Chapter 4   Personal
Chapter 4   skills and
Chapter 4   abilities

There have been many people who in the past have nursed a secret aspiration to run their own business. For most, the prospect remains just a wishful thought. For others, something happens in their lives which presents an opportunity, perhaps an unexpected inheritance or an event which forces a change in direction, such as redundancy. But simply having the money to start a business is not enough. Even in the case of the trades person who is made redundant, possessing both the technical skills needed to work and the redundancy pay-out to start on his or her own, surviving in business requires a much wider portfolio of skills. The problems lie, first, in identifying which specific skills are most relevant to the business proposal and, second, in determining objectively whether or not these skills are available. In the event that the required skills are not currently available, then those deficient skills must either be developed or imported. The process of identifying the necessary skills and assessing their presence is called the skills audit.

The objectives of this chapter are to assist the reader in understanding how to carry out a skills audit, and to provide some practical methods of self-assessment which will assist him or her, as a potential owner-manager, to define the skills gaps which need to be filled. Following on from that, the reader will be able to define his or her own personal development plan to acquire the further skills needed to succeed in business.

This chapter also relates to Unit 2 of the NVQ Level 3 Business Planning, ‘Assess your own skills and capabilities for running the business’, which is concerned with four key stages:

•   Objectively analysing and identifying the current and foreseeable skills needs of the business, in terms of management, administrative and technical skills, and the relative importance of these.

•   Identifying your own personal goals and objectives, and accurately analysing and evaluating your own skills and resources in relation to these.

•   Producing a realistic personal development plan.

•   Monitoring your ongoing performance as an owner-manager, and your progress in developing new skills.

What skills does my business need to make it successful?

First, when answering this question, it is important to remember that we are not just looking at those skills needed right at this moment, but also those which will be required as the business starts to expand. As a rule of thumb, the smaller the business, the wider the range of skills that the owner-manager will need to operate the business, particularly in the early stages of its development. It is important, therefore, to draw up a skills profile for the business identifying the diverse range of expertise required:

•   Technical knowledge of, or expertise in, the goods or services which you plan to provide, and how the customers will make use of them. From the customer's perspective, the supplier is the specialist who is expected to answer all the awkward questions.

•   Marketing skills – to enable you to research your market, to design a marketing plan to promote and distribute your goods or services. Many owner-managers set up in business in an area with which they are already familiar and so have some basic knowledge of their market, but there is still a need to maintain objectivity, particularly when estimating market share and sales volumes.

•   Sales skills – these are often assumed to be the same as marketing skills, but there is a distinct difference. You may have an excellent product and a market ripe to take it, but you still need the skills to persuade your customers, or your distributors, that it is your product they should be using or retailing, rather than one supplied by a competitor. In the early stages of developing your business, you may not be able to afford to pay a full-time sales person.

•   Organizational skills – the ability to plan and organize yourself and your business, to ensure that your staff, resources, materials, finished goods etc., are in the right place at the right time. Careful planning and attention to detail enables you to make the most productive use of time and resources, and to avoid costly waste.

•   Decision-making – the facility to analyse problems, identify and evaluate options and make objective and rational decisions.

•   Financial skills – keeping day-to-day accounts is not necessarily the best use of the owner-manager's time; a part-time book-keeper or accountant would probably be much more cost-effective. However, it is still important for the owner to be able to understand the accounting procedures. In particular, it is essential to have a basic understanding of budgetary planning and control, in order to keep the business on track and to spot any potential problems.

•   Customer service skills – this is not just a case of keeping the customers satisfied by providing a consistently high standard of service. For small firms one of the biggest headaches in dealing with customers is debt collection, and persuading your customers to pay their bills on time without the risk of offending them or losing their business.

•   Staff management skills – the ability to supervise, delegate work, train and motivate staff to get the best out of them. The importance of this is often underestimated, especially by new owner-managers who have never previously been involved with managing staff. One of the hardest aspects is that of trusting the staff to get on with the job without constant close scrutiny, so that the owner can get on with the job of running the business.

•   Management of information and computer literacy skills – the use of word-processing, databases, desktop publishing, accounting software, moving around the Internet, communication by e-mail etc.

The skills audit: what skills do you (or your staff or associates) already have?

Once you have identified the range of skills which the business will need, the next stage is to identify which of those you, as the owner-manager, already possess or those which can be provided by staff or associates. Where there is an obvious gap in the skills, you have to decide whether or not it can be filled by developing them within yourself or another person within the business. If it can, then you must consider how this is going to be achieved, e.g. by attending a training course. In some cases it may just be easier and more convenient to buy in the skills, as in the earlier example of accounts, where a part-time book-keeper employed for a few hours per week may be sufficient for the first year or two of the business. Sales skills are another good example as full-time sales staff are expensive to finance until the business becomes established, and yet without them the business will never be able to grow. Very few owner-managers can devote sufficient time to do as much selling as they really need, so the short-term answer is often a compromise, involving a part-time or commission only sales agent to supplement the owner's sales activities. Then, once the firm is established, it can look to employing permanent sales staff.

