If you’re ready to build a strong, lasting foundation for your business, learn and understand these tried-and-true facts:
Fact 1: If you don’t lead, no one will follow. This may seem obvious, but “leadership” is one of those terms tossed around by people who haven’t given much thought to what it looks like in action. Good business leadership begins with defining the destination and direction of your company and deciding how the business should look and operate when it arrives. But, it doesn’t stop there. It also involves developing and continuously improving on a set of skills in order to move your business from where it is today to where you want it to be tomorrow.
What’s important to understand is without effective leadership your managers or employees have no idea what is important to the owner, what to manage, or what success and failure look like. In other words, in order to have effective employees, your business first has to have effective leadership, which has to include defining success and failure based on the eventual destination. Another important aspect of being a good leader is developing a company culture that’s expectations-based, and rewards those who meet and exceed those expectations. The good news about leadership is that the most important aspects can be learned, and it’s essential that owners do so.”
Fact 2: If you don’t control it, you don’t own it. Control is the owner’s management reality. If you don’t control your company by defining key tasks and dictating how they must be handled, and “inspect what you expect,” then you don’t truly “own” the business. You are a spectator watching others play with your money.
There are two overriding concepts successful owners understand: First, great procedures and processes need controls, and these in turn create great employees. This happens because procedures and processes operate the business, and employees operate the processes. This is one of those business basics that owners must understand to be successful.
Second, don’t stop at pointing out what should be done and how. Also clearly state and emphasize that there will be consequences when standard operating procedures and processes aren’t followed. If you don’t do this, you’ll be ‘leading’ a group of individuals who follow their own rules and judgment, rather than a cohesive company working toward a common goal.
Fact 3: Protecting your company’s assets should be your first priority. Does it surprise you that sales, profits, and growth are not the first priority? If so, you’re not alone. But assets, both tangible and intangible assets, are what power sales, profits, and growth.
Usually, owners and soon-to-be owners understand the need for insurance on assets like their buildings and equipment. In fact, bankers insist on insuring specific assets they lend on, like facilities, equipment, and sometimes even insurance on an owner’s life. However, successful owners don’t stop at protecting obvious assets. They understand the importance of every asset, because assets represent invested cash, which should be managed to produce exceptional and maximized profits.
Ignore this business fact and your company will underperform — if it can even survive the continual asset write-offs and write-downs, customer abandonment, and employee indifference. It’s critical to understand what all of your company’s assets are, and then guard them closely and work to maximize the profits they represent. If you don’t, they will haunt your business and cause financial pain when you least expect it, or want it.
Preparing, Not Predicting
Fact 4: Planning is about preparing for the future, not predicting it. Nobody knows what tomorrow, next week, or next year will bring for your business. But you can make educated guesses based on the most current, accurate information available, as well as your own past experiences, and this should be an ongoing process. Effective planning is a mix of science (gathering pertinent information) and art (taking that information and turning it into a plan that will move your business forward over a specific time period.
Being able to plan better than your competitors can give you a significant competitive edge. Ford Motor Co. is a great example. In 2008 and 2009, its competitors, GM and Chrysler, ran out of cash and needed taxpayer bailouts to avoid bankruptcy. But, not Ford. Years prior to the credit crunch, Ford began to restructure its debt and raised billions as it continually added to cash reserves. Ford understood, as you should, that planning is important because it focuses owners on what’s important and it prepares them for what lies ahead.
Fact 5: If you don’t market your business, you won’t have one. Maybe working to market and advertise your product isn’t your cup of tea. Or maybe you believe your product is so great that it should speak for itself. You’re going to have to do it anyway. The bottom line is this: if people don’t know about your product, you won’t be successful.
New business owners are especially nervous about marketing because money is already so tight, but if marketing isn’t done very little good will happen. You have to make the necessary effort to connect consumers to your company. And when you do, you’ll begin to see marketing as an investment rather than an expense.
Fact 6: The marketplace is a war zone. Every company has competitors. If it doesn’t, and it’s successful, it will have them soon. Successful owners know they have to fight to win market share and to retain it. That’s why you must develop a warrior mentality and maintain it for as long as you’re at the head of your business. Sales are essential in any industry. It’s take or be taken from. In other words, in order to be successful and remain that way, you have to continually focus on the market, react to it, and fight for what you believe should be yours.
Fact 7: It’s not enough to know the business you’re in; you have to know business. Of course, you need to know the nuances of your particular industry if you want to be successful, but you also need to understand the various aspects of business as it is more broadly defined, such as accounting, finance, business law, personnel issues, and more, and how all of these impact each other and the decisions you make.
Having a limited knowledge of business is like being a high school dropout: it limits your potential for success. But, while it’s important to know what’s going on in your market, it is just as important to know what to do with that information and how you can translate it into more sales and gross and net profits — which cannot be done with limited business knowledge.
I don’t believe that any entrepreneur can succeed — or reach his or her full potential — without knowing, understanding, and applying these seven facts of business life.
But, it’s equally important to understand how these facts are interrelated. Being able to develop strategic plans or market your product will mean little if you don’t have a good grasp of business in general. If you commit yourself to understanding these facts while being prepared for their implementation to change as your business goes through its inevitable life cycle, you’ll be creating a best-odds scenario for success.
Bill McBean is the author of The Facts of Business Life: What Every Successful Business Owner Knows That You Don’t ($24.95, www.FactsOfBusinessLife.com), available at bookstores nationwide, from major online booksellers, and direct from the publisher: Call 800-225-5945; in Canada, call 800-567-4797. … McBean held a series of management positions with General Motors and later managed a commercial lending portfolio for the Bank of Nova Scotia. He started his first business, a new automobile dealership in Yorkton, Sask., and grew it to one of the most profitable GM dealerships in the region, leading to further opportunities in the automotive and other industries. Currently, he is general partner of an investment company, and chairman of a company that works with owners to improve their businesses for long-term success. Visit www.FactsOfBusinessLife.com.for more information