Last week we gave you “Ten Commandments” indicating what you should not do if you want your business to grow. Today we give ten “directions” which you should do if you need to becoming a successful small-business owner. If you understand and adopt the logic behind these directions, they will give you a base for making the best decisions to resolve your problems.
1. Focus on the execution
We all know that good ideas are a dime a dozen, the kind of people who can take those good ideas and turn them into successful action are definitely not a dime a dozen. Within the context of small business, this means that many people have good ideas that, when executed properly, would result in a good business. Unfortunately, history has proven that many of those people are unable to follow those good ideas with equally good execution.
Small-business success is always in the execution. Your idea probably is not what’s going to make or break your business. But you are.
2. Assemble a team of superstars
Of all the important duties the owner must perform, the one at the top of the list is assembling a team of superstars in the business’s game-breaker positions.
The process of assembling superstars in game-breaker positions includes the following three elements: Identify the game-breaker positions. These are the make-it- or-break-it positions in any business. Depending on the size of the business, these positions may include the managerial positions of sales, marketing, operations, finance, human resources, andproduct development.
Identify the characteristics of superstars. For this writer, a super-star is someone who a) subscribes to the owners’ ethics and principles, b) welcomes change, c) is capable of synergy with his other superstars, d) is creative, and e) displays a work ethic similar to the owners.
Recruit, train, and motivate the superstars. Remember – your company can only be as good as the people who make up your team. If it is a winning business you want to grow, you need people on the team who know how to win. Only you are in a position to collect them.
3. Work hard
There’s absolutely no substitute for hard work. While it does pay to be smart, intelligence alone never wins the small-business game. Neither does the uniqueness of your niche - although some are certainly better than others. And who in their right mind would ever go through life depending on luck to carry them through? Long hours and hard work have no substitute, especially in the early stages of your business.
4. Realize the difference between profits and cash
Not so long ago, I ran into a business-owner friend ata public function. “How’s business?” I asked. “Great! Our sales were up 2 5 percent, and our profits were up, too. By 15 percent!” After I congratulated her, she continued. “I must admit, however, I’m having a harder time paying my bills this year than I did a year ago, when my business wasn’t growing so fast.”
As a result of her increased sales, her accounts receivable had increased appreciably. She had also, in the past year, brought in a slew of new inventory to support her increased sales.
The cash outflow required to pay for all those increases in assets had more than eaten up any increase in cash that resulted from her increased profits. In short, she had spent her hard-earned cash on those items that show up on the balance sheet but not on the profit and loss statement. Despite increasing her sales, her business had a cash flow problem.
The word profits is nothing more thanan accounting term. It refers to a number that determines how much in taxes the business is going to owe. Meanwhile, cashflow is the operating term that’s used to measure the tangible flow of cash in and out of the business.
5. Recruit for attitude, Teach skills later
Basically, this means that you can forget what the person you’re recruiting knows how to do because you need to focus on who he or she is. After all, assuming your potential recruit is of reasonable intelligence, you can teach him the skills he needs to learn the job. What you can’t teach him is attitude - that is, how he’ll react to adversity, how he’ll get along with his peers, and most importantly, where you and many other companies are concerned, how he’ll treat your customers.
The difficulty when hiring for attitude, however, comes in looking for those subtle hints that belie the interviewee’s attitude. Check out the potential employee’s body language when he answers a tough question and watch for voice inflection variations in his responses. Learn to listen with your eyes and your intuition as much as your ears.
Ask thoughtful, open-ended, situational questions and then read between the lines for the right answers.
6. Create an exit strategy
One way or another, all business owners are eventually going to exit their business. You may exit your business feet first or head first, but exit it you will.
The two ways to exit a business are planned and unplanned. In the planned scenario, you pick a date or determine a goal (or both) and then manage your business and your eventual exit around those selections. After the set time has arrived and/or you’ve achieved the set goal, you wave good-bye and make your scripted exit.
In the unplanned exit, you wait for an unfriendly and/or random event to take place. Perhaps an attack of burnout suddenly strikes you, or a severe financial crisis loom. Wouldn’t you rather make a planned, well-thought-out exit over a frazzled, crisis- spurred one?
Assuming that you’re a typical small-business owner, you have the following exit options:
Your partner (if you have one) buys you out. Your business merges with another business. Another business acquires your business. You sell your business to your employees. You sell your business to an outsider. You hand down your business to a family member. You do an initial public offering (selling stock in the company to the public).
Your task is to select one of these exit options and then begin to con struct a strategy for making it happen.
7. Grow or die - there’s no in-between
There was this owner of a small printing company whose revenues had been flat for five years. When asked to describe the path of the business, he just shrugged and said, “Oh, we’re maintaining.” Two years later the business failed, and the ownerlearned the grow-or-die lesson the hard way.
A small business has only two options: to grow or to die. Anything other than growth is stagnation, and stagnation is the precursor to death. As the owner of the small printing company learned, as soon as the cycle of growth ends, the cycle of dying begins. Don’t let this happen to your business. Remember, cash is king, and it’s your job to see that you manage it royally.
8. Transit to manager level along with your first recruit.
Like it or not, as a small business grows, the owner’s role in it must make a slow but sure transition. As soon as you recruit your first employee, you have to begin to fulfil the role of manager, and the more employees you hire, the more manager you have to become. So instead of spending your time working with customers and fussing with product development, you spend much of your time performing such tasks as training, motivating, andmanaging employees.
In short, the small-business owner’s role is to “create and foster,” while the manager’s role is to “maintain and grow.” Fulfilling these roles takes two different skill sets. Sometimes the small-business owner is capable of making the transition from small-business owner to manager, but too often he isn’t.
To successfully make the transition to manager, you must develop a collection ofmanagerial skills - skills that make you dependable, consistent, and logical in the way you manage your employees and run the business.
9. Develop an insatiable appetite to learn
Successful business owners come in degrees; on a scale of one to ten, some are ones, a few are tens, and most are somewhere in between. The ones include the small gift store retailer who scrapes out her livelihood by selling t-shirts and trinkets. The in-betweens include the vast majority ofthe rest of us - people who have survived and hopefully prospered in this competitive but rewarding vocation.
So just what is the number one characteristic that sets Number 1 apart from Number 10. The number one belongs to successful entrepreneurs who possess an insatiable appetite to learn. Motivation begets effort, and effort begets results. So, develop an insatiable appetite to learn, and then try to satisfy it.
10. Do only what you love
The best niche for youshould involve a product or service that you already know something about. And more importantly, your niche should involve a product or service that you can become passionate about.
No matter how hot you think the niche is or how hot you may think it promises to be, if you can’t develop a passion for the product or service, you’ll never develop a passion for the business that follows. And operating a business without passion is a sure pathto mediocrity.
(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a business consultant, freelance newspaper columnist and a writer.)
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