Businesses go under because they run out of cash. A business accelerates when it markets itself successfully. Your business is sustainable when the right foundations are put in place, and has all of the functions of the business allocated to responsible people who are motivated to succeed. ‘Your people are your asset’ should not be a token saying but should be your business mantra. Invest in your assets or your people should be done wisely and no money should be invested unless there is a return on investment.
 
But what areas should you have people allocated in? Sometimes as a business grows rapidly, the owner recruits a whole heap of people to handle the increase in demand. The people are busy, but busy doing what! The owner recruits these people, with no real plan in mind, “Just get the bodies out there!” shouts the overwhelmed owner. The new recruits are given no direction, no job description, no performance reviews. They all work hard, but mainly surviving the chaos that has been created.
 
Then the market turns for the worse. Business slows down.
 
“I am spending that much on wages!” shouts the business owner, as he sits down with the book keeper. Cut, cut, cut. The owner starts to layoff people. The remaining employees are overstretched. Customer orders are not being delivered on time, and the complaints register every day. The owner says to himself “What went wrong? We were doing so well?”
 
The Functions of Every Business
 
A house collapses, when it has weak foundations. The business collapses when it has weak foundations. If you do not have the foundations in the critical areas of your business, cracks in business performance start to appear. It is like in the game of soccer, when the fullback moves up the field to attack, it leaves the backs exposed. A well drilled team would ensure that a midfielder would slot into the vacant position, so the foundations of the team, the defense, is always at full strength. It is the same in your business, are you covering all positions?
 
Remember your business is an investment, don’t be tight, and try to penny pinch, it will only hurt your ability to grow the business. So the areas to possibly outsource;
 
Finance: The role of ensuring that the books balance, could be handed over to a bookkeeper or an accountant. Outsourcing book keeping is not overly expensive, and will save a lot of unnecessary time in entering all the invoices and payments into an accounting program. Also some debt collection agencies have an accounts receivable service, which is paid as a commission on invoice amount collected. As mentioned in the previous chapter, when you hand over the books, do not abdicate your responsibility in reviewing your numbers on a regular basis.
 
Production/Operations: You do not have to be a ‘jack of all trades’. If you have an advertising agency, you may outsource some of the excess work to a graphic designer. If you are a supplier, you could outsource the installation and delivery to a contractor. This also helps not only freeing up your time, but also helps with cash flow, by only paying a ‘variable cost’ of hired labour, as opposed to hiring in a ‘fixed cost’ of a full time employee.
 
What is the area that you are spending most of your time in? This is the area that you should seriously consider bringing on extra help. A business grows when the owner spends more than 50% of their time in the sales and marketing functions of the business; these are the areas which grow the business. Think of it this way. No one buys from you unless they know what you do (Marketing), and nothing is ever produced unless a sale is made. You cannot grow the business by producing more goods. Set your business up, so that you can dedicate more time to the sales and marketing functions of the business.