The majority of small and medium-sized enterprises in Japan generally have a structure in which the owner is the representative director or their relatives.
It does not use the original mechanism of a stock company, but has a simple composition of “a company by yourself for yourself”.
Even founding members and executives with management decision-making power remain minority shareholders.
They basically belong to the company to get a salary or reward in return.
In this article, I will explain the basic way of thinking when formulating a management strategy for a company that operates with such a small number of elites. increase.
First, the president himself clearly decides what he wants to do with his company
For the clients we are involved with, we start by clearly deciding what the representative director (the owner) wants to do with his company.
- We want to create a company where employees can work comfortably
- We want our customers to be satisfied
- I want to save the supplier
It is certainly important to draw goals and ideals like the above.
However, first clarify how you want to use the absolute authority and absolute rights of the “representative director = owner” should start with.
However, a company with a lot of deficits and no retained earnings shouldn’t be that far.
Let’s start by making a profit and increasing the value of the company from when it was founded.
The real intention of a company employee: “Everyone decides the policy”
“A company for everyone”
“Everyone decides the future policy”
It is not a bad thing for the president to send messages to employees as described above.
However, at a time when most of the employees are minority shareholders,the belief in “a company for myself” and “deciding the company’s policy by myself” is not at the bottom of my heart. It should be .
The employees who think and act on their own initiative guess what the representative director = owner wants to do, and work on their daily work.
What does our company want to do? What do you want the company to do from the president? He asked me.
Don’t ask employees about that!
Source: Twitter
On Twitter, the voices of employees of general companies such as the above are also listed.
Many company employees do not want to decide their own policy, but empathize with the policy decided by the president and act independently.
Determine the pillars of the business policy according to the goals that the president aims for
If you ask the president of a small or medium-sized company, “What do you want to do with the company in the future?”
- I want to go public
- I want to pass on the business to my relatives
- I want to hand over my business to someone else
- I want to sell it to someone else (buyout)
- I want to liquidate the company when I retire
By choosing one of the five options above, you can see the pillars of your business strategy.
I will give an overview of each.
① I want to be listed
This is a dream that everyone should have at least once if they start a company.
It is also a 〇〇 dream concept, and only a small portion of it can actually be developed to the point where it can be listed on the stock exchange.
Of course, if you lose the competition, the harsh reality awaits.
Furthermore, it is not possible to achieve listing as a founder with ordinary efforts.
If listing is a clear goal, I need to immediately get rid of the obsession that “owner = myself”.
If we continue to stick to that commitment, the speed of growth will slow down, and at best we will end up with the goal of going public.
After increasing the value of the company’s stock to some extent, effectively use VCs, investors, professional and financial professionals, M&A, etc., with only their own business model as the pillar, and then follow this. We need to move forward at full throttle with people.
Small and medium-sized business owners who aim to go public are in the minority.
If the purpose is to be listed, it will not be possible to achieve it unless you make an effort that goes far beyond the content of this column.
② I want to pass on the business to my relatives
- I want my child to inherit the company I created under my own name, and create a foundation for my child’s future life
- I want you to use the assets you have created effectively even after you are gone
“Business succession to relatives”, which contains the above wishes, should have been the most common goal for small and medium-sized business owners up to a generation ago.
One of the main reasons why this idea was so popular is that Japan has achieved stable economic development.
- If you start a company and stabilize its management, you will be able to earn stable profits and income for 10 years or more
- And if that wisdom is firmly passed on to the successor, there is no need to make a particularly drastic business transformation, and a stable growth strategy can be expected from the second generation onwards
Until a generation ago, it would have been natural to think like the above.
However, that era and country are gone now.
Even if we act according to the national policy, the situation becomes worse, and the necessary knowledge differs depending on the world situation.
Under such circumstances, appointing a child as a successor may be a considerable risk, or a task that is beyond the capacity of a child.
As a parent, even if you take over the business for the sake of your child, it may become a burden for your child.
If the goal is to pass the business on to relatives, it is not recommended to think that the predecessor will do his best to create a frame and box for the child to inherit.
