The Ten Truths for Making Business Fun
And building a business that sustains you for years to come:
This is the second article in a series on Making Business Fun: Building a fun business starts with Why; Purpose, Passion and Profit.
The first article in the series, explaining why Fun in Business is the key to building a business that sustains you for years to come is here
Building a Fun Business: The Foundations
Introducing the hedgehog
One of the greatest business management books of the last 20 years is called “Good to Great” by Jim Collins. The book explores what makes average companies become great, and a number of the conclusions translate just as well into the world of small business. In particular, I have seen time and time again with clients, friends, colleagues and in my own business that what Jim Collins refers to as the “Hedgehog Principles” are the absolute foundations upon which to build a Fun Business (and a business that sustains you for years to come).
The Big Question of Small Business: Purpose, Passion and Profit
I call it The Big Question of Small Business: Why does your business exist and why would anybody care? The answer is all about the three Ps: Purpose, Passion and Profit.
Jim Collins in his book talks about the simplicity and single-mindedness of the hedgehog.
In order to stay alive, hedgehogs do one thing really well: roll up into a spikey ball when under attack. They do this over and over again, never tempted to vary their approach. The Hedgehog Principles state that a long-term successful business must be able to answer three questions unequivocally and, like the humble hedgehog, never waiver from its commitment to the answers. The three questions are about Purpose, Passion and Profit and together they combine into the one big question I mentioned above, The Big Question of Small Business and
Many businesses can answer one of the three, some can answer two, but very few can satisfy all three. Long-term sustainable success is absolutely dependent on there being complete clarity for all three questions at once.
1) Purpose: A Fun Business Strives to be the Best in the World at ‘Something’
Question 1: What will we strive to be the best in the world at, day in and day out, without fail?
In the 21st century, it is simply not good enough to answer this question the way most business owners do:
“I give really good customer service.”
“My prices are fantastic.”
“I provide great products and services.”
Why? Because all of your competitors are saying exactly the same thing. Customers want to know what makes you different to everyone else. If you don’t clearly communicate the answer to the first Hedgehog Question, you are essentially leaving it in your customers’ hands to work out what sets you and your competition apart.
Oh, and I know it might feel a little unrealistic to aim to be “the best plumber in the world”, but you can sure as hell strive to be the best plumber in your world (perhaps your suburb) and for your narrow niche or sub-speciality.
Remember, customers always want to know what’s in it for them.
2: Passion: A Fun Business is Passionate About That ‘Something’
Question 2: What are we absolutely passionate about and will happily jump out of bed for, day in and day out, year after year?
Many business authors have written about the importance of this question:
“People don’t buy what you do, they buy why you do it.” – Simon Sinek (It All Starts with Why)
It’s Not What You Sell, It’s What You Stand For – Roy Spence
There is no doubt that there is deep truth in these statements. People want to know what you stand for: your core values and beliefs. It is this information, more than anything else, that helps them decide to do business with you over your competitors.
You can be passionate about so many things in relation to your business: making people smile, being a trendsetter, helping people achieve their dreams, building partnerships, or even seeing people improve their diet. These are passions that can be clearly connected to and expressed in the purpose of your business, and customers will understand why they’d want to do business with you.
If you don’t care about your business then your customers certainly won’t either, so you must honestly consider what gets you out of bed in the morning and how that relates to what your business does. Oh, and let me give you a hint: your passion for making money won’t do as the answer to this question (sorry!).
I promise, if your passion and your business purpose coincide, you will find it so much easier to take the next steps to building a Fun Business that sustains you for years to come.
Remember, it’s not what you sell, it’s what you stand for.
3: Profit: A Fun Business Makes Sustainable Profits from That ‘Something’
Question 3: How can we create a long-term sustainable economic model around the answers that we gave to questions one and two?
This question is actually more complicated than it seems, and most businesses never really sit down to work it out properly.
Firstly, just because we are passionate about something and we are the best in the world at delivering that something doesn’t guarantee we can build a business out of it: Is there enough of a market to win consistent work in your area? Do you need to expand into other complementary services or build a flexible team that can manage peaks and troughs in demand?
Secondly, a business must make money to survive. How much money the business needs to make is a complex question to answer. Your business will likely need to provide for your financial needs, and it will also need to make enough profit to provide a return on investment to the shareholders or investors (even if that’s just you and your financial input). A business also needs funds to grow – actual cash that you can use to pay your bills. Businesses in a growth phase will be particularly thirsty for cash and the best way to quench it is by having profits.
Thirdly, it’s important to think about your business’ ability to generate steady long-term profit and cash flow. In other words, if you don’t think about the sustainability of your business model, you might end up with a flash in the pan. A good rule of thumb is to ensure that your business is not reliant on one customer for more than 10% of its revenue.
Finally, the last reason why a business must make profit: Making money is a lot of fun. It is simply a heap of fun to make money and to see the balance sheet grow!
Remember, a business that doesn’t generate profits and cash is a hobby.
Your Homework (The Fun Kind)
If you make sustainable profits from doing something you are passionate about and committed to being the best in the world at, all the steps towards building a Fun Business will fall into place – I promise. And the way I see it, if you are not in business to have a lot of fun then I suggest you find an easier way to make a living!
Still eager to stick with this messy-and-tricky-yet-incredibly-fun entrepreneurial stuff? Ask yourself the following question today:
- What first steps can I take in the next few weeks to focus my business on the three Hedgehog Questions?
- How to have more Fun in business
- The four steps to Fun in business
- Business Mastermind observations: How passion and purpose hang together
- Making money from Death and hamburgers
- The Big Question of Small Business
- Knowing how and when to say NO
- Great TED talk by Simon Sinek about the bigger Why?
- John Mackey, founder of Wholefoods Markets talking about the Purpose of business