Businesses need balance I’ll break this into three areas. The first one is customers and vendors. Both need to have a good mix and lack of concentration. We hear a lot more about this on the customer side and rightly so. It’s risky to have too many eggs (one customer’s business) in your basket.
Management and employees are an area that also requires balance. The nature of many small businesses is that they are owner driven. The owner is usually either the founder or the person who was the driver who got the business to where it is. They don’t like to let go; they want to be involved in everything. In the early stages this was necessary. As the company evolves this holds the company back. Bringing in smart, talented people (management or advisors), giving them responsibility and letting them “do their thing” builds strength (profit).
Many years ago I read a book that talked about how business is like a three-legged stool. The legs are:
1. Operations and production
2. Sales and marketing
3. Finance and administration
The finance leg tells you if the other two legs are in sync; or should I say balanced? Not enough sales mean excess capacity. If sales exceed the capacity to deliver in a timely manner it means you will have unhappy customers (who may never do business with you again).
