For over 10 years, this award winning Blog has been a Forum where Australian Small Business Owners can exchange Ideas and Advice with experts in Australia on how to Improve their Businesses through better Business Management, Planning & Strategy, Business Management Systems and Marketing Strategy.
Our Ultimate Objective is to help Australian Business Owners Make their Business Run without Them and to achieve their Goals where ever they may be in Australia.
The way most people run their business, they are the last to get paid. Their wage is what’s left over after they have paid their bills and their staff. If there’s not enough to go around, they take a cut, or even worse, have to chip in from their own pockets to make sure that everyone else gets paid.
Economics 101 tells us that for any given level of supply, as demand increases you can increase your prices, but do you do it? Have you seen people queue to get the latest iphone, or tickets for a popular group. There is no need to discount when there is already a queue at your door.
There’s always a tension between empowering your staff and overpowering them with micromanagement. When you leave staff to their own devices, there is always a risk that they will make decisions you don’t agree with, or carry out tasks incorrectly.
On the other hand, when you micromanage, you demotivate your staff, they won’t take any initiative, and you become the bottleneck. So what’s the answer?
While this measure is not often considered, it’s a strategically important benchmark of the strength of a business’ position in the marketplace. Value added as a percentage of sales is defined as the ratio of costs remaining after third party costs for services and materials to deliver the products that the business sells are removed as a percentage of sales. The higher this measure is, the more of the value is created and kept inhouse.