Before we can think about employing staff, we need to examine some methods of self-assessment which will assist in identifying both the skills which are present and those that are needed. There are a host of different methods of self-assessment, for example psychometric tests, learning style questionnaires etc. The examples described below have been chosen because they are easy to use, are relevant to the needs of owner-managers and provide good examples for inclusion in the business plan for presentation to the bank manager, and as evidence for NVQ portfolios.

SWOT analysis

It is becoming increasingly hard these days to find anyone who has never completed a SWOT analysis in one form or another, but its popularity is a reflection of its simplicity and usefulness. The idea is that the person making the analysis lists their own personal Strengths and Weaknesses (i.e. those factors which are a part of the person themselves) affecting the proposed business. They also examine and list the Opportunities and Threats (i.e. the external factors) which might affect the business. For example:

Strengths Sales skills, good technical product knowledge, enthusiasm.

Weaknesses No knowledge of accounts, poor computing skills.

Opportunities Offer of cheap premises, existing customer base.

Threats Lack of working capital, strong local competition.

In view of the subjective nature of a SWOT analysis, it is quite possible for people to underestimate or overestimate their personal skills and capabilities. To make the process more objective it is recommended that, when the subject has carried out their own analysis, they should get another person to complete the analysis for them and then compare the two outcomes. The SWOT analysis is a useful element to include in a business plan, and is a key evidence requirement for Unit A2 of the NVQ.

Exercise

What makes a good manager?

This exercise is designed to get the participants thinking about a host of different management skills, their relative importance or usefulness, and which of them the participants need to develop for themselves. Figure 4.1 contains a list of seventy-two ‘management’ skills, which cover a broad range of technical, organizational, business and interpersonal skills of the types required by the average owner-manager.

Stage 1 The participants examine the seventy-two skills, and categorizes them under three alternative headings: ‘Managing yourself’, ‘Managing others’ and ‘Managing tasks’.

Stage 2 The participants identify what they regard as the ten most important skills in each of the three areas, and list them in order of priority.

Stage 3 The participants grade themselves against each of the thirty selected skills, on a scale of 1 to 5, with 5 being the highest. As a double check they can also ask a colleague or manager to grade them against the same thirty skills.

Stage 4 The participants select the two weakest skills from each category as being potential areas for self-development, and complete an action plan for developing the two skills. A sample action plan is shown in Figure 4.2.

Figure 4.1 What makes a good manager?

Power torch

This is a short exercise published in 1999, specifically designed by the Small Firms Enterprise Development Initiative (SFEDI, 1999) for owner-managers, to encourage them to review their personal effectiveness in running their businesses. The first stage comprises fourteen questions which can help to identify potential areas for improvement within the business. The second part contains a series of more focused questions about cash flow management and the impact of your personal performance on the business. The questions are linked to the NVQ Level 4 Business Management and Development Standards, and the booklets are available from SFEDI. As with the previous exercise, the sample action plan (Figure 4.2) can be used for any areas of development that are identified as a result of this exercise.

Activity

Planning and prioritizing your work

Make a list of all of the daily activities that waste your valuable time, e.g. talking to the secretary, making coffee, smoking breaks, failing to delegate routine tasks, cluttered desk, allowing interruptions, lack of self-discipline, unfinished work brought forward, attending unnecessary meetings, responding to crises, long lunch breaks, playing golf during working hours etc.

Make a second list of ways in which you could save time, e.g. better use of diary to plan work, delegate more work, keep meetings to tighter agendas and timescales.

How do these compare? Highlight key areas for improvement, and work out how the improvements can be achieved, and how you will measure their achievement.

Activity

List all the items of work that you have to do over the next two weeks, under two headings. First, the proactive work that will lead to profit or development of the business (sales meetings with customers, planning new products or services, etc.). Second, list the reactive and routine work which has to be completed, but which does not really contribute to the profitability or growth of the business (VAT returns, reports for bank managers, filing and administration, etc.). Then prioritize your tasks under four headings:

1  Important – urgent: typically the proactive tasks that need a prompt response, such as customer enquiries, ensuring the completion of customer orders and the delivery of goods on time.

2  Important – less urgent: typically the proactive work that will lead to growth of the business in the longer term. This may involve negotiations for future contracts, development of new products and markets, negotiations with suppliers, etc.

3  Less important but urgent: the day-to-day work that needs prompt action, but which does not necessarily involve substantial time commitment, e.g. writing cheques and letters, paying bills, renewing insurance policies, advertising for staff.

4  Less important and less-urgent: the routine work which is not due for completion in the next week or two, e.g. the quarterly VAT returns, monthly PAYE records, non-urgent replies to letters, etc. But beware of this category because less important and less urgent work, if repeatedly deferred, has a habit of suddenly becoming both urgent and important, particularly if it involves late VAT returns!

How did you perform in these two activities? Are you already using your time effectively? Are you already planning and prioritizing your work, or was this a new experience for you? Have you identified any scope for further improvement? If so, what changes will you make, and how will you start to implement these?

Identifying personal goals and objectives

The previous exercises have been concerned with identifying the skills needed to ensure the efficient operation of the business, but it is equally important for the owner-manager not to neglect the personal aspirations and objectives of his or her family:

•   Where am I now, and where do I want to be in five or ten years’ time?

