With the shock news that construction giant Carillion Group plc has collapsed, with management unable to persuade its lenders to provide more funds and the U.K. government refusing to help, Carillion has been left with no further options, says Clare Galloway, Magic Beans
There is a suggestion that some £150m of cost cutting options had been overlooked, while problems with integration of the companies acquired to form the Carillion group and a lack of investment in data analysis, meant management had an incomplete view of operations.
These problems are not unique to Carillion. So bigger isn’t always better? What can small firms teach large corporations
The beginning phases of a start-up can be chaotic. There are so many tasks that need to get done that it can be hard to prioritize where to start. Often businesses just want to get started on whatever product or service they’re working on and get it out the door as soon as possible, yet they forget to take a step back and focus on the business and operations themselves.
Procedures are vital! They should be visualised as a flowchart of a sequence of activities with intertwining decision points. The benefits of using business processes include improved customer satisfaction and improved responsiveness for reacting to market change. They should be developed to ensure order and that your product or service is flawless. Unfortunately, when these policies aren’t implemented correctly, they can create bottlenecks.
Start-ups and smaller organisations, however, tend to have flat organisational structures because everybody has a pivotal role in the company. It’s important for big brands to be fast and flexible and to not have too many cooks spoiling the broth. Management needs to put trust in the employees and empower them to make the right decisions. Once they’ve proven they can handle the assigned work, it’s important to step back and let the employees do their jobs. If everybody takes ownership of their responsibilities and try not to micro-manage, operations should be effective and efficient
Invest in technology
Companies looking to grow should not shy away from adopting new, emerging technologies. With the rapid adoption of smartphones and improved internet connectivity the way we interact with technology has almost changed beyond recognition. Gone are the days of needing to go back into the office to send information, or indeed receive information, needed to make effective, profitable business decisions. You should now have all the business information you need a touch of a button.
Over the past few years, companies have been forced to reconsider their existing business models. Investment in technology will make your work more efficient, cutting down on human errors and ensure you are better able to handle larger workloads.
When you can get things done effectively, you can increase both your cash flow and revenue – not to mention giving you an advantage over your competitors.
Don’t stop listening to your customers
Understanding who your customers are is critical to being a successful business, no matter what your size. All start-ups and small businesses start with an idea. It can be easy for a small business owner to want to drive every business decision by their initial concept and do what they think is right to get their product or service in the hands of the customers.
But does your product or service properly address your customers’ wants and needs? If you want your customers to use your product or service, you must find out what they want. By listening you can give customers exactly what they’re looking for, even if it’s different than what you originally imagined when starting your business. It’s quite simple really. If you don’t listen and provide what they want, they will go elsewhere.
Businesses don’t want to stagnate, or worst of all – fail. Forbes recently said, “Listening to your customer will guarantee above-average service……Delight your customers in surprising ways and you’ll earn their loyalty”.
Remember Who You Are
For big brands, it can be easy to get caught up in day-to-day operations and forget the passion that existed at the start of your business. Through years of operational changes, turnover, stress, … the list can go on… many large businesses lose their connection to the original story they wanted to tell. But it’s always important to get back to your roots and remember why the business was started in the first place.
Understanding that a market exists for your idea is only one piece of the puzzle. Never lose site of the vision that brought you to this point.
Keep the passion alive. Bring energy into the business. Encourage employees and motivate.
So, we’ve heard that £150m of cost cutting options had been overlooked at Carillion. Businesses with large amounts of money at their disposal need to continue to think like a start-up would.
The focus should never change from spending money as efficiently as possible. Ensure your spending habits align with business goals. All purchases should make sense for the company; don’t spend money simply because it’s available in the budget… do you really need those branded golf balls when none of your prospective clients are coming to the golf day?
Always take the time to keep on top of your finances and ensure your priorities are in the right place and continue to remain aligned with your business goals and company culture.
Bigger isn’t always better but the key to your business’ success is to always ensure you are listening, understand who your customer is, have processes in place to support sustainability or growth and that you have access to real time, relevant, financial information to allow them to make effective business decisions.