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.
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.
Saying NO is hard, much harder than saying YES, but it’s a skill you can learn and get good at. (more about saying No here)
The Big Question of Small Business
Learning to say NO starts with becoming absolutely clear on the Big Question of Small Business:
Why does your business exist, what’s it on this earth for and Why would anybody care?
If you struggle to answer that question, clearly, in LESS than 20 words, there’s a good chance your business will get stuck.
Here’s a few beautiful examples of answers to that question:
From Disney: Create Happiness
From BMW: Create the Ultimate Joy of Driving
From an electrician, I worked with: You’re in Safe Hands
From a Retail fitout company, I worked with: More Bang, Less buck
From an Architect, I worked with: Architecture that Inspires.
Answer the Big Question of Small Business with complete clarity, and you won’t get stuck in your business… I promise you
How to grow your business is the most enduring of The 7 Big Questions. All of us business owners have felt frustrated at some stage in our journey to building a Beautiful Business The business feels stuck at one level and we are not sure how to get it to the next level.
So many misunderstandings and myths about business growth:
I have written about the general topic of business growth in many different places. I think there are a number of misunderstandings about business growth that are not helping us, as business owners, to feel better about ourselves. The first article is about that (and you can also read about the misunderstandings about growth in my book: The Ten Truths for Making Business Fun):
I believe that 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 be able to tell, and then all it comes down to is price. Competing on price is a dog’s game, unless you’re Aldi, where price is your Purpose. The second reason you need to be able to answer the question clearly is that if you can’t, you will never master the greatest skill of effective business owners, namely the ability to say “NO”.
We’ve all heard that to grow your business you must start with Goal setting. But effective Goal setting is more complicated than you might think. Most Goals we set for ourselves and for our businesses are at best ineffective and at worst actually hinder our progress. Goals are often arbitrary, unrealistic, and unrelated to what really matters in our lives. A Goal to make $2 million revenue is an arbitrary and meaningless number, why $2 million? why not $1,956,384.13, or $2,163,927.46 for example? And so what when you reach the goal? Will you be better off somehow? What if you fall short? By $100, or by $1,000, or by $100,000? Does that mean you are a failure? Goal setting really makes a difference, as long as 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
And it is. To grow your business you have to look at every aspect of your business. Marketing is about advertising campaigns, and social media and designing your logo and your website, but it’s also about how you answer the telephone, about your pricing policies, about ensuring that your customers are happy with what you sell them. It’s about how you dress and about how you present your quotes and about your Public Relations strategies and about your warranty return policies. One of the greatest marketing strategies is a relentless focus on quality in everything the business does, in order to “Create Raving Fans”, because if your customers are all Raving Fans, they will actually do your marketing for you.
I don’t mean to imply that online marketing is somehow something different from all other forms of marketing, it isn’t. But it is useful to pay special attention to online engagement and marketing to build and grow your business, because it has become such an important aspect of any marketing strategy. Whether your business is a cafe or a building company or a law practice, or it imports widgets or makes whatsits, you can not ignore a bunch of different forms of online marketing. Email marketing, content marketing, Search Engine Optimisation, Search Engine Marketing, Social Media Engagement, Social Media Marketing, online PR, online reputation management (The ubiquitous star ratings), video marketing. The list is near endless and constantly changing.
You could easily argue (and I have in one of the articles I refer to below), that the principles of marketing haven’t changed, we’ve just got a bunch of new tools to do it with. And at one level that’s true, people still want to get to know, like and trust you before they will do business with you. But 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 they want to know you’ve got a high functioning web presence and that you’ve got a presence on Facebook and on Google local and ideally a bunch of 5 start ratings on Yelp and Trip Adviser. Whether or not you have a bricks and mortar presence, simply doesn’t matter anymore. Online engagement in all forms must be part of your marketing strategies or you will not be taken seriously.
That’s a quote I saw hanging on the wall at a big office once, many years ago. And it’s true. No business growth, no 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 conditions are, if you’re not selling, the business will cease to exist.
Sales is often seen as a subset of marketing, but I’m giving it it’s own section here, because I think of marketing as getting the customers to your door and sales as actually getting them to hand over money. Lead generation v lead conversion. Sales is about skill and it’s about mindset and systems and above all, it’s about making it easy for people. And this last word is the key to the whole shebang. It’s always about people. The old saying is:
People do business with people they know like and trust
You must always remember it’s about people first and foremost and in small business especially it’s about people in both directions: People do business with people. Your whole approach to sales, especially in small business, all aspects of it 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:
1) 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 and form part of the documentation to obtain a loan or other form of funding or make a proposal to a third party of some sort.
Internal Plans are documents designed to help the business focus. They are combined with meaningful goals (see above) and they help people in their day to day decision making processes. Internal and external plans have different functions and are presented quite differently as well.
