellent execution of these necessary tasks.
When I say good management, I mean the effective use of management techniques for tasks with high managerial leverage.
This blog will mainly cover areas of operations and organizational behavior, and it will cover surrounding areas where needed.
When I use the term operations, I refer to everything from how you run your meetings, to how you communicate within your business to the processes you follow (or would like your team to follow).
When I started my career in the German automotive industry, I hated the term process. It felt like it was something designed to limit my ambitions and creativity and to ensure adequate performance—not less, but also not more.
Now, after several stations in my career, I view processes differently: the secret to running a successful team or company is designing an effective and efficient process and then actually establishing it as the way your team operates.
Why organizational behavior?
Everybody claims that people are among the critical factors for business success. But, what happens in reality?
If you’re lucky, your HR department is desperately trying to bring the latest know-how into your company‘s day-to-day but fails due to a lack of (your?) management support.
If you’re unlucky, people management is hijacked by a lethargic HR department for which the term business partner is a stretch—managing contracts and processing payroll is about it.
In either one of those cases, you should adopt HR concepts, especially organizational behavior concepts, yourself.
Why, you ask? Because organizational behavior research holds the fundamental insights for managing your business or team effectively.
It’s time to bring HR back to business.
Who I Am
My name is Benjamin, and I am an operations consultant, helping my clients to structure and streamline their operations while involving their teams.
I started my career in the German automotive industry. After a few years, I founded my own event agency, which I ran for five years. I moved to Toronto and started my current business, an operations consultancy. And I love it!
To be clear, I’m not saying that all I do, say, or write here is the only and ideal way to do it.
I want to share thoughts and concepts, based on experience and research, to help you manage your team or business well.
Let me know if you would like me to cover any particular topics or if you have feedback about my articles.
One thought on “Good Management”
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