Even if the child is half-full or accompanied by the mother, the initiative of “Family meeting with the successor having a say = management strategy” The contents should be partially shared with employees.
③ I want to hand over my business to someone else
- There is a large age gap with children
- The child does not wish to inherit the business
Even if it is ideal to inherit the business to relatives, it may not be possible.
In that case, you should give up on inheriting the business to your relatives.
It’s not a pessimistic meaning, but it’s a way to get rid of the premise that “business succession = relatives” and expand the target of business succession to other people< /span>.
In order to succeed a business to another person, it is necessary to have a fairly precise plan and to systemize and package the business.
Experts are also required for this effort, and it takes much more money and preparation time than handing over to relatives.
If you are well prepared for business succession to others, you will have a much higher level than business succession to relatives.
Even if you have already forgotten about the succession of the business to a child who is older than you, if you look at the business succession plan that you have worked hard to create for others, you can naturally achieve the succession of the business among relatives.
Even if you want to inherit the business to your relatives, you need such an initiative.
However, it is often omitted because it takes a lot of cost and time, and because it is a relative’s sympathy and sensibility part.
④ I want to sell to someone else (buyout)
In recent years, M&A has become a major activity among SMEs.
Most small business owners think, “I can’t believe my company will sell.”
However, in reality, even companies that rely on sensible management or relatives can add value through M&A based on the value of the customer, the value of the destination, the value of the product, etc.
However, such companies tend to be seen by the buying side.
It will be treated as a so-called quarrel.
“The products there are of good quality, but the majority of the work is done by the founder and president’s intuition.”
“I don’t know if I’ll let the people I sent take over.”
If there are such opaque factors, buyers will drop out, and the selling price will go down.
If you make a business strategy with the goal of handing over to others, you can continue to maintain the quality of products and quality that can be sold by not leaving sales and manufacturing chiefs to relatives or by creating manuals.
A company that is to be transferred to another person will eventually become a requirement for a company to be listed.
As a point of caution, if you are aiming for a buyout, It is necessary to remove the sensory or social elements in your work from an early stage .
Doing this later would not be a trivial effort.
⑤ I want to liquidate my company when I retire
“My retirement = the end of the company”
At first glance, it may look like a bearish strategy in the goal state introduced so far.
However, it is the goal state that requires the most solid strategy, and it is also the most solid strategy.
It is said that the time it took for a company to reach its peak growth is the same as the time it took for the company to disappear from that midpoint.
Although I have decided to liquidate the company when I retire, it is a company that has grown through repeated efforts.
No matter how bad the times may be, or if production capacity declines, the comrades who have fought together will not be easily abandoned.
If this is your strategy, you have to set “where do you want the company to peak”.
If he quits at the age of 70, where will he peak in the next 30 years and where will he start cleaning up?
We will clean up while doing business, so we will be able to create a very simple, minimum and lean company.
A minimal and lean company is the strongest company style in today’s turbulent world.
In other words, “a company that has no regrets even if the company fails tomorrow due to external factors = an invincible company.”
What you need to do to finish it properly by yourself is not to quit suddenly at that age.
It is necessary to create a simple, sophisticated and lean company.
By the way, having staff younger than you is not a bad thing.
Skills are generously handed over to young staff so that they can be active even if they are not in the company.
Perhaps, among them, excellent staff may inherit the business and say that they want to acquire it.
Summary
The above is only a starting point that should be set.
Only a minority of companies are able to do so, and it is common for goals to change along the way.
However, by setting this as a current goal, you have the best long-term planning metric for your company.
By including the medium-term plan and the immediate short-term plan in it, even the short-term plan can make a lot of sense.
The benefits of establishing long-term planning indicators are not limited to improving business strategies.
For example, we can smoothly create a subsidy application that is in line with the business strategy and a loan business plan that matches the vector of the subsidy application.
This will eliminate waste in work and make the company more motivating and easier to work for.
I would like to write about practical efforts for each plan indicator at a later date.
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