Six Tips to Good Business Management

By Nora Dunn on 16 April 2008 (Updated 26 April 2010) 6 comments
Photo: Ian Muttoo

You don’t have to be a fortune 500 (or even a fortune 500,000) company to take advantage of these tips for good business practice. In fact, some of the best small businesses have evolved and succeeded by implementing some of these principles.

 

I will be using the restaurant industry as anecdotal examples throughout this article, but you will see that the principles below apply to any industry. Maybe you will identify some restaurants in your area that aren’t following these tips. Watch them struggle for business, and ultimately close down as a result.

 

 

Know-How is Not Enough.

Just because you’re an expert in your field doesn’t mean that you have what it takes to be a business owner. When you hang out that open sign on day one, it is unlikely that customers will flock to you right away just because you know what you’re doing. You’ll need marketing and administration (at the very least) to grease the wheels of your company.

How many chefs or self-professed foodies have you met or known to open a restaurant because they love food and cooking, only to have it close down months or years later because people weren’t beating a path to their door when they opened? Making good food isn’t enough; people have to know about it to experience it. You also have to run a tight ship financially, which requires the advice of tax and financial experts, and ultimately an experienced general manager at the helm.

 

Hire the Right People.

If you are technically proficient in your field but lack marketing knowledge and expertise for example, then be prepared to hire the right people to fill in the blanks. This will start the trend of people beating a path to your door. The next trick is to keep them coming back and referring their friends.

 

Don’t Hire your Friends!

This may seem obvious to some, yet I’ve seen it done over and over again. Not only can it compromise (and in some cases destroy) a perfectly good friendship, but it can do the same to the business.

Sometimes, it works. But hire with caution, and a heck of a lot of communication (both in the friendship and business). Be prepared to wear different hats while at work and after work.

 

Don’t Make Snap Decisions. Planning Strategy is Everything.

I have an acquaintance who recently stepped in as part-owner of a restaurant. The restaurant is well-situated and ultimately successful, but with a slow-down in businesses in the area, they have to work extra hard to keep enough customers walking through the door and keep them leaving happy.

After one particularly harrowing night when everybody in town decided it was the place to dine and not enough wait staff were scheduled, their patio was drowned out with rain, and one of their head chefs walked out, the owners made some snap decisions during the aftermath. One of their decisions was to double the number of wait staff on shift all the time. It is my feeling that they didn’t truly see this idea through to conclusion before implementing it; they now characteristically have way more wait staff than necessary on shift. The hourly wages paid out are increasing exponentially (and unnecessarily). Each servers’ share of the tips has significantly decreased, and often a number of them get cut before the night is over. The restaurant will likely lose their best servers because of this.

You may say “so? Big deal. Hire more servers,” but servers are the front lines of a restaurant. Poorly trained or inexperienced servers can be the death of a perfectly good restaurant; retaining the good ones is crucial. This was a snap decision may be a critically detrimental one.

 

Hiring/Promoting From Within isn’t Always Good.

Although promoting from within encourages staff to “reach for the stars” and gives certain personality types something to work for, it isn’t a good idea to categorically hire from within. Sometimes the skill sets just aren’t there within the existing employee base.

A bar/restaurant I know of only hires bartenders from within. If a server has proven themselves with blood, sweat, and tears, they may be so lucky to be promoted to bartender. Sadly though, servers and bartenders are not one and the same. The skills are not transferable, and not all servers understand the finer points of tending a busy bar. Hence, their bartenders are more often than not under-skilled and unprepared for being in the trenches. They don’t have mixology knowledge at their fingertips, they can’t make drinks quickly, and they don’t have the rhythm to manage a fast-paced bar when it gets crowded. They are simply thrown into the fire and made to survive by trial & error or go down in flames, ultimately quitting or being fired.

They are losing business because they insist on promoting servers from within to become incompetent bartenders, instead of hiring proficient bartenders to begin with. And when you’re running a busy bar, a good bartender is an essential element to make things run smoothly.

 

Good Business is in Consistency.

This could be the very key itself to good business practice. If you do nothing else, be consistent. E-Myth is an excellent book by Michael Gerber centered around this crucial concept.

Consistency is what franchises are built around. McDonald’s pioneered and epitomizes this idea. When you walk into a McDonald’s anywhere in the world, you know exactly what you are going to get when you order a quarter pounder, right down to the exact ingredients, quantities, and order of toppings.

A fledgling restaurant I worked for many years ago liked to think it was fancier than it was. The chef often played around with both presentation and ingredients for their standard entrees, thinking that he was adding variety and constantly improving upon the dish. Unfortunately when I ordered the salmon I never knew how spicy it was going to be, what it came with, and even how it was prepared. You don’t create a loyal clientele or repeat business with discrepancies; you do so with dependability and consistency.

 

 

With consistency, professionalism, proper planning of strategies, and alignments with the experts, you can run a top-notch successful business. Don’t reinvent the wheel, or ever find yourself saying “my business is different, I don’t have to follow that rule”. Because the wheel is pretty darn efficient, and I’m sorry to say, your business just isn’t that different. Good business management equals good business. Period.

 

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Your link to E-Myth is broken.

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katy

You hit on all the critical points! My husband is a chef. consistency is key, not all skills are transferable. You know your stuff - both front and back of the house!

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Joshua

Knowing when to delegate a task can be very important. It frees you up to take care of other important issues. If you feel that you cannot trust anyone but yourself to get a job done, re-think your hiring strategy!

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I think most of us would agree that on a practical, day-to-day level the most important life skill is communication. However, when we take a look around we discover that:

1. Many of us have trouble expressing ourselves effectively.
2. Many of us spend the majority of our life not saying what we think or feel (for a range of reasons).
3. Some of us talk a lot without ever saying much.
4. The vast majority of us don't consciously work at becoming more effective communicators.

Sadly, too many of us mumble and bumble our way through much of our life. Or we remain silent. And frustrated. And unfulfilled. And angry. And sad. Sure, we'll learn how to weave baskets, use a computer, build a spaceship from scrap metal and we'll even attend university for years to learn irrelevant stuff that we'll never need, remember, or use, but will we actually make a conscious effort to learn how to communicate and connect more effectively with people? Nup.

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Paula

Very wise tips and points to think about! I guess what’s missing is the possibility of improving the management skills through business training and/or maybe seminars. It’s not easy looking for someone to delegate tasks that you can’t take for yourself, you’ll have to find one that’d best fitted for the job and I believe learning “how” is important.

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THE DUKE OF THE STREETS...!!!

i love the "DON'T HIRE YOUR FRIENDS" part, because it's something that one will not be able to handle...hiring a friend brings about a lot of sentiment like: not being able to confront him/her when the person goes wrong, due to so much attachments...