Do Business Well

To the uninitiated, business looks pretty easy. Maybe that’s why so many try it. Those who have taken the leap know that there is much more to this game than a good idea and some seed money. Henry Ford bankrupted two car companies before his third effort clicked. He is far from alone.

Fortunately, through this and others like it, you can improve your chances for success. What follows are six very specific ingredients. I believe that if you keep these six elements at the forefront of your thinking, you will succeed. Prior to listing the six ingredients to business success, though, allow me to define the “success” that I’m referring to.

The least that a business can do to be considered successful is survive and pay its owners a living wage. Beyond that, a moderately successful business might pay its owners a wage equal to what they could earn by providing the same services working for someone else. A very successful business will do all the above and repay its investors for their risk at a level commensurate with that risk. The highest level of financial success would include all of these at a very high rate, plus create wealth (value of the enterprise if sold).

Financial success is not the only goal. Many owners would want the business to provide them with a satisfying and challenging career. They might also be looking for certain nonfinancial benefits such as travel, vacation time, or a thirty-hour work week.

In a very small business, the definition of success can become quite wrapped up with the needs of the owner. As mentioned earlier, there should be a separation of these in many instances, but sometimes it is very hard to see the lines of distinction.

Ingredients to Business Success

1. Desire
2. Sales
3. Marketing
4.  Luck
5. Accounting
6. Planning

Desire

You’ve got to know what you want and want it bad! You must focus! You know what you want to accomplish. You knew there would be short-term sacrifices. Maybe you didn’t know it would be this hard or take this long. You read section 1, but only believed half of it. You thought you were different . . . better, somehow.

Well, this is the time that separates the champions from the also-rans. Building a successful business is a long race, to be sure, and you are nowhere near the finish line. However, it is your strength and endurance now that will determine if you are even in the race for the second lap. You may not even be as strong as some of the others, but you must want to win more than they do.

Desire includes having a survivor mentality. There must be an underlying feeling in those running the business that failure is not an option. Now this is tricky, because failure is a valid option. There is a time and a place where packing it in is the best thing to do. However, until that time comes, everyone in the organization must believe that folding the tent isn’t up for consideration. Such an attitude alone may keep a business right side up for months after others without a survivor mentality have gone broke.

Sales

An associate of mine started a business. Within a year the company had enough sales to break even, but not enough to pay him. At the end of two years his sales were still the same. The overhead was pretty well fixed, so that even a small sales increase would have resulted in good profits. From time to time as we discussed his undertaking, I would ask: “If you reached your current sales level in twelve months, why haven’t you been able to sell more than that in your second year?”

The answer was simple. He had stopped selling. He was now only servicing his existing accounts. A very small business must maintain a constant sales effort. Selling must be very high on the list of priorities for use of time, energy, and dollars.

Marketing

You must provide products or services that people need at a price they can afford. If you pass those two hurdles, you must then come up with an effective method of telling your potential customers that you have a great product at a reasonable price. Our business has experienced its greatest growth in product lines from buying out companies who managed to achieve a good product at a right price, but had no idea of how to get the word out.

Finally, you must also establish a method to deliver your product or service to interested customers. Should you sell it direct to the user, or through a series of middlemen? How do you package it? How many distribution centers do you need? Successful businesses understand the options in marketing and use that knowledge as a tool.

Luck

I list it fourth. Others I have read would list it first. I believe that most luck is made by the lucky. Nothing irritates me more than hearing someone who hasn’t known me long exclaim: “Boy, is he lucky!” This is usually from the lips of someone who has never even walked across a college campus, complains about a forty-hour work week, and spends every evening in front of the tube with a beer in his mitt.

But there is luck (or providence) in the equation. Does the recession hit at a time when you have cash in the bank or when you’ve just borrowed all the bank will allow? Does the city decide to do roadwork in front of your new restaurant the second week you are open?

One must take the bad with the good. Is it luck when an inventor calls you with a new idea and you end up with a $100 million company? You could say so. However, how did he happen to call you? It could have been your advertising, your reputation, or any number of things you can justifiably feel proud of.

Accounting

Good accounting can help you in every phase of your business. It’s easier to keep your desire intact on even the worst days if you feel that you’re in control of your destiny. It’s hard to feel in control of any part of your business if you’re uncertain about your inventory levels, sales levels, collection effort, cash on hand, production capability, profitability, or even your solvency.

Your sales effort will be vastly improved by supplying those in your sales department with information about how their accounts are doing.

Your marketing will improve if you can accurately determine what you can afford in advertising, promotion, and trade show expense.

Clearly, your planning will be enhanced if you have historical numbers from which to derive your projections.

Planning

Planning can move you along your path more quickly. It can help you to miss some of the potholes in the path. It provides you with a mile marker to see how far you’ve come, and how far there is yet to go. It’s a very useful skill and important to the overall success effort.

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