A while ago I ran the Finance stream of a project using Prince 2 methodology, with a budget of around $7m, employing about a dozen specialist personnel, and having a timeframe of 12 months. The outcome was an accounting system, an industry specific sub-system to integrate with the accounting system, reports, procedure manuals, and training for operating staff.
Just recently, I consulted alone to a company. In 4 weeks I set up their accounting system, installed an integrated inventory system, wrote bespoke reports, compiled a procedure manual and trained their operating staff. All at a fraction of the cost.
The comparison is astounding and clearly demonstrates the waste that can be involved in major corporations where risk mitigation is spoken of as corporate risk, but is in fact personal risk, where individuals protect themselves from responsibility. It’s the old “covering your backside”, where if something goes wrong down the track, the blame can be shifted elsewhere. And this becomes the underlying driving force, rather than fulfilling the corporate objectives.
Most people who have been involved in medium to large corporates are familiar with the regular meetings, where the majority of the discussion centres around people defining their specific areas of responsibility to ensure they don’t pick up other people’s responsibilities, and then taking measures to offset as much of their own responsibility as possible. I have lost count of the number of corporate meetings I have attended where on conclusion I ask myself, what has been achieved in terms of the overall objective? The answer is often, very little.
Smaller businesses have the luxury of not being concerned with this personal risk mitigation. The reality is that the owner wears the personal risk, whatever happens. Sure, corporate risk is still to be assessed, and decisions taken to avoid or minimise this where feasible. But they don’t have the personal concern that the employees of larger businesses do. They know as entrepreneurs that the buck stops with them.
This in turn gives them a degree of freedom to achieve their objectives as efficiently as possible. If a system, procedure or operation isn’t as polished as it might be, but is robust, reliable and has integrity, then it can still achieve the objective. There are no egos to be massaged or backsides to be protected in the process. This is the characteristic of agility that many smaller operations have as an asset, and many larger, more cumbersome organisations have lost.
The lessons here for small business are obvious. You have an enormous asset in your agility and direct control. You need to capitalise on this competitive advantage by implementing systems that deliver for your business objectives; at a fraction of the cost of your big competitors. Having management information, not just accounting numbers, with integrity and speed gives you the tools to drive your business.
