small business success

There is an old saying that is used to motivate athletes and sports people - keep your eye on the prize.  In small and medium sized businesses however, it seems that that saying has been distorted to, "Keep your eye on the price."  This is a pet subject of mine, but once again I have been reminded of it this week by going through the process of getting three quotes for moving our household furniture, as we are planning to move our home from Auckland, New Zealand to Melbourne, Australia, while the business is carried on here by my capable team.

What's The Price?

This is crunch time for the three sales people involved and for their companies.  After winning the right to present their quotes, which in itself was not an easy task, because there are so many competitors to choose from, this is the time to capitalize on that and do their best to win the work.  In other words, this was their opportunity to sell me on why their company should win the business.

Have you ever stopped to think about what your customers really want?  Small business success is achieved by satisfying customer needs and wants, so it makes sense that the competitor who really understands what the customers want and makes sure they give it to them is the one most likely to succeed.  And don't make the mistake of thinking that all customers want is a lower price.  If that is what you focus on then you are leaving a lot of profit on the table and a lot of customers unsatisfied.

Customer Service

When the idea of starting an airline business was first suggested to Richard Branson, he did some very basic market research to discover a need that was not being met by competitors in that market.  He conducted a simple exercise of phoning the People Express customer reservation line and discovered that it was almost impossible to get connected to a customer service operator.  He surmised that either the major competitor for the type of service they were planning was either very poor at customer service or so extremely popular that they had excess demand for their service.  Either way, Branson thought that this situation presented an ideal opportunity for the entrance of a new player in the market.  Branson's start-up company, Virgin Airlines has done pretty well by identifying an unmet need in the market.  Why didn't the existing companies understand what their customers really wanted?

Technical Expertise

A business can have an exciting vision and a clear mission, but until it has a customer it achieves nothing.  For a business to succeed, nothing is more critical than finding customers and satisfying them.  From this perspective, business performance can be broken down into a very simple equation.  The level of profits a business can achieve is a direct function of the number of customers it can attract, multiplied by the number of sales transactions with each customer, multiplied by the level of profit it can make on each sale, less the overhead expenses.

Total Profit = number of Customers x Sales to each customer x Profit per sale – Overhead Expense

It is useful to look at business through this strategic formula. Many business managers actually limit the effectiveness of their marketing and selling processes because they operate only through the accounting equation which says:

Profit = Revenue – Cost of Sales – Overhead Expenses.

The result of operating only by the accounting equation is that we only see the task of making sales as a single task instead of focusing on how to optimally perform each of the three specific marketing elements included in our strategic success formula. When you break down the marketing process into these three objectives, you can exponentially multiply your results.  Your profits move into supersonic range when you start to develop specific strategies to achieve three specific results:

It's not new and you've probably heard it before, but I want to reiterate the truth that if you want small business success, you've got to work more ON your business than IN your business.  But I also want to take it further, because even though you may have heard that statement a thousand times, have you ever really figures out how to achieve that goal and understand what to work on when you are working on your business?

Working IN Your Business

In my experience, around 95 of every hundred people who own their own business approach it in entirely the wrong way.  Think about this.  If you can imagine the last business meeting you were in and there was 5% of people in the room that appeared to be more successful than you, then you are more than likely one of the great majority that is getting it wrong in business.  Here's a quick quiz to confirm whether that thought is right.

• Do you ever worry about your competitors' prices?
• Do you ever wish your employees were more productive, or worked more like you?
• Do you work more than 35 hours per week on average?
• Do you wish you felt less stress from your business?

If you answered yes to any of those questions, you are probably spending more time working in your business than on it.  The question is: what do you do to work ON your business?

In our current recessionary times, I see a lot of business owners choosing different types of action to address the situation.

The craziest (is that a word?) choice of action I see many people making, is to sit tight and hope they get through it. I call this the hibernation approach. That is, they hope to survive the recession by bunkering down, cutting costs and reducing their action.  To me, that sounds like a dumb strategy, a bit like a bear heading off to the cave to hibernate for the winter, without first gathering the food needed to last until spring.  What happens if the recession lasts too long?

The next approach is less crazy and it's what most people choose, although the thinking is still flawed.  This approach is to work harder.  In other words, they are increasing their action by doing more of the same.  Trying to pour it on, as if doing less before was OK.  The problem with this approach is that most business owners work hard anyway.  Working harder means that you will produce marginally better results at best.  If the recession has chipped away at your market, you may end up achieving the same results as before the recession, if you work hard enough.  But what is the cost of this approach?

Every business person I speak to agrees that providing a quality product or service is important. It is a bit like motherhood; everybody thinks it is a good thing. The difference between the truly successful business and the average business is that successful business’s leaders live, breathe, and preach quality, where the average business’s leader merely pays lip service to it.

The thing is, for quality to be an advantage for you in selling your product or service profitably, you need to be very clear about what quality really means in your situation. It must be prescriptive, or a deliberate, prescribed outcome.  In the dictionary, the word “quality” has many different meanings, depending on how you use it. For quality to work to your advantage, you need to define those characteristics and standards of excellence in a number of different aspects of your business, going beyond the characteristics of the product. You must also define it in terms of customer service, including how your telephone is answered, how you greet your customers, how long your turn-around time should be, how you will deal with customer complaints, how you will deliver your product, and so on.

Business owners who pride themselves on their quality but leave the quality aspects of their customer interactions undefined are really leaving quality to chance. When you know what quality means and how to achieve it, you must then ensure that your business delivers that quality to customers consistently.

If being in business is not exciting, enjoyable, and rewarding, then why be in it?

It is exciting and rewarding for the few who are really successful. The difference is that they have a vision, a clear idea of where they are going, and each day they can see their business making progress towards achieving their clearly defined goals.

This vision stems from your purpose, or what it is that drives you to do something. Your purpose as a person translates into your vision for the business. The vision is what you see the business becoming. The more clearly you see how the business will be, the more likely you are to create it that way.

Putting your business together is a bit like constructing a jigsaw puzzle. Each piece of the puzzle falls into place to form a perfect picture. Imagine how difficult it is to put a jigsaw puzzle together if you don’t have a picture of what it should look like when it is finished. You have to guess where each piece should go with nothing to guide you. How would you expect your business to turn out if you operated like this? Incredibly, this is exactly how most business owners try to construct their businesses. Is this how you work in your business?

If you do not start out with a clear vision, or lose sight of it at some point, the business continues aimlessly. Without a vision there is no real meaning. Having a vision allows the owner to define the business’s purpose and what the business will look like when it is fully developed. Without a