Clients come from many different backgrounds and have different needs. Despite the fact that each client and situation is unique, I have found that there are some commonalities that emerge from the nature of being an entrepreneur who has to deal with a world full of urgent situations that don’t seem to leave time in the day for important matters.
That is the reason why I wish all my clients knew that they need to have an infrastructure in place to run a sustainable business. What do I mean by infrastructure? I define infrastructure as the sum of all the well define structures needed to support any business no matter how small it is.
I like to compare the business structure to a table. A table needs four legs to stand alone, and businesses also need four “legs” or structures each revolving around one of the following areas:
- Product and service
- Management (legal issues, time, contractors, communications)
After all, you can have a great product, but what if you are not be able to sell it? Or you can have a great product that sells well but only due to low pricing. Consequently, you are not making any money – you’re going into debt. You can have a good business but a regulation, licensing issue, lawsuit, or lack of communication between one of the areas could actually put you out of business.
Many entrepreneurs spend most of their time preparing the product & service leg with little focus on sales, some management efforts, and at the beginning, very little on financials. Even if owners are aware of the four legs needed, soon the day to day urgencies take all their time and there is no time left to do the processes needed in the financial and management legs which are either delegate it in a manner that control is lost or are totally forgotten.
These behaviors which is what humans tend to gravitate to naturally create what I call “hidden” costs. Costs that you don’t see initially but grow underneath the surface like an iceberg. If nothing is done to minimize the growth of the hidden costs they will sink the business. The business owners only see the iceberg top, but when they get closer, the bottom of the iceberg has gotten so big it has created cracks in the foundation of the business.
It is critical for entrepreneurs to have processes in place and schedule the time to deal with each one of these structures. Ideally, if preparation, planning, and processes are simplified on the financial and management structures, the time spent on them can be minimized. This is much different than ignoring them. The difference between minimizing the financial and management “leg” and ignoring it is BIG.