2) 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 said: Life’s what happens when we’re making other plans. Planning is like that, we make a bunch of assumptions and plan our actions accordingly. Then we go ahead and check reality as it unfolds and make changes to our plans to suit the new realities, every day, every week, every month and every year. Business Plans that work, that make a difference, are living documents.
Customer service is also a subset of marketing of course, if done well it leads to more business from those customers, and as I said above, everything is marketing and marketing is everything, but it’s worth mentioning separately, because of the concept of Raving Fans. Ken Blanchard wrote a little book that said it best in the title: Create Raving Fans and have your customers do your marketing for you. It’s a great little book and there’s a link below to get yourself a copy of it.
The principle of Ken Blanchard’s book is that your business should always be working to do one better for your customers than they expect. If you do so, your customers will become your advocates (Raving Fans) and advocates will go out of their way to help your business grow. They will talk to their friends about you, they will drag their colleagues to your door. They will defend your business against the competition and best of all, they won’t quibble about price. If your business focuses on turning it’s customers into Raving Fans, you will be able to slash your marketing budget in half, over time, for a better result.
Grow your business with systems and quality improvement
My clients often ask me to help them grow their business, and I often tell them to stop worrying about that. Getting more customers is actually the easy part. The hard part of business is:
To deliver 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, the customers will come flocking to your door and you won’t have to spend much money on marketing (for one thing because you’ll be creating Raving Fans, see the previous topic). And right now, you may well be doing all those things, with a smile, but the trick is to be able to keep doing that as the business starts to grow.
I can’t tell you how many businesses I have seen struggle and fail in my years in business who couldn’t maintain their product or service quality and dependability and price, at scale. Once the business starts to grow and you, yourself, are no longer in charge of every step in the process, things start going wrong. Quality becomes inconsistent, delivery times become unreliable, prices go up or profitability suffers and your smile starts to disappear. Once the rot sets in like that, your reputation starts to suffer and customers start to look elsewhere.
There are only two answers to this dilemma: Either, don’t grow, stay small, learn to say NO and say it all the time… Or systematise. Developing systems for all aspects of the operation is the only answer. Systems for how the phone is answered, systems for estimating, systems for quality checking, systems for calendar management, systems for inventory management, systems for callbacks and warranty repairs. Systems for marketing, systems for hiring and firing etc etc. Above all, systems allow you to create Continuous Improvement Loops into your organisation. And continuous improvement is the Holy Grail of business. It’s what made companies like Toyota great.
Inventory management is a big specialised topic, and 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 Great business that Stands the Test of Time. My earliest lessons of inventory management came from the owner of a big hardware store I dealt with a lot in my days as a builder, Colin. 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 asked Colin once if keeping such high stock levels of everything a builder such as myself 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 and 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 in the years since, 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, to minimise shelf apace and inventory cost.
I don’t know what the answer is, but I 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 be picked up.
Grow your business with hiring, firing and engaging people
Michael Gerber in his famous book “The E-Myth” wrote that it’s impossible to manage people and hence great businesses focus on systems, and manage those instead. And that’s certainly what grew McDonalds into the enormous business it is today, no argument. 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. But, I can’t tell you how happy I am that not everyone in the restaurant industry wants to build McDonalds, because the world (and my palate) would be the poorer. The same 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 in the right direction and also know which people to get off the bus. 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 hiring policies, being prepared to hire people who might be better than you are at certain things, learning how to do great interviews, implementing induction and development training programs. It means learning how to coach your people, encourage them and hold them accountable. And it means learning about effective delegating. It means doing the HR admin and compliance effectively, writing job descriptions and doing performance reviews. It means learning what it takes to be a leader and it means being prepared to take the tough decisions when required, and take them quickly and respectfully.
To build and grow a Great business that Stands the Test of Time, you can’t afford to be left behind. The pace of change and innovation is relentless and what was ok even a few years ago is no longer ok now. Not long ago it was still fine for a cafe to have a sign saying “cash only”, but in 2018, you’ll lose a lot of business if you don’t accept cards in payment. Even in a business as simple as mine, people expect me to be able to accept online bookings. Cloud computing combined with smart phone technology and advanced GPS systems mean that customers now expect to be informed that their plumber is on its way and can be expected to pull up in front of their house in 13 minutes.
You don’t need to be Uber or AirBandB to implement new technology and come up with new ways of doing business. I just 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 a foot in the house or the state.
A client of mine with a creative marketing agency has a team of designers and 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 allow him to see what’s going on in any part of any store and to get live access to each of the store’s Point of Sale systems. He’s also just implement a bunch of tablet screens in his stores allowing 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 in doctor’s surgeries and lawyer’s offices, and copywriting agencies. If you think that technology and innovation isn’t going to have a massive impact on the way you do business and how to 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.