Operations Strategy

Your business isn’t growing as much as you expected. What’s the real problem?

Your business isn’t growing or at least not at the rate you expected. What’s the problem?

“If sales are not growing, the business is not making money, or the company doesn’t have enough cash – those are three red flags when things are not working,” said Ricardo Newark, a consultant with Florida SBDC at FIU, the small business development center within FIU’s College of Business.

But diagnosing the underlying issue is not as easy as you think.

Hire more people or buy more equipment – that’s often the go-to solution but it isn’t always solving the problem, explains fellow SBDC consultant Shelly Bernal, an international trade specialist. She often sees Industrial engineers brought in to do work flow analyses and they optimize tools, but it’s still not solving the problem.

Diagnosing What is Wrong

“The key to diagnosing what is going wrong is to have information. The lack of it is a shortcoming for small businesses,” said Newark, who specializes in business growth and operations efficiency. “Unless you have a good understanding of the market, your customer, and what’s your go-to-market approach, it is difficult to identify the root cause … and to take corrective action.”

When he helps a business, Newark begins by asking questions: who’s your customer, what are you selling, what’s your geography, what’s your competition, what’s your price, have sales gone up or down, what has changed to make that happen? Can you expand geographically or sell more products to the same customers?

To answer them, you have to understand your competitive advantage and the profile of your target customer, he said. “Small businesses spend all their time in the doing and not much in the analyzing.”

Growth Obstacle in Plain Sight

Bernal thinks the real obstacles to growth may be hiding in plain sight. Let us explain.

A slowdown in productivity, leading to a slowdown in growth, could be due to insufficient cross departmental cooperation, she said. “That’s the famous silos we hear about, the lack of communication between departments, that is where the drag is at on productivity.”

The result is employees don’t develop the decision making skills they need for real productivity or efficiency. They become more conservative in what they do so they succeed in their roles, dragging down overall productivity, she said.

It’s the quantitative measures such as Key Performance Indicators – the numbers that track and measure – that can start this retreat of employees into being very specific about how they spend their time, Bernal said. “The company is guiding the employees away from the solution and into continuing the symptoms they are trying to avoid.”

Please send GrowBiz topic suggestions and feedback to sbdc@fiu.edu.

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