•   What material benefits do I expect to gain from running my own business, in terms of my salary, my home, my car, holidays, etc.?

•   What benefits do my family expect from the business?

•   Are my family aware of the potentially substantial commitments of time and effort involved in establishing and running a business? Are they prepared to accept possible disruption to family routines, and possible financial pressures during the early stages of setting up the business?

•   What price am I prepared to pay in terms of stress and risk to personal health, in order to ensure that the business succeeds?

•   How will I measure the success of the business in material terms?

•   How will I measure the success of the business in terms of my of job satisfaction and self-fulfilment?

•   What will I do when I have achieved my targets?

•   Will I be able to handle failure if the business does not work out?

•   Are my family fully aware of the risks involved?

•   Do I have the will to succeed?

These are just a selection of the questions which potential owner-managers should be considering not just on their own, but in consultation with their spouses, domestic partners or families. There may be times when an owner-manager needs the support of friends and families, and that support is likely to be more forthcoming if their own objectives and aspirations have been considered. Once again, where targets are identified, action plans can be prepared to monitor progress and achievement, and the review of those plans should be carried out not in isolation, but in conjunction with partners and family.

Action plans for self-development

Apart from being yet another essential part of the required NVQ evidence, there is a very sound reason for the preparation of action plans because, with the best will in the world, personal objectives can easily slip or be pushed into the background. Think back to last year. How many New Year's resolutions did you actually manage to keep, or have you simply given up trying? Owner-managers are very busy people, and in their case it is even more important to make some public or tangible declaration of intent, in the form of a self-development action plan, to ensure it will be not be forgotten or relegated into oblivion by the sheer pressures of work. A simple action plan, in the form of the example shown in Figure 4.2, pinned in a prominent (although not necessarily public) location, will act as a regular reminder.

Skills/competencies to be improved	Activities/methods of improvement	Means of measuring achievement	Degree of success/reasons for failure
Example :
Effective delegation – Work needs to be delegated to release time for other management duties.	Review daily/weekly job activities to see which of these could be delegated. Select potential staff & assess their suitability to take responsibility, and any training needs etc. Define staff objectives and how their progress and achievement will be monitored and assessed against their targets. Review own workload once more.	Is delegated work progressing suitably well? If not, why not? Are there still more jobs that I can delegate? What else am I doing with my time? Review progress after 30 days, and 60 days.	Are there still jobs to be delegated? What problems have occurred?

Figure 4.2 Action plan for self-development

Another reason for the use of an action plan is to provide a means of monitoring progress on a regular basis, and to set specific review dates. To take an analogy: how many times have you heard someone say ‘I'm going on a diet and I intend to lose ten pounds’? Okay, when will you start, right now or after the barbecue next week? When will you lose the ten pounds, by next month, next year or by Christmas 2010? How often will you check your progress, daily, weekly, monthly, never? And if you do manage to hit your target weight, how will you ensure that it does not go up again?

The answer is easy: ‘I will use my action plan to set specific targets and review dates to monitor my progress, and to highlight any problems or reasons for failure, along with the necessary corrective action.’ Well, is that not exactly how the Weight Watchers organization helps its members to succeed, albeit in a slightly different format and with a bit of added guilt for motivation?

So, to review the process of action planning:

1  What skills gaps do I wish to fill? What competencies do I wish to improve? List them.

2  What methods or activities will I undertake in order to facilitate the development of those skills and competencies? Again, list them, and review them to ensure that they are appropriate.

3  How will I measure my progress or success? Set specific targets, set review dates and set target dates for achievement. Define the criteria for success.

4  How well has the process worked? What problems were encountered? What were the reasons for success or failure? Where do I go from here?

Effective management requires regular self-evaluation

The self-assessment process is not a one-off activity that you go through when you set up a new business. It is a measure of an effective manager that personal skills and capabilities are reviewed on a regular basis. If you were employed by a large organization, you would almost certainly be involved in some form of annual or twice-yearly appraisal system. You may well have plans for setting up such a system in your own business. So why should you not bother to carry out regular assessment on yourself? Self-evaluation is not just a process of assessing skills gaps and development needs, it is also about your overall performance as a business manager:

•   In the achievement of standards: meeting objectives and deadlines, ensuring consistent quality of work, achieving targets, achieving and maintaining customer satisfaction.

•   In the efficient use of time: prioritizing work, effective delegation and allocation of work, monitoring progress of work, and avoiding time-wasting activities.

•   As part of self-development: improving and upgrading skills and abilities, improving personal knowledge. This is the process described as Continuous Professional Development (CPD).

•   In the style of management: employing and varying management styles according to the needs of the situation (autocratic, democratic etc.); being proactive and in control, thinking ahead and anticipating problems, rather than being reactive and constantly fire-fighting in response to problems.

Reference

Palmer, G. (1999). Personal Effectiveness. (You and Your Business booklets) SFEDI.

Further reading

Palmer, S. (1998). People and Self Management. Butterworth-Heinemann.