Successful businesses need great management
To succeed in an enterprise, you need to learn how to manage it
THEMBA, an entrepreneur friend of mine, recently came to me looking for answers.
Why am I not successful, why have I not realised the promise of entrepreneurship, what am I doing wrong? He asked.
Even though Themba has been in business for many years and is held in high regard as a “hustler”, he has failed to achieve success of any consequence. Why?
To understand why, we must first appreciate the “epidemiology” of business. In other words, we need to understand the science of what makes successful entrepreneurs successful. This requires us to distinguish between two distinct concepts of management and entrepreneurship.
Entrepreneurs are businessmen and women who assume the risks and rewards of starting and building a business. So, one only requires the willingness to assume the risks associated with being in business to qualify as an entrepreneur. Management, however, is a learnt science, and often requires an education or vast experience.
The job of the manager is to ensure that activities undertaken by a business produce predictable and consistent outcomes.
For example, if you walked into any bank’s branch without branding, it would be nearly impossible to tell which bank you were in as most of what happens inside would be the same across all banks. That is what management tries to achieve. Best practices and processes that not only deliver the value proposition, but do so in a consistent manner.
Therefore, when stripped down to its core, business can be described simply as the science of managing resources that enable you to deliver value to your customers in a consistent manner. This places at the heart of business the ability to manage things and people well. So even though businesses are always started by entrepreneurs, they are always run by managers.
Even when entrepreneurs run their own businesses, there comes a time of transitioning from the entrepreneurial tasks of resource mobilisation to the discipline of resource management.
A good plumber may establish a competent plumbing business that gets the job done, but what will make that business successful is the ability to invoice for jobs properly, collect cash timely, upsell customers and generate referrals.
What successful entrepreneurs who scale their businesses do well is not only make widgets, if they make widgets at all. Rather, they tend to be good planners, organisers and controllers of resources. They are good at finding people who can make the widgets, keep the books, manage employees and sell to new customers. Doing that is not entrepreneurship, it is management.
As Themba pondered the adequacy of his management skills, I left him with these final insights: for the performance of your business to get better, you need to get better first. Things only improve when your competencies improve. Business is about managing resources well. The better you are at management, the more successful your business is likely to become.
Tshepo Phakathi is group chief executive of Phakathi Holdings.