A business mentor is someone with years and more likely, decades of experience in business for themselves. They have been through the ‘school of hard knocks’ growing their own businesses and advising business owners on how to navigate through the maze that can often be experienced in growing a business.
A business mentor is different to a business coach due to their depth of experience in business. Often business coaches haven’t owned a business at all, or have only owned the one business so their experience is not deep and comprehensive.
Business mentors can have various different skill sets and experience on different topics related to business and not all mentors will have the same experience or ability to advise business owners on all topics related to business management and growth.
The 5 Aspects a Business Mentor Can Benefit Your Business include…
1. Employees
Hiring and managing employees is a people skill and it’s an aspect of business that’s very important to have skills in.
Due to the majority of business owners being an employee before going into business for themselves, their experience with people from a hiring and managing point of view can be limited. This is where a business mentor can assist.
Skills that a business mentor can assist you in are with identifying the best candidates in interviews. Often the most experienced people are not the best employees. Their work ethic, level of integrity – that Warren Buffet states is the most important trait to choose potential employees on, and initiative are important traits to look for in employee candidate interviews. It can be difficult to identify them all without a lot of experience.
2. Understanding financials
Financials is a big topic to understand as a business owner and one that few business owners do understand anywhere near the level they need to. It’s often something they want to delegate to their accountant or bookkeeper however, it’s not their business so their interest will be nowhere near as strong as your own in seeing the business healthy and profitable.
Financials don’t require years of study to understand and not even many months, with a good business mentor.
One simple aspect of financials includes selection of the Chart of Accounts categories so that is clearly reflects what is a Cost of Sale and necessary as a direct cost in obtaining sales. In a service business that would include the technical staff being shown as a Cost of Sale as their time is what’s being sold so it is a direct cost and necessary cost of obtaining sales.
Another important aspect where a business mentor can assist is identifying the prices to sell products and/or services at, based on gross margins, with employee labour considered a Cost of Sale. To identify sales prices the mentor would need to look at the overheads of the business, the operating profit currently and the sale price.
The aim is to sell at a price where the gross margin is high enough to cover the overheads (as a percentage of revenue) to achieve a desired or minimum operating profit margin.
A good business mentor with a lot of experience with financials and especially ratios can help to identify the target operating profit margin based on the sale price. This is one of the most important aspects of business to get right and understand.
3. Systems
As a business grows it will become more dependent on systems. Systems are needed to induce employees into a business, to get them up to speed and fully productive in their role as soon as possible.
Systems can be in the form of processes, policies and procedures and a good mentor with experience with systems will understand how far to take the systems in the business, depending on the long term goals of the owner. In a business where the systems will support interstate or even international growth they will need to be far more comprehensive than a business that may max out at thirty employees over ten years.
Systems support the smooth operation and growth of a business. They define the function of roles within the business. They also provide a key ingredient of the structure necessary to grow a business and for it to be efficient as it grows.
The other key ingredient that complements systems is KPIs.
KPIs are mechanisms that keep employees accountable to a performance standard and for the employee to see their contribution to the overall business from their role’s perspective. The KPIs effectively ‘glue’ an employee to their role and use of systems associated with their role.
A business mentor can assist with simple but very important systems such as job descriptions and KPIs association with positions.
There are many more aspects of a business that an experienced business mentor can assist you to grow your business.
If you’re considering growing your business faster, or to improve its profitability or to set it up ready for a general manager or CEO to take over management and growth of the business, for these and many more reasons a business mentoring is a worthwhile consideration to take the trial and error out of growing your business. It’s why business mentoring is a fast growing industry.
This article is penned by Tim Stokes for Profit Transformation for Business Owners.