Embrace Seven Facts of Business Life that Affect Us as Entrepreneurs
By Bill McBean
There are other important facts about business ownership — facts that could help you avoid the mistakes and pitfalls that trip up so many others, and go on to achieve the success you’ve dreamed of. I call these the Facts of Business Life — seven essential concepts needed to create a successful business life.
There are no guarantees for entrepreneurs—and to add to the challenge, each business is one-of-a-kind, in terms of how it competes, its constraints, and how it operates. But what you can do is tilt the odds in your favor. If you’re ready to build a strong, lasting foundation for your business, then read on for an overview these seven Facts of Business Life.
Fact 1: If you don’t lead, no one will follow. Often, “leadership” is one of those words that is thrown 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 that 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 because all you are is a spectator watching others play with your money.
There are two overriding or macro concepts successful owners understand over their unsuccessful competitors. 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.
Secondly, 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. Once again, this is one of those business basics owners can’t ignore.
Fact 3: Protecting your company’s assets should be your first priority. Were you surprised because this fact didn’t instruct you to first protect your company’s sales, profits, and growth? If so, you’re not alone. But the truth is, assets — which include 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 money 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. Protecting both tangible and intangible assets is one of the most underrated and underappreciated ownership issues today, and, if mismanaged, can be one of the most damaging. The key is to understand what all of your company’s assets are, and then guard them closely and work to maximize the profits they represent. Because if you don’t, they will haunt your business and cause financial pain when you least expect it, or want it.
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 from “here” to “there” over a specific time period).
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. If so, too bad—you’re going to have to do it anyway. The bottom line is that if people don’t know about your product, you won’t be successful.
New business owners especially are nervous about marketing because money is already so tight at this stage. But again, 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 the investment it actually is, rather than the expense that less successful competitors think it is.
Fact 6: The marketplace is a war zone. Every company has competitors, and if it doesn’t and it’s successful, it soon will. Successful owners know they have to fight not only to win market share but to retain it as well.
You must develop a warrior mentality and maintain it for as long as you’re at the head of your business. That’s because selling and sales in any industry is serious business. It’s take or be taken from. 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. If you don’t, your competition will win the war. Great marketing has to be followed up by having your company “on its game” in order to capture every customer your marketing attracts.
Fact 7: You don’t just have to know the business you’re in; you have to know business. Yes, of course you need to know the inner workings and 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 tunnel or limited vision as far as business knowledge is concerned is akin to dropping out of high school. In doing so, you limit your possibilities for success and how great your success could be. What is most important is not how much you know, but what you know and what you do with that knowledge. For example, it’s important to know what’s going on in your market, but 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. And remember, it’s an owner’s responsibility to make sure what you’re learning is correct and relevant.
Ultimately, I don’t believe that any entrepreneur can succeed — or at least reach his or her full potential — without knowing, understanding, and applying these seven Facts of Business Life. It’s equally important to understand how these facts are interrelated. For instance, 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. But 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. HBM
Bill McBean is the author of The Facts of Business Life: What Every Successful Business Owner Knows That You Don’t (Wiley, October 2012, ISBN: 978-1-1180949-6-9, $24.95, www.FactsOfBusinessLife.com)—now available at Audible.com. McBean is currently general partner of McBean Partners, a family-owned investment company. He is also partner and chairman of Our-Mentors, a company that works with owners to improve their businesses for long-term success, and Net Claims Now, which provides companies in the restoration industry with invoicing, accounts receivable collections, cash flow services, business coaching, and business lead generation services. For more information, please visit www.FactsOfBusinessLife.com.