No society in world is better or more prolific at creating new businesses than United States capitalistic system but often we are so busy commercializing ideas and starting new ventures that we don’t take time to learn basic, successful management principles that have been developed by our larger companies.

Many entrepreneurs are technical experts in what they do but start a business without any formal training or experience in management practices and principles. By “management” here we mean business of successfully managing non-technical side of business, “back room” activities. As a result of inadequate management, many small businesses fail in early years. They fail not because of a weakness in product or service concept they have, but because business was not properly managed in back office.

Once a business has emerged or grown to a certain level, management techniques must change or business will run into trouble. For many small businesses this level is $1-3 million in annual sales or 5-15 employees. Sometimes critical point is smaller and sometimes it is larger, however, when it occurs, owner or manager of a small business must evolve, morph or otherwise change from a manager of things to a manager of people and from a technical expert to a strategic thinker.

This is often a difficult task because of ingrained habits developed over time but failure to grow as a manager is a major, perhaps major reason why a business will falter, stagnate or even collapse under its own weight.

But what do successful businesses have that troubled businesses don’t? First of all, owners of successful businesses have developed personal characteristics that exhibit themselves in their businesses:

•Invariably they have a positive attitude towards their business and life in general.

“Twenty years from now you will be more disappointed by things you didn't do than by ones you did do. So throw off bowlines. Sail away from safe harbor. Catch trade winds in your sails. Explore. Dream. Discover.” Mark Twain

•They are committed to their effort.

“The only place you’ll find success before work is in dictionary.” May B. Smith

•They are patient.

“Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage." Victor Kiam

•They are persistent.

“Many of life's failures are people who did not realize how close they were to success when they gave up.” Thomas Edison

Secondly, owners of successful businesses have developed a business blueprint called a Strategic Business Plan that clearly describes their business concept, their mission and their philosophy of business. In this document, they have set personal and corporate goals and set out specific time lines and strategies to achieve them.

Thirdly, owners of successful businesses have developed an Organizational Structure that functions as a well-oiled machine. This structure, including all its policies and procedures, encourages all associates to perform to their utmost capabilities. It rewards those who excel in proportion to their contributions. It also disciplines those who deviate from acceptable behavior. Positions, tasks, duties and responsibilities are defined and communicated and performance is routinely measured. Training, job enrichment programs and incentive compensation plans are designed to encourage each associate to excel. Successful owners view their associates as their most valuable asset and resource.

Fourth and last, owners of successful businesses have developed Operational Support Systems. These may be financial or non-financial, manual or automated. The objective of these systems is to support and make efficient all activities of organization. Well structured, they also relieve management of many day to day routine activities, giving owners more time to be strategic thinkers. The information provided by these tracking systems provide critical information on sales, cash flow and other financial performance data so that senior management can take timely action as change occurs. Red flags appear early, before problems become unmanageable.

IN SUMMARY, THE FOUR KEYS TO SUCCESSFUL SMALL BUSINESS MANAGEMENT ARE: (1) Owners have developed habits and traits that are Positive, Committed, Patient and Persistent. (2) A living Strategic Business Plan is in place. (3) An Organizational Structure has been developed that encourages people to be their best and helps them do so. (4) Operational Support Systems are used that track performance and relieve senior management of daily detail yet supply them with critical data to manage business.

Let’s go a littler deeper into what is meant by a Strategic Business Plan.

Successful businesses operate within a planned framework. A Strategic Business Plan is written for a minimum of three years or two years beyond current budget year. The plan describes company’s mission to serve its customers. It analyzes its corporate and marketing strengths and how they will be exploited. It addresses its weaknesses and how they will be overcome. It identifies its target markets and pricing strategies and it identifies and describes strategic alliances or business partners that may be crucial to success during planning period. The plan describes positions on any other issues seen as critical to long term health or viability of business.

With a current and meaningful business plan company stands its best chance of continued success and achievement. Without a viable business plan company runs risk best described in old adage: “Failing to Plan is Planning to Fail”.

Now let’s look a little deeper at what we mean by Organizational Structure.

The basic building blocks of organizational structure for a business are:

•An Organizational Chart depicting key functions of company operations and reporting relationships between functions

•Job Descriptions for managers, supervisors and professionals that detail reporting relationships, physical/mental/special job requirements, skills, duties and responsibilities and standards of performance for each function

•Task and Duty Lists for plant workers, utility personnel and other laborers that detail reporting relationships, physical/mental/special job requirements, skills, duties and responsibilities and standards of performance

•An objective Job Performance Evaluation System that measures performance of all employees and encourages continuous improvement

“95% of small business start ups fail within 5 years. Two-thirds of new employer firms survive at least two years, and about half survive at least four years.” (Source: Small Business Administration 2004).

How can this be when same US Government source claims that small firms represent more than 99.7% of all employers? Why is failure rate so high? Here’s why. 95%of all start ups have no masterplan in position at outset and in consequence flounder and sink without a trace.

What’s more, this alarming fatality quotient applies equally to offline and online enterprises. Even worse, tens of thousands more start a business every day and follow exactly same route to disaster.

Fact: Google lists in excess of 12,000,000 web sites offering advice on how to start a business - but how many I wonder emanate from people who’ve actually done it for themselves.

My site does...

I’ve founded, owned and operated dozens of small businesses – and I’m still doing it. I’ve also authored two widely-acclaimed bestselling hard copy books on topic, ‘Starting Your Own Business’ (How To Books ISBN 1-85703-859-2) and ‘Starting an Internet Business at Home’ (Kogan Page ISBN 0-7494-3484-8); titles that sell in big numbers online at Amazon.com and offline in bookstores throughout world.

Now I’m unzipping my case notes spanning forty years of successful independent commercial activity to present you with an all-in-one masterplan to ensure success before you start a business – and to maintain momentum in tandem with your endeavors so that you don’t end up in same place as 95% of start ups: dump truck.