Today Susan and I began to teach an Entrepreneurial class geared mainly to executives downsized with the current economy and looking to start their own businesses. In preparation, I was reflecting on some of the differences between managing in a corporation and managing a small business and some of my early struggles in making that transition. Many of the skills are transferrable, but need to be toned down to account for less time, money, and staff. They are often, however, the very skills that lead to success in the small business world.
1. Strategizing. Most executives have been heavily involved in strategy sessions. A common misperception with small business is that you do not need to spend as much time on it as with large corporations. Nothing could be further from the truth. The big difference is that the strategizing team will not be readily available. One of the first things a small business owner should do is identify a team of experts to help him strategize. These might be people hired as employees, they might be experts whose services are outsourced, or they might be a group assembled as an Advisory Board.
2. Budgeting. Many corporate executives have been involved in budgeting so they understand the process, but many have only been responsible for developing their department budget and have had sales forecasts and production schedules prepared for them by other departments. One of the major hurdles for adjusting to managing a small business is that the small business owner is responsible for the entire budget, not just one piece of it. Depending on the type of business, the budget can be more or less complex than the executive is used to, but since there are no other departments to shift funds between to make up differences, it requires just as much thought and foresight.
3. Accounting and Business Information. Large Corporations spend vast amounts of money on Integrated Business Information Systems. When starting a small business, the business owner needs to perform the job of a systems analyst, detailing exactly what information is required and desired to run the business and make informed decisions, and then performing a cost/benefit analysis in regards to potential solutions. There are many industry specific programs which can be customized for certain industries as well as the popular software programs on the market (QuickBooks, PeachTree, MYOB, etc). Each business owner needs to determine the balance between having the information needed to make well-informed decisions and the time and resources available to gather this information.
4. Defining Goals and Measuring Performance: Many small businesses simply begin with an idea and open their doors for business. The business owner that takes the time to define specific, measurable objectives for all areas of the business and then compares actual results to those objectives will be in a better position to quickly adapt to any variances or changes noticed. Awareness and quick adaptation are vital for small business success. Many corporate executive will be thrilled with the speed with which a decision can be implemented in a small business environment.
5. Managing Employees: Corporate executives are often well-trained in managing and motivating a workforce. Never is it more important than when you own your own business to apply those skills to hire the right employees, train them well, communicating your mission and objectives and encourage independent thought and innovation within that mission.
For those of you that have made the transition from corporate executive to small business owner, what is your experience?