ARTICLE

"FIRST, ANCHOR THE VENTURE DOWN"
The Sunday Age
20 June 2004

A sound house needs firm foundations – the same applies when building a business.

Let’s compare the two concepts of building a house and building a business. To build a house you need a system that builders use. This ensures that the structure, when completed, will be a house that stands upright and is designed to last hundreds of years. The system goes something like this:

1. Draw up a plan
2. Map out the measurements and dig holes in the ground
3. Lay foundations using steel, concrete and wood
4. Construct walls that connect to the foundations and tighten with screws, nails, nuts and bolts
5. Build the roof that connects to the walls, that connects to the foundations. Tighten the roof to the walls with screws, nails, nuts and bolts to ensure the roof doesn’t collapse, leak or fly away.

If the foundations of the house are not strong, the walls will start to crack and move, then the roof may start leaking and collapse. We hear plenty of stories about new houses that are unliveable - either you strengthen the foundations for the home to remain standing, or knock it down and start again.

The same principle applies to building a business. However, some business owners build the walls and the roof, and forget about the foundations – and then wonder why everything is about to collapse.

You need to build solid foundations that give your business the structure from which to grow. That sounds all very well you say, but what are the foundations you need?

The first one is simple – make your business independent.

You can’t build a business if it depends on you. A house doesn’t depend on you to hold the walls up - the structure holds it up. There was a process used to build the house and, therefore, it is process dependent. If your business depends on you to hold the walls up for it to survive, then it is people dependent.

If a business is people dependent, it doesn’t have the structure in place for which to grow. Slowly cracks and leaks will start to appear, and eventually it will collapse.

Business planning and development are also crucial. A business needs to be developed so that it works as an independent, integrated system with a purpose, a process and people. To build a process-dependent rather than a people-dependent business you need to:

1. Draw up a plan with a clear picture of what you expect from the business.

If you don’t know what it looks like, how will you know when you get there? Spell out your vision and purpose, and develop short and long terms goals. How many staff will you need? What staff training is required? What technology do you require? Will your business need to relocate? How much will it cost? Do you have enough capital?

2. Design and document business systems and operating procedures that anyone can follow.

Realise the importance of operating procedures and processes within all facets of business. Everyone knows how time consuming it is if, each time you write a letter, you need to start from scratchl. Ensure that you plan for growth from the start; build systems that do more than cope by documenting what your systems are. If it is not written down, it doesn’t exist. Design, develop and implement systems and procedures that can be replicated many times over, by anybody. This enables you to free resources and make your operations run more smoothly. It also enhances the professional image of your business.

3. Measure your results frequently.

You must be able to monitor how your business is performing. With the technology available today, there is no excuse for not having an efficient way to analyse your business performance, which gives you reports that outline the financial position.

4. Ensure you and your staff know what you are doing and why.

By having job descriptions, and a company policy and procedures manual, staff can understand the business operations and the reasons behind each policy. Existence of these documents enables consistent delivery of products and services to customers.

5. Decide where you need help, and seek outside assistance.

If you don’t have the internal skills, find experts to do the job – they can do it faster and more cost-effectively than you doing it from scratch.

We like to think we can do everything, but the reality is quite different. An expert can help you uncover what is not immediately obvious, motivate you to focus on the key issues and provide support and understanding.

Remember, just like our houses, we all want our businesses to stand the test of time.

For those of you who have started building, but feel that you need to relay those foundations, or for those of you who are looking at starting afresh, now is the time to think about getting those foundations right.

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