Understanding Your Core Processes for Organic Growth
Monday, November 05, 2007
A Member article by LaJuanna Russell, President of Business Management Associates
If you’re a typical entrepreneur, you opened your business for one of a few reasons:
I’ve invented this great new product and now I can sell it
Rarely, however, does the reasoning include, I have created a really efficient internal operations process that I can implement and make money.
I have worked in
this service industry for 20 years. I know how to market and have good
relationships, so I’m going to do this for myself
I have always wanted to own a franchise (or some other retail operation) and now is the perfect time…
we forget how important operational processes are – that is, until some
fire emerges that requires abrupt and immediate attention.
Entrepreneurs inherently realize that efficient internal processes will
make or break the business. They also understand that these processes
are primarily responsible for organic growth. The question becomes, where do I start?
First, let’s look at the definition of organic growth. According to Investopedia. Organic growth represents
the true growth for the core of the company (as opposed to mergers,
acquisitions, or take-overs). It is a good indicator of how well
management has used its internal resources to expand profits. Organic
growth also identifies whether managers have used their skills to
improve the business.
Understanding your core processes will enable you to:
- Determine where to look should revenues slip
- Better utilize your financial statements by tying specific core processes to line items
- Ensure your team is working together for a common goal
- Determine targeted areas for management and/or leadership training
- Better manage your cash flows – and ensure you receive payments on-time (if not before)
by determining what type of organization you want to be in 5 or 10
years – small boutique, $50 million mid-size, or larger. You must begin
to institute the infrastructure (policies and processes) now that
support that level of growth for your company. As an owner, you must
also determine your exit strategy. Do you want to build up to a
specific revenue and then sell? Do you want to leave a legacy for your
heirs? These decisions impact how your processes are structured and how
your operation should be run today.
So, how do you pinpoint
your core – the processes that contribute most to your competitive
advantage? The simplest way is to track your money. How is your revenue
generated? Taking one of the start-up mind-sets from above, let’s take
a closer look at the service model, which is driven by client
acquisition, project planning, project execution, and close-out.
each core area are 4 to 5 sub-processes, such as technology support,
human resources, and accounts receivable, etc. As you begin to drill
down into the specific functions of each sub-process, you will develop
a critical path of operational functions for each core process.
the service model above, “client acquisition” is one of the core
processes. Associated sub-processes might include business development,
marketing, proposal management, etc. As you begin to drill down within
each area, you will be able to relate specific functions – and
responsibility. Once the processes are identified and documented, you
will be able to develop long-term strategies for improvement. In
addition, you will be able to determine, relatively quickly, particular
processes that are ‘broken’ and how to go about fixing them.
this take a little time and energy – yes – but compared to the time
lost recreating a winning proposal or cash flow delayed due to poor
accounts receivables practices, the time is well worth the effort.
Develop the core path over time, setting a day or so each (or every
other) week to focus on your core processes. You will be surprised at
how the smallest positive change can impact your bottom line.
We wish you growth.
LaJuanna Russell is president of Business Management Associates,
a management consulting firm that assists organizations to increase
strategic and financial value through the integration of people and
process. Ms. Russell holds an MBA from The George Washington University
and is certified in Six Sigma. If you have additional questions, please
contact her at firstname.lastname@example.org or 703-216-4416.