There Is No Magic Formula for Small Business Success -- Only This

Robert-Reid11By: Robert Reid, CEO of Intacct

I’ve been asked many times to lay out my magic formula for building a successful small or medium-sized business. I usually respond by saying there’s no magic, only hard work and experience.

While this is certainly true, the success of a small or medium-sized business depends on dedicated execution of the following: articulating a clear mission, hiring the right people, setting goals and measuring progress toward them — and then resolving the inevitable conflicts that arise. The latter task is truly the tricky part!

With that in mind, here are the five ingredients in my “not really” magic formula for small or medium-sized business success.

1. Develop a compelling mission. A clearly articulated, compelling mission attracts talent to the organization and encourages strong commitment to the team. It also acts as glue to keep members of the team unified over time. When formulating a mission, start with the why not how. Why is the company here? Why have other companies been unable to solve the problem?

2. Find the right people. Locating talented people with the right skills and experiences is essential, but that’s the easy part. The hard part is finding people with the right character traits. I look for people who like working on a team.

Many smart and successful people don’t work well in teams, and it’s harder to create a successful organization with them, in part because as the organization grows in size, conflicts become harder and harder to resolve.

I also want to hire people who are champions of change and with a natural ability to establish plans, structures and processes. These traits are critical because people lacking them simply won’t be able to support a rapidly growing organization. Ultimately, it’s the personality traits of staffers (their attitudes, beliefs and actions) and their commitment to the mission that results in a company culture that’s capable of fostering successful execution.

3. Set clear goals. The process of creating long-term goals and short-term objectives to support the mission is also essential for successful execution. Clearly articulating these goals helps ensure that the people and processes will be geared toward moving the organization in the right direction.

Consider a school of fish or a flock of birds: If the goal is to move from Point A to Point B, no progress is made if each individual creature moves in a direction of its choosing.

In a workplace each member of a company’s team should strive toward the same goals.

4. Measure progress. Setting goals doesn’t mean much if its not possible to measure progress in achieving them. Attach specific financial, operational and process-oriented performance targets to specific activities supporting the objectives.

Measuring these activities against the targets offers a clear picture of the progress toward the long-term goals. Based on the picture that develops — and with input from the team and the marketplace — continually refine the objectives, supporting activities and measurement targets to ensure continued successful execution.

5. Be prepared to resolve problems. No matter how successful a company is in developing a compelling mission, hiring the right people and measuring progress toward goals, problems will arise related to strategy, execution and culture.

To tackle problems, I like to start with the empirical data. I look at the progress made toward the measurable targets to determine what the problem really is. Is there a profile of the customers not adopting the company’s solution? Are partners not moving forward with the company because of an unforeseen problem? Finding empirical data points can help in determine how big the issue is.

Then I address the root cause. Did the company not understand the opportunity? Did team members not communicate effectively internally or have the right processes? Did the organization not provide enough services to customers? Has the competition successfully countered the company’s messaging?

With all the key stakeholders gathered in a room, I ask them to write down what they think is the problem’s root cause. We brainstorm for a while to be sure every possible issue has been surfaced. Then I ask everyone to rate each suggested cause on a 100-point scale. We focus the discussion on areas of disagreement.

This process enables us to quickly expose and address the biggest issues first. This is contrary to the practice at other organizations (focusing on agreement and ignoring outliers). But those who use this sometimes difficult problem-solving process say it can facilitate an alignment.

Ultimately, ensuring agreement from all stakeholders about the approach and encouraging their contributions are the only ways to help an organization efficiently execute its plan and produce something better than what any other company can produce.

Rob’s content was originally published here.