ARTICLE TEXT:
MICRO
FIRMS ARE NOT SMALL BUSINESS
Labels can be misleading.
By nature micro-businesses
have five or less employees, including the owner. However,
throughout the world micro entities are big business.
Systems, structures
and resources are typically limited and often not cutting-edge.
They are small. Many are dynamic and innovative. Individually,
businesses in this sector have been greatly impacted by the
current economic turmoil. Finance lead-times can be short
and margins wafer thin.
Cashflow is often the
true and central lifeblood of such entities. The categorisation
“credit card” financial management is an over simplification
and harsh judgement. However, these aspects and references
are indicative of opportune realities for this business type
and those who seek to service them.
Collectively, micro-businesses
are numerically greater than the number of medium sized and
major regional, national and transnational corporations which
operate in Australia, New Zealand, Britain and North America.
The skill set and entrepreneurism
of the owners are often insufficient to generate growth, beyond
the initial years of trade, and to sustain competitiveness
and advantage. That may explain in part why many in
this subgroup do not aspire to substantially grow their operations.
That mindset and parameter is often not recognised or respected
by external consultants.
Increasingly, the greatest
and most widespread needs for micro-businesses are integrated
systems, structure and discipline. In short, support and infrastructure.
During the past three
decades, major corporations have learnt and profited from
the utilisation and marshalling of the capacity and drive
of small and micro-business. Countless supply chains exhibit
the evidence and consequences of downsizing, outsourcing,
re-engineering with the proliferation of micro-businesses.
Buying groups, marketing
networks, franchise chains and operating co-operatives provide
immense scope if and when they are able to overcome one major
impediment. That is, the allure of the desire for independence
by small business owners.
DIVISION OF LABOUR
The lessons of the
past have been lost on, or possibly have never been learnt
by, many contemporary owners and managers of micro-businesses.
Frederick Taylor has
long worn the label of the father of “Scientific Management”.
His research, findings, philosophies and applications about
the division of labour were the touchstones of mass production,
which was instrumental in the growth and success of entities
like Ford, General Motors and General Electric.
Regrettably, the science
of mathematics work against micro-businesses. The capacity
for division and multiplication is limited with a maximum
workforce of just five.
Time spent on administration,
marketing, selling and networking can be all consuming, with
little immediate returns. The financial imperatives of generating
cashflow and earning need to be forsaken, even if for a short
time.
Conversely, a full
commitment to “doing the job” can have significant adverse
intermediate and longer-term consequences. Neglecting administration,
marketing, selling and networking can be perilous. It's a
fine line between the two.
All too often micro-businesses
do not have comprehensive, detailed and objective business
plans. Cashflow projections documented by external accountants
do not suffice. Many are in reality documented hopes, dreams
and aspirations without addressing the issues of “why” and
“how”.
So, one should be driven
by and needs to respect the underlying philosophy of economics.
That is, the allocation of scarce resources.
SMALL THINKING
One epidemic which
pervades the current crisis ravaged global marketplace, including
among micro business owners, is short term, negative and small
thinking.
A strong focus on cutting
costs can and often will achieve the set objective
… to save costs. The unanswered question is: “At what cost?”
Growth, enhanced margins and increased customer satisfaction
appear to be off the agenda. That is lamentable and
often unnecessary.
Considerable value
is possible from an effective and objective skills audit of
all employees. Emphasis and priorities can be set, reset and
refined. Complementary skills and resources may be necessary.
Most important and
often overlooked is an analysis and determination of what
is the driving force of the business. It may be production,
services, sales, research, product development and logistics.
Cross referencing the
two sets of findings can be enlightening, highlighting strengths,
competitive advantage, gaps and deficiencies. It can also
register and quantify the advantages of being part of grouping,
regardless of its individual character and structure.
That is the true worth
of the division of labour.
AN IMPORTANT FOOTNOTE
In these testing times,
nepotism can and often does come to the fore. Looking after
those in the nuclear and extended family is understandable,
possibly laudable. However, in business it can be simply
dumb.
The issue is not family
employment, but rather skills deployment.
Our DNA and genes are
not necessarily the best pro-conditioners for sound employment
and deployment decisions, be it first, second or third generation.
Micro entities and
business at large deserve better. That in itself is a rare,
unique and disciplined science.
