In many small and medium sized businesses there is little or no strategy to improve the fortunes of the organization. This may happen in good times as well as bad and may result from a belief that:
- If it is not broke don’t fix it
- The business is in a niche market with no competition
- No skills are available in-house to make proposed changes
- The business owner is retiring – it will be someone else’s problem
- And so on
The lack of a desire to continually develop and improve the business encourages a reactionary mode within the business, rather than a more desirable pro-active stance. Why is this important? Generally a reactionary organization fails to take business planning seriously and is more focused on resolving current issues than establishing a mechanism to allow problems to be anticipated and actioned prior to becoming an issue. The import of this can be found when comparing organizations that:
- gain success on an on-going basis
- are able to more easily attract skilled staff
- train staff in order to raise the skill set within the business
- have set their goals and know how they are to be achieved
with those businesses that do not. Pro-active focused businesses are generally the winners. Businesses do move into a pro-active mode, but what inspires the business owner to take such a step? Ten of the most frequent reasons for change within a business are:
1. Third Party Intervention
A financial institution that has supported the business may seek improvements in the business performance to reduce a potential risk to their investment. This may prompt the business leaders to take improvement actions that were previously alien to satisfy the institution and reduce the risk to their own assets that may be held as a guarantee against the investment.
2. Sales Decline
There may be a serious decline in sales. Competition, new technologies, a failure to meet the customer needs and expectations, a history of poor product development and introduction or poor marketing may all be contributory factors in reduced sales and be the catalyst for the business owner to change the approach to the business development.
3. Management Buyout
The chief executive is removed through a buyout by the other directors and a changed business approach ensues.
The business is acquired and the policies and practices of the acquiring business are adopted and introduce a proactive approach to the business. This may follow the appointment of new executive directors.
5. Lack of Internal Skills
The dearth of management skills within the business may trigger the appointment of an external senior executive who brings new methodologies, planning and enterprise to the business.
;6. Family Business ‘Turmoil’
The autocratic control of an owner may at times only be changed through the realization that permanent family divisions are undesirable. It may well be the opportunity for perhaps the ‘university educated next generation of family’ to demonstrate their abilities in setting and achieving sustainable growth strategies and managing the culture change.
7. Raise Capital
The success of raising new funding may be dependent upon the appointment of an executive or non executive director to oversee the business on behalf of the provider. Such an appointment will add new skills to the management team as well as promote improved business practices.
8. Exit Strategy
A business owner may realize that in order to optimize business value at the expected time of his/her exit, changes in the way the business is run will be necessary. The delegation of responsibilities, training of staff and implementation of strategic plans may be areas exploited to reduce the dependence of the owner on the business.
9. Delegation or Renegade Action
When the business owner does not have the skills necessary to effectively manage the organization authorities may be delegated to or sized by an opportunist director to manage the business. A weak unskilled business owner may be relieved that some responsibilities have been re-assigned, however, should the delegate or opportunist fail to match expectations more severe difficulties may arise for the business.
10. Project Based Change
Should implementation of an improvement project be planned, but internal resources are not sufficient or capable of managing the change, the appointment on a fixed term contract of a consultant or interim manager may be a desirable option. Change can be implemented with less interruption on staff conducting their normal duties.
The business owner should always control the business and this is easier to achieve if change is planned, well managed and is aligned to the goals of the organization.