What’s the most important skill of a business owner?
This is the fourth post in the series of The Ten Priorities: Laying the Foundations for a Great Business and Life. The fourth Priority is about learning to say No. The introduction to this series on The Ten Priorities is here.
As seen on Kochie’s Business Builders
What do you think is the most important skill for business owners to master?
You’re probably thinking, financial management, or delegating, or sales or something like that.
Important skills, obviously, but the answer I’m looking for is this:
Knowing how and when to say NO, clearly and respectfully.
As I’ve talked about in the introduction to the Ten Priorities, the life of a business owner is one where there is never enough time in a day. And so, you have to decide, every day, what to say NO to and what to say Yes to.
Growth is the most enduring topic of the 7 big questions of small business. There are literally thousands of business growth strategies bandied about by business experts and gurus. Every business owner that ever was has felt frustrated and stuck at some stage while wondering how they can grow their business to the next level. Which are the growth strategies that are going to work for your business?
This page lays out the 11 most important strategies to grow your business to where you want it to be. All of the 11 growth strategies are solid and proven, it’s up to you to mix and match. It’s a bit like baking a cake. Most cakes have eggs, flour and sugar in them, but you can’t make a cake just with flour or with nothing but eggs, you need a mixture of ingredients. So it is with building and growing your business. You may not need all the 11 business growth strategies, but you certainly need a mixture of them.
So … Get yourself to the kitchen and bake something beautiful.
Everybody’s favourite business guru, Seth Godin, once summed up the solution perfectly:
“To build and grow a great business, you really only have to do two things:
If you want to grow a beautiful business that stands the test of time, you must be able to answer the question: Why does your business exist and why would anybody care?
Most business owners can’t answer that question succinctly and powerfully. That’s bad because:
If you don’t know why your business exists, your customers certainly won’t either and that makes price the only differentiator. Competing on price is a dog’s game (unless you’re Aldi, where price is your purpose).
If you don’t know where to focus your energy, you will never master the greatest skill of effective business owners: the ability to say “NO”.
We’ve all heard that the first step towards business growth is goal setting. However, effective goal setting is more complicated than you might initially think.
Most of the goals we set for ourselves are ineffective at best, and at worst, actually hinder our progress. They’re often arbitrary, unrealistic and unrelated to what truly matters in our lives.
For instance, a goal to make $2 million revenue is meaningless. Why $2 million? Why not $1,956,384.13? And what happens when you reach that goal? Will you be better off somehow? What if you fall short by $100 or even $100,000? Does that mean you are a failure? Goal setting only makes a difference if you understand that goals are like a compass; they provide a direction on your journey, they are not the destination.
Marketing is about creating opportunities to sell your stuff. As such, I fervently believe that:
“Marketing is everything and everything is marketing.”
That’s why, if you want to grow your business, you must analyse every aspect of your business.
Yes, marketing is about branding, advertising campaigns, social media and your website, but it’s also about how you answer the phone, your pricing policies and ensuring your customers are happy with what you sell them. It’s about how you dress, how you present your quotes, your PR strategies and your warranty return policies.
In fact, one of the most powerful marketing strategies is maintaining a relentless focus on quality in everything the business does in order to create “raving fans”. Why? Because if your customers are all raving fans, they will do your marketing for you.
I don’t mean to imply that digital marketing is something wildly different from all other forms of marketing. However, it is useful to pay special attention to the online space because it has become such a critical component of any growth-driving marketing strategy.
Whether your business serves food, builds houses, crunches numbers, imports widgets or makes whatsits, you can’t ignore digital marketing activities, like email marketing, content marketing, social media and influencer/affiliate marketing, search engine optimisation (SEO), pay-per-click advertising (PPC) and online PR. The list is almost endless and constantly changing with emerging technology, such as artificial intelligence, voice search, chatbots, virtual reality, drones, and progressive web apps.
You could easily argue that the core principles of marketing haven’t changed, we’ve simply got a bunch of new tools to use. At one level that’s true because people still want to get to know, like and trust you before they will do business with you. However, on another level, things have changed drastically.
Ten years ago, you’d give someone a business card with your web address on it and they would immediately want to know if you also had a bricks and mortar store. These days, people want to know you’ve got a high-functioning, active web presence, including a Facebook and Instagram page, a Google My Business listing and ideally, a bunch of 5-star ratings on all the major review platforms.
The reality is, often your physical presence doesn’t even matter anymore. If you want to be taken seriously today, online engagement across all mediums and channels must be at the heart of your marketing strategy.
