Steve Davies Online

In any business, there are a number of different risk factors that could jeopardize the future of the corporation. Thinking about this in a systematic fashion is something that many business owners fail to do, and I have produced a questionnaire to help focus on potential threats and an action plan to devise strategies to neutralize them.

It is important to identify the weaker performers in your organization but managers tend to grade people too highly and this can make the process difficult to implement. One good way around the problem is to force a bell curve on your managers.

A standard bell curve distributes a small percentage (10 – 15%) at the top and bottom and the remainder in the middle. If you can use the bell curve concept to get  your managers to focus on identifying the people at the top and the bottom it is a valuable tool.

Business owners often balk at giving personal guarantees but they are a fact of life in most banking relationships for small to medium-sized businesses. What guarantors often overlook is the benefit to them of the bank having adequate collateral for the loan and ensuring that it has been properly perfected.

Expenses seem to breed and need to be sprayed regularly if they are to be kept under control. The problem in reviewing them is that the way accountants present them is not helpful and they need to be looked at in a different way that makes review easier.  What I do is to reformat them in descending value and then, starting at the top, take one or two a month, isolate them and ask the following questions about each one.

Boat owners will know that you have to scrape the barnacles off the hull of a boat at regular intervals to improve performance. The same is true of a business, and the barnacles are under-performing employees.

Mediocre employees slow you down and there is a disturbing tendency in small businesses to put up with mediocrity because of what I call the "fear of the unknown incompetent".