Too many times (particularly) small businesses fail to gain (or maintain) good momentum due to the owner(s) finding themselves erecting or fixing their structure as they concurrently pour time and energy into contributing towards the generation of revenue.

On each occasion where I have seen the above practice, the business concerned has typically been close to becoming dysfunctional in terms of:

  • Communication breakdown
  • Stakeholder relationship breakdown
  • A company culture which is characterized by distrust and disharmony
  • Internal stakeholders threatening to “abandon the ship”
  • Little-no sense of commercial direction, and a low level of purpose felt by internal stakeholders who are subordinate to the owners

 

If a builder builds the walls of a house without creating a robust foundation (concrete or piles), then the chances of the walls remaining unaffected by say an earthquake would be slim…which then of course compromises the balance of the features of the house.

A business is no different in respect of the need for a robust structure (foundation) to be in place if its operation is going to run as smoothly as possible and for the business to realise its commercial potential. These are the Critical Success Factors of an organization.

I have found that the following Critical Success Factors are common to most organizations (commercial and non-commercial alike):

  • The legal structure is correct, given what the owners’ objectives and funding requirements are.
  • The correct legal documentation in support of the chosen legal structure is in place. E.g. Shareholder Agreement, Company Constitution, Contract for Services Agreement, etc.Capital and working capital base is sufficient.
  • A suitable IT system is in place to create a reliable and easy-to-use system for communication to flow readily amongst most particularly internal stakeholders.
  • A current written Strategic Plan is in place and is driving the operational delivery. And the strategy has been shared with relevant internal stakeholders who are instrumental in its delivery.
  • A current written Marketing Strategy is in place and is driving the creation and implementation of marketing activity.
  • A well written and up-to-date Operating Procedure is in place per key function.
  • The right people with the right skill sets and competencies have been appointed to the range of identified functions/ roles.
  • A well written and up-to-date Job/ Position Description is in place per work role.
  • The accounting system engaged is easy-to-use and is capable of generating the range of clear reports that the relevant stakeholders need in order to make good decisions.
  • The owners have either empowered a suitably qualified and skilled person to manage the day-to-day business operation on their behalf or they purposely schedule to work “on” the business at least one day each week, to enable them to address opportunities/ situations which have the potential to evolve the business – for it to grow and realise more market share.
  • The owners and senior management team are client-centric, and market research features as a key component of their Marketing Strategy ongoing.
  • …and arguably most importantly, the owners are predisposed to being prepared to change (both themselves and aspects of their organization) as the need to change becomes apparent. They deeply understand the need for them (and their team) to keep adapting in order for their business to survive and (hopefully) thrive.