Step 1, Part A:
Small businesses face many challenges. I want to take you back to the beginning, to the source, to the first failure, which we know is one of the main reasons for the creation of small businesses. After all, the goal of nearly 90% of founders or owners of businesses that usually start small is to one day turn that small business into a larger and more profitable business, with a national and even international presence.
To set the stage, a small business in Israel is considered to have annual revenue of less than 25 million shekels (NIS) without VAT or employs up to 20 employees. We know that the definition of a small business is not a small business, it’s quite an operation, and the reality is that most small businesses operate on annual revenue of between half a million to ten million shekels per year and employ between three and seven employees. This is what the Central Bureau of Statistics (CBS) considers to track and measure various data and indicators in this important segment.
If you are within the definition of a small business, I want to ask you a question, and it is a key question that will lead you and our series “Big on Small Businesses” to incredible insights! Please note, that you cannot skip it to the next chapters! Or to belittle it! Or to create a shortcut by not taking it seriously (by the way, businesses are not built on shortcuts – shortcuts are more suitable for a casino – and in the long run, the casino always wins) So if we came to do business, give respect to this key question, because it is responsible for breaking any existing or future glass ceiling in a small business or medium-sized business or any business you are planning to open in the future.
And the question is… well, to answer it, you probably need to close your eyes… And if you don’t have time for that right now… maybe you should come back to me when you have 10 minutes free to go on a little journey with yourself. Are you ready?
How do you see yourself in 6 years from today?
Are you at the beach? With or without a phone? Are you somehow connected to a business? Is there someone managing it and you’re with a coconut in your hand?
Or do you have a different picture altogether?
Are you sitting in an office on a high floor? Or in an industrial area? Where is the office? In Your country? or abroad? Are there employees in the office? Few or many? Are you managing the operation closely? Or are you doing other things?
Or are you present in the business daily with very little responsibility for a field you love?
Take a few moments to come up with an answer. Yes, yes, I’m waiting. You are welcome to pause me so I don’t disturb you 🙂
Please take a minute.
Drive to action Sharing – we will also respond to a consultation hour with one of the responses.
Your answer fascinates me, of course, anyone who wants to share with us is welcome to post here in the comments… how he sees himself in another 6 years. I’m really curious to hear your responses!
Okay, so why is this so important, and why did I create all this crazy buildup around a question of -basic- business vision building?
The reason is that something critical is happening here! And the vast majority of business founders simply miss it.
And the truth is that this is a real epidemic that threatens every business activity. In your answer, if you stop and analyze it for a moment, there is an enormous insight! That if we understand it, it’s a game-changer! In your answer, you are defining from your deep intuition, what your goal is in your daily activities today in the business, what is the reason you wake up every morning and simply bust your (beep) and give your all for the business, for the quality of the product and quality of service, and sometimes it’s even without getting paid, because of cash flow challenges in certain periods, it’s just crazy. All this pressure for what? for what just jumped into your head in the exercise…
The problem is that we are usually not only far from our goals, but we are also not making any progress towards them. We are making all the critical mistakes that are taking us in the opposite direction. These mistakes are very common! and they are what lead 90% of small businesses to hit a glass ceiling and never get past their fifth year. Only one out of ten small businesses survive their fifth year, and then they all close down (and closing down is a terrible thing).
On the other hand, it is clear to us that every business that has managed to understand and implement the principles I will present to you here in the series “In a Big Way About Small Businesses” has grown and expanded, and has broken through that glass ceiling to achieve the very goal they dreamed of in our exercise here (each founder and their specific and subjective goal).
To understand what the exercise gives us, let’s first see how we at Saleograph define a CEO and how we use it:
So, simply put, the CEO is the most senior employee in a business. They are responsible for achieving the business results that are clearly defined for them by the shareholders (investors or owners), while developing the brand values defined by the owners, operational efficiency, and profitability for the shareholders (the owners themselves).
OK, now let’s define an owner or, more accurately, an investor according to Saleograph:
The goal of the investor (the owner) is to generate positive cash flow/capital growth, through his investments, over other non-risk alternatives (bonds, CDs). The investor is looking for a quick return on his investment with as little risk as possible.
Let’s step into the shoes of a venture capitalist. He is always faced with business alternatives, and investment opportunities, just like in Monopoly:
To invest money in real estate in Tel Aviv? 4 million shekels and get an annual return of 3.5%
Or maybe buy a US government bond for one year, which is currently at 5.2% (also considered a risk-free asset)?
Or maybe buy a vending machine business in Israel Railways for 400,000 shekels and get an annual return of 12%?
Or maybe stocks with inherent risk? Or to buy your business and receive the net profit after all the gross and operational results (including paying you a salary as CEO) everything after taxes…. What percentage of annual return will he receive?
Boom! If you are both the owner and the CEO (and this is the case in most small businesses – by the way, even if you have partners), we understand that there is a challenge here. We at Saleograph call this situation the “identity challenge in the board.” After all, the owner and the CEO have almost identical goals, but the function is so different. Everything is in the same person, day after day, hour after hour. The daily conflicts and emotions lead to a real functional problem in the business.
Here’s a question for you: As an owner (who is also the CEO), do you provide the CEO with all the tools they need to be successful in their role? Do you provide them with the budgets they need to be successful? Do you provide them with the systems they need to have a clear view of the data to make decisions? Do you give them a budget to recruit the people they need to help them achieve their goals? Have you provided the CEO with a clear vision? And does the CEO also manage to present the owners (which is also you, yes…) a clear business picture? CEO managing to return your investments with a good return? How often has the CEO failed to meet their goals? How often has it been necessary to change or extend their term of office when things didn’t go according to plan? How often has the CEO changed the strategy they built?
Interesting, right?
As a CEO (yes, yes, that’s also you), do you receive a salary from the owners for your crazy work? If you, as a CEO, are the best choice that can be hired for the salaries paid to you by the owners? Do you receive a bonus when you break records or forecasts? Are you, as a CEO, experienced enough to propel the business forward? Are you able to manage the variety of tasks and operations required to generate returns for the owners?
The truth is, it’s very difficult to be both the owner and the CEO of a small business. We don’t have many choices. We probably chose this method for many reasons, usually related to money. In investments, money is simply an accelerator of processes, for better or for worse. If you choose to invest your money in a way that you are currently alone or with partners serving as both the CEO and the owner, you have entered the identity challenge of the board.
To start acting and making changes, we need to get organized.
We will expand on this organization in the next episode of “Big on Small Businesses,” and there we will go into the thick of it, how to organize the “identity challenge in the board” in a few simple steps using clear role definitions that will boost our business (without any investment of money – just accuracy in work under clear regulations) according to the Saleograph model. Let’s get to work, let’s build strong businesses!
Subscribe, follow, and comment, this is our pleasure “Big on Small Businesses.” Let’s together, small businesses, make the change.
We have a lot of power in our hands, and we are the ones who drive the economy. It’s not small, it’s big 🙂
Yours, Sagiv Gurvitch.
