Dear entrepreneur friends
Today I would like to share with you my ideas on business planning from Chapter 2 of my book “Survival Kit for Small and Medium Businesses – Profit from your Business Risks!” So, here it is:
Some time ago, I was delayed by a traffic jam on the highway. I had more than enough time to look at the immediate surroundings, the buildings, and houses on both sides of the highway. Suddenly I realized that “I DIDN’T RECOGNIZE THESE BUILDINGS AND HOUSES!”
At first I thought that I had driven past the turn-off I knew so well as the entrance to a certain part of the city. My logic told me: “You haven’t seen these buildings and houses before, so you must have accidentally passed the off ramp”. I had to slowly creep on with the traffic until I saw the sign for the specific turn-off ahead.
Small and medium enterprise / business (SME/SMB) owners or directors are speeding ahead every day trying to arrive at their daily objectives. They don’t observe, forget about identifying and assessing, the adjacent risks that had appeared and surrounded their businesses over time. (See our cartoon on the lack of planning.)
They cannot do this.
They are speeding ahead at maximum speed to provide excellent products and services to their clients. Every day. Every week. Every month. Every year. The disturbing thing, though, is that even the SME racers who have managed to race for some years, are still short-term racers. Most of them will not continue with this sport for more than ten years…
Why am I telling you this?
Because one of the arguments against the idea of profit protection planning, in addition to “I do not have the time”, is that, “I know my risks and I will identify and assess them on the fly. I am able to shoot at it, when necessary, from the hip”.
My answer to this argument is that as long as we are speeding every day, every week, every month, and every year, we won’t be able to recognize our business risks alongside the business highway. At least not an adequate number of them, and we will definitely NOT know exactly how they could impact our businesses, and how we could counteract them. However, as soon as we take the time to be quiet and get into that simulator, we might be aghast at all the opportunities we have missed to turn our business risks into rescued profits.
Why do you think the success rate for franchises is higher than for non-franchise businesses?
Because the owners of these franchises have made time to establish all the necessary systems and controls that are needed. They can hand over to every franchise purchaser an “improved chance of business success”.
[Please, I do not say that you should buy a franchise!]
The business world of today is too complex, multifaceted, difficult, complicated, and thorny. It is too complex for you to “shoot from the hip”. You will probably miss – if you had even seen the risk coming in time…
Bill Treasurer says in his book, Right Risk, (see Note below) that “risk taking is as essential to life as breathing. It is the oxygen of such things as innovation, entrepreneurialism…”
(Note: Reprinted with permission of the publisher. From Right Risk – 10 Powerful Principles for Taking Giant Leaps with Your Life, p.1. First edition. Copyright © 2003 by Treasurer B, Berrett-Koehler Publishers, Inc, San Francisco, CA. All rights reserved. ISBN: 1-57675-246-1.www.bkconnection.com)
Across the globe, more and more new asthma sufferers are added to the list of asthmatics. Asthma is on the increase. Much research has been performed, and it seems that air pollution is one of the major culprits. More and more people are forced to use asthma medication to help them breathe.
As I am one of the victims, I know what it feels like when breathing is no longer just an implied function of my body, but a daily decision to make. In other words, when you can no longer breathe without having consciously decided to do so. I cannot take it for granted any more. Like millions of people across the globe, I started using asthma medication to assist me in breathing in this “complex” air of ours.
Let me put it in plain English:
For millions of people across the globe, it is not so easy to breathe anymore. They need asthma medication to help them. Their desire to live compels them to make every day a conscious, deliberate decision to counteract the threat of asthma.
Business Everest has two sides. If you want to pursue a business opportunity, you need to take the risks attached to that opportunity. However, if risk taking is the “oxygen of entrepreneurialism”, the business owners’ oxygen has also become polluted because of our complex, multifaceted, difficult, complicated, and thorny business world of today. Risk taking is not so easy any more and has become extremely dangerous (see our cartoon on profit protection planning).
Therefore, to manage a small or medium business these days, necessitate that a business owner or director makes conscious, deliberate decisions to counteract the risks that are attached to his business opportunities. Profit protection planning was first tried by the “asthma victims” in the business world years ago, and since then has become the standard “medicine” to assist in counteracting business risks.
While you do take risks when pursuing business opportunities, at the same time you should also try to minimize the occurrence and/or negative impact of these risks! And you need to do it deliberately, and in a controlled manner! I’m not advocating avoiding risk, but about dealing with it as a reality, in order to increase your chances of business success!
The capability to manage risks is no longer an implied function at the birth of a business. A business owner cannot take it for granted that he would be able to manage his risks on the fly. Serious simulation has to be done beforehand.
If you have any questions, you are welcome to contact us at email@example.com
Michiel Jonker, CISA