That’s a quote I once saw hanging on the wall at a big office. And it’s true. You won’t achieve any business growth (or even have a business!) without sales. No matter how great your product is, how beautiful your logo is, how smart your website is or how wonderful your employee culture is – if you’re not selling, your business will cease to exist. Simple.
Sales is often seen as a subset of marketing, but I’m giving it a solo section because I think of marketing as getting the customers to your door and sales as getting them to hand over the money. Lead generation vs lead conversion.
Sales is about skill, mindset and systems, but above all, it’s about making things easy for people. And that last word is the key to the whole shebang: it’s always about people. The old saying goes:
“People do business with people they know, like and trust.”
It’s especially important to remember this in small business because people do business with people. Your entire approach to sales must be built on a people-to-people philosophy.
“A business without a plan achieves everything in it.”
Nothing in other words.
Your business growth depends on planning. No human endeavour ever amounted to anything without a plan. Yet planning is guessing. It can never be anything more than guessing, because we can not know the future. So if planning is guessing, why does it matter so much and how can we do it so it works? There are two important answers to those questions:
You must understand that there are two entirely different types of business plans: internal plans and external plans.External plans are designed to impress others about your business. They form part of the documentation to obtain a loan (or other type of funding) or make a proposal to a third party. Internal Plans are designed to help the business focus. They are drawn up using meaningful goals (see above), and they help people with their day-to-day decision-making processes.
Planning is a verb. It’s not static, it’s an activity that never stops. As soon as one plan is created, we start again.John Lennon once said, “Life’s what happens when we’re making other plans,”. Planning is like that. We make a bunch of assumptions and map our actions accordingly. Next, we check reality as it unfolds and make changes to suit those new realities – every day, every week, every month and every year.
The bottom line? Business plans that truly work and make a difference are living documents.
Customer service is also a subset of marketing, and if done well, it leads to more business from those customers (plus, as I said above, everything is marketing and marketing is everything). However, it’s worth mentioning separately because of the concept of “raving fans”.
Ken Blanchard wrote a little book called “Ravings Fans” that talks about how your business should always be working to do one better for your customers than they expect. If you do so successfully, your customers will become advocates that go out of their way to help your business grow. They will talk to their friends about you, drag their colleagues to your door, defend your business against the competition and best of all, they won’t quibble about the price. If you focus on turning your customers into raving fans, you will ultimately be able to slash your marketing budget in half and achieve a long-lasting competitive edge.
8. Grow your business with systems and quality improvement:
My clients often ask me to help grow their business and I often tell them to stop worrying about that. Getting more customers is the easy part. The hard bit about business is delivering what you say you will by the time you say you will for the price you say you will at the quality you say you will… with a smile!
If you can do that all the time, even as your business grows, then customers will come flocking to your door and you won’t need to spend much money on marketing (largely because you’ll be creating raving fans !).
I can’t tell you how many businesses I have seen struggle and fail because they couldn’t maintain their product/service quality, dependability and price once they scaled.
When your business starts to grow and you are no longer in charge of every step in the process, things often start going wrong. Quality becomes inconsistent, delivery times become unreliable, prices go up or profitability suffers – and your smile disappears. Once the rot sets in like that, your reputation nosedives and customers begin to look elsewhere.
There are only two answers to this dilemma:
Stay small: Don’t grow and learn to say “NO” often.
Systematise: Develop systems for all aspects of your operation, including estimating, quality checking, calendar management, inventory management, callbacks, warranty repair, marketing, hiring, firing and even how the phone is answered. Systems allow you to create continuous improvement loops in your organisation (and that’s the Holy Grail of business. It’s what made companies like Toyota great).
Inventory management is a big, specialised topic. It’s really a subset of the systems section above. There are whole management libraries written about the various philosophical approaches to managing stock when building and growing a beautiful business that stands the test of time.
My earliest inventory management lessons came from Colin, the owner of a large hardware store who I dealt with a lot during my days as a builder. One of the reasons I bought so much of my material from Colin was that he always had everything in stock. Colin clearly knew what it took to create business growth because his business was booming.
I once asked Colin if keeping such high stock levels of everything that a builder might need from time to time was economical for him. I imagined that it was a very expensive way to run a business, having all that money tied up in timber, hardware and bits and bobs. His answer was:
“If I don’t stock it, I can’t sell it.”
I have often thought about that statement, particularly now that most operations run on the principle of “just in time”. Supermarkets have made an art form of stocking just enough and not a jar more than required in order to minimise shelf space and inventory cost.
I don’t know what the answer is, but I do know that Colin got all my business for 20 years and most Sydney builders had an account with him because everything we needed was always ready to collect.
