In today’s fast-paced business world, change is as much a constant as the shift in seasons from summer to fall. Running a small business in a dynamic market requires you to adapt and evolve in order to keep pace. Whether you drive the change or it happens to you, you need the knowledge and skills to effectively manage it in order for your business to thrive.
Developing a change management process is not something reserved for big companies. Owners of small businesses in growth mode must learn to guide their organizations through transition, but research shows that many of them are unprepared. One study found that about half of senior managers at small businesses surveyed reported that their change management efforts typically fail at the execution stage. Nearly a quarter of respondents cited the post-implementation phase as the biggest roadblock.
Without an effective change management strategy, small firms can put themselves at risk. Failing to plan for growth can tax your current operations, potentially damaging quality and customer satisfaction. Your accounting, HR, and IT systems may not be sophisticated enough to support a more complex business model. Workloads must be managed carefully to avoid placing too much pressure on staff and risking increased turnover.
Here are some key areas to focus on to ensure a successful change management experience for your small business.
Define the Need for Change
Business change can be driven by any number of factors, from market demand and government regulations to organic growth. Small business owners must be able to recognize when and why change is needed as their company evolves.
Whether the catalyst is acquiring another business to support your growth plans or the realization that demand has outstripped your current capacity, make sure the reason for the transition is valid. Change will result in tremendous upheaval, so simply deciding you want to do things differently is rarely justification enough for putting yourself and your employees through what is typically a stressful and exhausting process.
Communicate Clearly and Consistently
One of the biggest challenges for small business owners during major change initiatives is managing staff. Fear of the unknown can make employees anxious about the impact change will have on their lives. Failing to include them in the process early on may lead them to ultimately resist the change. Communicating clearly and consistently is the most effective way to lead employees through a transition.
As the leader of your business, it is critical to ensure that your staff understands the reasons behind the need for change and that you communicate with employees at all levels in the organization. According to research by Towers Watson, only half of middle managers and 40% of first-line supervisors say business leaders do a good job of explaining the reasons for a change.
Use multiple channels to relay essential information to your employees, including verbally in meetings; in writing via email, memos, and company newsletters; and visually through videos and presentations. Keep everyone informed of the progress over time, and avoid the common pitfall of communicating less after the change initiative is launched.
Wherever possible, engage employees in the change process. Make sure communication is a two-way street, and allow ample opportunity for staff to ask questions, provide feedback, and express their concerns to you and/or your leadership team. This will not only boost your team’s understanding, but it can also build a sense of trust and inspire their support for change.
Focus on Accuracy vs. Speed
Business owners often feel pressured to execute change as fast as possible. However, it is important to remember that change requires careful planning, and it is essential to put the right systems, technology, and financing in place to sustain it. It is also essential to ensure that your people are ready to handle the transition. Pressure to bring in new business or turn work around quickly can create the kind of high-stress environment and sense of overwhelm that leads to employee burnout.
Change does not happen in one giant leap, but in incremental steps that move your business in the direction you want to go. It is important see that it happens at a pace that allows you to achieve each objective without putting undue strain on your resources and systems and gives your employees time to accept and digest a new way of doing things.
Manage Your Cash Flow
Evolving businesses often need to spend money to facilitate change. However, cash flow can be a challenge as growth or increased demand for products and services results in greater expenditures for space, inventory, production, and payroll. In order to make sure you’re on solid ground financially, you need to evaluate whether or not you have enough capital to support your change strategy and explore financing options before you set the wheels in motion.
Having access to working capital financing can help you cover expenses rather than relying on existing cash flow. You can use the funds to invest in additional locations, pay for employee training, upgrade equipment, or buy additional inventory. Summit Financial Resources offers custom financing solutions that use your accounts receivable and other assets as collateral. Because we are not regulated like a bank, we can structure more flexible deals, take more risks, and make funding decisions more quickly to help you manage your company’s transition.
Measure Your Progress
When implementing change, small business owners often neglect to step back and gauge successes and shortcomings before moving forward. As you make progress on planned objectives, it’s important to take stock and determine what’s working and what’s not. By analyzing the current situation, you may find it’s necessary to make adjustments to your plan. The time you invest in implementation will always be time well spent.
While managing change has its challenges, continuing to do things the same way can hold your business back. With a sound strategy in place and a willingness to embrace the new, you can execute a smooth transition that will position your small business for long-term success.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.