Small Business Management in Changing Conditions
Achieve Sustained Business Growth by Focusing on Current Bottleneck
Jan 25, 2009
A separate article on small business strategy development suggested that small businesses can develop their business strategies through a detailed business plan. As mentioned in that article, business plans are roadmaps rather than forecasts of what is going to happen. Things can happen very differently in actual practice. This article looks at how a "bottleneck-oriented" business management approach can sustain continuing growth, and cope with changing business scenarios.
Bottleneck-Oriented Business Management Approach
At any time, there will be one major bottleneck that prevents a business from growing. There might be other bottlenecks; but these are unlikely to have the growth-critical significance of the major bottleneck. Identify the major bottleneck and focus on solving it to restart the growth process.
The restarted growth process is likely to be halted again by a new bottleneck. The process of identifying and focusing on it is repeated. This becomes a cyclical process with different bottlenecks halting growth, and being tackled with focus and full resource deployment. Diverting focus or major resources to non-critical bottlenecks will be a waste of time and resources.
Identifying Business-Critical Bottlenecks
Actionable bottlenecks are very specific problems. For example, if the business is not growing because sales levels are stagnating, it is not enough to know that sales are stagnant. It is imperative to go deeper and identify the specific factor that stopped sales growth.
Many different causes could have led to the sales problem. For example, it could be that the business' product is beginning to get obsolete. Better alternatives might be coming into the market.
Or the in-depth study might reveal that sales channel partners are not promoting the product seriously. They might be dissatisfied for some reason, or might have more profitable products to promote. Yet another possibility is that field salespersons have reached their maximum potential. They can sell only so much with the resources available to them.
Managing the Bottleneck
In each of the above cases, a different solution will be needed. If demand for a product is declining, extra promotional measures (such as discount pricing) can help move it. For the long-term, however, the business will have to focus on new product development.
The channel partner and sales force problems will have to be tackled by going still deeper to identify the specific factors that led to these problems. Only then will it be possible to develop appropriate solutions.
One major benefit of the bottleneck oriented approach is that blame games are avoided. Instead of blaming somebody or something, the emphasis is on going into specific details and identifying the real problem, and how to solve it.
The result will be a big culture change leading to higher employee morale. Business results improve in a major way because of the improved morale as well as optimal deployment of resources.
A bottleneck oriented approach to small business management converts the management process into an objective exercise driven by real insights. By identifying the specific problems responsible for preventing growth, and deploying resources and energies to overcome that problem, your small business strategy will always be aligned to current realities.
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