Business Basics Part I

5 Jul

This article is part of a series “31 blogs in 31 days” during July 2017 on howtofab.com.

This article is also the first part of a two-part series on Business Basics. Check in tomorrow for Part II.

I have now been in business for over 15 years. With “in business” I mean working in companies or organisations in the Creative Industries, both in Germany and abroad, as both an employee and employer. I have made many mistakes myself, have watched other make them too, have celebrated successes and have definitely learned a few lessons alongs the way. Some so textbook and obvious that it’s almost embarrassing to talk about, but this already leads me to

1: The difference between textbook and reality

Whether you have an official business degree or whether you just love reading the Harvard Business Review, theory is one things, practice another. Of course, any good theory should be based on practical experience, but business on paper and business in person are two very different things.

I have been a more or less self-taught business person, I never aspired to work in management, it just so happened that over time I was entrusted with more and more administrative, operational and managerial tasks (finance, admin, HR, legal, operational) that one day I came to realise that what I was doing was business management. Later, I also got involved in more strategic discussions (“What are the plans for next year?“, “What else can we offer out clients?”, “Which new markets are we trying to get into?“, “What do we need to develop / invest in?” etc.) and before I knew it, I was approached to take over as Managing Director from the original founder, who had come to realise that I had become much better than him at running his company – something he never even enjoyed doing.

Over the years, I have changed the context, industry, size and set-up of my place of work, but I have remained a “management person”. I have spent time and money educating myself on business theories, on building up a theoretical framework to help me structure and better understand my practical, day to day experiences. And I am glad I did it that way around – if I had studied business at uni, straight out of school, I would have been lost. I would have either trivialised the complex or complexisised the trivial, probably both.

Because the crux is: No textbook in the world can make you a good manager. No textbook in the world can really teach you about how day to day business management works, its pitfalls, frustrations, rewards, kicks, phases of being overwhelmed and phases of being utterly bored. What to do when things go well and what to do when they don’t. Without practical experience, theory means so very little. And without at least some sort of theoretical background, practical experience can also be misinterpreted.

2: The importance of a business plan

I don’t mean the glossy 25 page document, with lots of complicated graphs and calculations, you think you need to produce for a banker in order to get a loan.  I mean the plan that marries the narrative, the motivation, the mission, the main ideas and assumptions (about you, the product, the market, the future) with targets, milestones, goals, materials / resources, timelines and numbers. It’s multifaceted, for sure. But it does not have to be difficult. If you can’t sum up your business plan as a 1-page document, you don’t have a business plan. If you can’t bring the numbers to eventually go from red to black, you don’t have a business model. Of course business plans aren’t static entities. Just like life itself, business plans keep evolving just as the parameters they deal with keep changing. The inherent assumed futures never exactly happen as assumed. Sometimes they are better, sometimes worse, but definitely somewhat different.

It baffles me, just how few companies share their business plans with their internal teams. I guess in most cases it points to the fact that they don’t have one. If I know where the big ship is heading, I know whether I am on track or steering away from it. Whether an opportunity that looks very tempting leads me in the planned direction or whether it’s a diversion. Whether the diversion is worth a permanent change of course, or whether it’s just a temporary, experimental detour. If I don’t have a plan for the future, I don’t have a way of measuring whether what I am doing today will lead me, and others, there. With a coherent plan, with a coherent story, I can get others onboard. I can get them to work and think with me, to see possible pitfalls and errors, to come up with even better ideas and solutions, to spot opportunities that could speed up development, that could decrease spendings, that could diversify the portfolio, that could make you win the race against your competitors. Business is team work. And the team needs to know what’s going on.

3: Structure follows strategy

The team also needs a captain or two. Somebody to keep their eyes above the details, to look at the bigger picture, to the left, the right, ahead and to make decisions when nobody else can. The team also needs structures. Not for their own sake but in order to support the bigger plan – after all, they form part of the plan itself. Nowadays there are many more ways to structure a business, some more promising than others, that it’s not always easy to come up with the best structure right away. Sometimes you need to experiment, in most cases you need to at least keep it flexible enough to adapt to changes, and any structures should always be justified and appropriate. Some organisations require more reporting, some organisations benefit from fewer hierarchical levels – but all organisations need some sort of structuring. Without structures, even the best plan might never be realised on time. Especially at times, when egos and expectations are getting bigger and bigger, structures help everybody to know where they stand. Where responsibilities begin and end. Some structures may look unconventional (and I am really quite sceptical of some) but if they serve the purpose of realising the plan, why not?!

4: Hey data, how am I doing?

Part of the plan and structure also includes reporting on key data. Not every data set makes sense for every organisation, but you need to know what to look for in order to measure your development and success. Whether it’s how many units you sell in a week, the overall speed of a sales process, whether it’s how many new clients you win every year, how many of them come back for support – your business model should tell you what data to look out for and hence what reports to produce. Some numbers make little sense without the appropriate context and one number alone never tells you the whole story (just like a person’s weight means very little without gender, age, height etc.), but the right data can give you insights far beyond narrative, anecdotes and gut feeling.

Internal data is hereby just as important. Regularly asking for feedback from within your team should give you some insights into how you are doing as an employer. In most cases your company can only ever be as good as its people, so it’s in your own interest to make sure you’re hiring, developing and keeping good people. A solid plan, fair and transparent organisational processes and two-way communication is a good way to keep them….. as well as credible leadership, an appropriate organisational culture and incentives for motivation…. but more on that tomorrow!

Picture: Poppicnic on Pixabay / CC0

 

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One Response to “Business Basics Part I”

Trackbacks/Pingbacks

  1. Business Basics Part II | How to Fab - July 6, 2017

    […] This article is also the second part of a two-part series on Business Basics. See here for Part I. […]

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