10. Grow your business with hiring, firing and engaging people:
In his famous book “The E-Myth”, Michael Gerber wrote that it is impossible to manage people, so great businesses focus on systems and manage those instead. That’s certainly what grew McDonald’s into the enormous business it is today. And as I’ve written elsewhere before, if you set out to make as much money as possible from selling restaurant food, it is undeniably the case that the McDonald’s model is the one to emulate (that doesn’t mean I like it!). This philosophy can be applied to any industry.
If you’d like to build and grow a unique business, a business with an individual character, you’re going to have to manage people. You’re going to have to get good at putting the right people on the bus, sitting in the right seats, facing the right direction while also knowing which others should get off. If you don’t learn how to find (and keep!) the right people and get them to do great work, your business will always struggle. That means:
Developing strategic hiring policies
Being prepared to employ people who might be better than you at certain things
Learning how to conduct great interviews
Implementing meaningful induction and development training programs
Learning how to coach, encourage and hold your people accountable
Getting better at delegating
Doing HR admin and compliance effectively
Writing job descriptions
Scheduling performance reviews
Learning what it takes to be a leader
Making tough decisions when required (quickly and respectfully)
More about hiring, firing and engaging people here:
If you want to build and grow a beautiful business that stands the test of time, you can’t afford to get left behind. The pace of change and innovation is relentless. What was acceptable even a few years ago is no longer acceptable now.
Not long ago, it was still okay for a cafe to have a sign that said, “cash only”. Today, you’ll lose a lot of business if you don’t accept card payments. Even with a business as simple as mine, people still expect the option to make online bookings. Cloud computing combined with smartphone technology and advanced GPS systems mean that customers now even expect to be informed that their plumber is on the way and will pull up in front of their house in 13 minutes.
You don’t need to be Uber or Airbnb to implement new technology or come up with new ways of doing business. A few years ago, I bought a house in a different state of Australia. The real estate agent gave me a private showing of the house via Skype. I engaged the conveyancer, the building inspector and a surveyor all without setting foot in the house or even the state.
A client of mine with a creative marketing agency has a team of designers, copywriters and marketing assistants all over the world and she rarely even meets her clients face to face. Another client with a small supermarket chain has technology in his stores that allows him to see what’s going on in every area as well as getting live access to each of the store’s point-of-sale (POS) systems. He’s also put a bunch of tablet screens in his stores that allow people to find dinner recipes incorporating the fresh vegetables he has on special.
And all this stuff is only the beginning. It won’t be long before artificial intelligence is integrated into doctor’s surgeries, lawyer’s offices and copywriting agencies. If you think that technology and innovation won’t have a massive impact on the way you do business and how you create business growth, you are kidding yourself.
I’m often asked what the secret of small business is. I was recently asked this question by a new internet support service for micro and home based businesses called Brazzlebox . I told them there’s only one thing to get right and that is be able to answer the Big Question of Small Business, What’s the Purpose of your business?
It’s actually a really interesting question, and one that few business owners stop to think about before they get their business underway. I’ve also written about the Big Question here on Medium.com and in other pages on my website here as well as in this podcast for example. To be honest, I think that most business are started more or less by accident.
Of course there are startup entrepreneurs who plan the development of the next widget, they take a shared office space in some kind of incubator and plan to sell their widget to Facebook for 25 trazillion dollars one day, but I believe that those business owners are in a tiny minority.
The small business owners I meet everywhere (and the ones I support) start their business when an ever increasing level of frustration with their job or career to date simply overflows the bucket and they decide to take control of their life in their own hand.
And when that moment arrives they run around doing the practical logistical things; bank accounts, business names, email addresses, business cards… the basics, but the really important questions are not usually addressed until much later, sometimes never.
The really important questions that we should all attempt to answer right from the word go are the questions about the strategic direction of the business, the Goals (short, medium and long term) and the biggest question of all:
Why does your business exists; What’s it on this earth for, and why would anybody care?
Whenever I am at a networking function talking to business owners I always ask them what is special, or different about their business, why I would want to do business with them and how I could refer business to them. It’s actually surprising how difficult most business owners find it to a give a clear answer to those questions. Mostly people try and tell me that they have a Great product (Our widget comes in 23 different colours) and they give Great customer service (We re smaller than the competition so we care more about our customers) and their prices are Great too (we’re really efficient and run a tight ship and we have few overheads and we’re committed to “adding value”).
These days I have hardened up a bit so I don’t feel the pain so much anymore and mostly I remain polite and nod with interest and make engaged noises, but deep down I think to myself: “Oh Please… not another one!”
