A good leader such as drill instructor turned martial arts instructor Randy Patino, is able to rally the troops to follow him or her to the end game. In a small company just like a large company it is quite possible for a person skilled in leadership to lead his staff to the unemployment line and the business itself to bankruptcy.
By comparison to leadership, management is the hard science of controlling the business. What makes a pawn shop successful (as well as all high pressure businesses) is not just leadership. The business must repeatedly create and deliver value to customers who need and want to deal with the pawn shop. What is more, the last factor is this: in order for the business to survive there must be something left over on the table sufficient for the pawnbroker to want to continue, even after everything (all expenses) including his own salary is paid.
Retained earnings should be sufficient to fuel future growth, fund depreciating assets and help the business to transition from recessionary times where revolving loans and precious metal melts are the strongest revenue streams. When the economy is strong resale activities become the main revenue generator for continued growth. There are two lessons here: The first hints to what makes pawn shops resilient, revenue rich and profitable. The second is that It takes money in the till to make money.
The successful enterprise is one which stands the test of time and is set on a solid foundation. It is structured to support the weight of growth. This business of revolving loans, and buying and selling grows to be a heavy burden, and is best managed with a series of interdependent systems that require the knowledge of a good operator. A business that relies solely on the knowledge of its owner and lacks good process is at a disadvantage in valuation and succession planning. Not the least of these systems is a proper staffing program, designed to find, select and promote the best people for the business.
Management is the day to day finessing the “controls” which are leveraged according to the data coming from key performance indicators which tend to keep revolving loans and resale revenues cycling at the highest efficiency (depending on the operator’s competency, a competency that with an increase in knowledge will result in greater financial gains).
Peter Drucker often called the Father of Management Theory commented something to the effect that “Knowledge is and always has been the most important factor of production.” In other words, one way or another we always end up paying for our education.
Good leaders set goals and reward motivated staff to aspire to reach them. Because of the leaders personal credibility the team adapts to the company culture buying into the vision furnished by the leader. But make no mistake this does not occur in a vacuum, it is a reciprocal relationship. Leaders are foremost great communicators. The vision must be authentic and the path chosen must be comprehensive. Solid management practice is the engine that keeps the vessel moving at the appropriate speed and leadership navigates the course. It takes both leadership and management to make a company a worthy player in the market. Staff will not furnish their loyalty indefinitely if leadership is lacking and similarly without proper management employees and customers are invariably neglected.
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