Of course you have a great product with a great price and great customer service, “D’OH” as Homer Simpson would say… I don’t think I’ve ever talked to a business owner who told me their product was average, their prices were average and they kind of looked after their customers in an average manner either. The competition has those three covered as well as you do (otherwise they wouldn’t be your competition in the first place) and your potential customers assume you will deliver them those three as a minimum, otherwise they wouldn’t be talking to you.
You have to find what sets you apart, what makes you different, because if you don’t, your customers only have one way to decide who they’ll use and that is by comparing your price and competing on price is a dog’s game, it might work for Walmart and Ikea but few others.
So… Why does your business exist, what’s it on this earth for, and why would anybody care about that?
I have a client who is an architect, he defined the purpose of his business as “Architecture that Inspires”
I have a client who owns a gym and he defined the purpose of his business as: “To build the finest resistance training community in the world”
I have a client who has a video production business and the Purpose of his business is: “It’s a joy to work with us”
When I meet someone at a networking function and I ask them what’s special about their business and they give me a powerful short statement like that, I sit up and take note and I’ll remember them and I will be able to introduce them to potential clients.
Also when your business rests on such a strong statement, it suddenly makes everything so much easier:
It’s suddenly easy to make decisions about which jobs to bid for and which opportunities to say No to
It’s suddenly clear which employees to hire
It’s suddenly clear what prices you should be charging
Finding the Purpose of your business and being able to express it with complete clarity is absolutely the biggest step you can take to building a sustainable, fun and rewarding business.
Does that mean I’m a fan of McDonalds? No not much, I am an admirer of the model and I make use of McDonalds from time to time, but I’m really really glad there are many other types of restaurants out there, besides McDonalds, even if they don’t make as much money or are as efficient. It would be a poor world if all restaurants were running a business model based on that of McDonalds. But if your aim in life is to make as much money as you possibly can from selling food, you can do a lot worse than read everything you can about the history and business philosphy of Ray Kroc and The Golden Arches.
And the same goes for any other type of business you can think of, from funeral parlors to medical practices and everything in between. Ray Kroc, was a genius, there is no doubt about that and Michael Gerber and many other business gurus since have analysed the McDonalds model and explained how to apply it to every other Small Business out there.
Making money from death
If you own a funeral parlour and you want to absolutelymake more moneythan anyone has ever made from burying people, read “The E-Myth” and apply every word Michael Gerber wrote about the lessons from McDonalds to your business with single minded focus and you’ll never look back … guaranteed.
But if you believe there are other things in life that are important to you besides making money from selling mince meat patties… Read on my friend.
But just like I would be sad (and we would all be very unhealthy) to live in a world where the only restaurants we can eat at are McDonalds, likewise I’d hate to live in a world where all the funeral parlours were run by 18 yr olds who were trained to ask me: “Do you want roses with that?”
The disconnect lies in the misunderstanding most business owners have about the Purpose of Business. Most business owners, business analysts, gurus and advisers will repeat the manta that the purpose of business is to “Maximise Shareholder Value”, to make lots of money in other words.
But if, like me, you believe that making money is a sad and short sighted reason to be in business, all kinds of things become possible instead of McDonalds.
Breaking the law
Don’t get me wrong, a business must make money. There are many things abusiness must do in order to survivehowever. It must operate within the law for example, but we would never maintain that the Mission of our business is to not break the law.
Similarly the notion of making money, the business must make money so that it’s able to do what it is meant to do. In other words, a business that delivers on it’s promise has a reason for existing far beyond “Maximising Shareholder Value”.
In the restaurant industry it may be that the reason for the existence of your business is that you are passionate about unexpected cuisine combinations, French with an Australian twist, for example, or maybe you’re passionate about the sustainability of food, or maybe your passion is about educating disadvantaged youth in the hospitality industry.
There can be many reasons you have started your restaurant. As long as the business makes enough money to be sustainable in the long run, it doesn’t mean you have to turn it into a McDonalds for it to be a great business. Your business is a great business, when it delivers you what you want from it, month in month out, year in year out.
Anchovies and chocolate
So please do yourself (and my stomach) a favour: don’t listen to others’ judgements about your business, and ignore the little voice on your shoulder that tells you to build a McDonalds, because I’d much rather come and eat your pig trotter rolls with anchovy and chocolate sauce than be forced to eat another Big Mac.
Here is the Big question (with a capital “B”) I’d like you to think about:Why does your business exist, what’s it on this earth for, and why would anybody care about that?
Answer that question, decisively, in one bold sentence, and your business and your life will never be the same… I promise you.