Only about one of every 10 businesses started will reach a 10th anniversary and most failures happen within the first few years. Lots can go wrong: an ill-conceived business idea, poor planning or execution, bad business model, lack of capital, ineffective leadership, and poor location, among others.
But business owners who succeed know how to avoid the mistakes and pitfalls that trip up other entrepreneurs. They get the foundations right. Bill McBean is one such business owner. He grew a highly successful series of car dealerships in Texas and went on to write about his success in “The Facts of Business Life: What Every Successful Business Owners Knows that You Don’t” (Wiley 2012).
Here are McBean’s seven “tried and true” foundations for building business success:
1) If you don’t lead, no one will follow. Good business leadership begins with defining the goals and direction of your company, and deciding how the business should look and operate. It also requires that you develop and constantly improve the skill sets you need to move your business forward. You must develop a company culture based on expectations and that rewards those who meet and exceed those expectations.
2) If you don’t control it, you don’t own it. If you don’t control your business by defining key tasks and dictating how they must be handled, you don’t truly “own” the business. You’re more like a spectator watching others play with your money. “Great procedures and processes need controls, and these in turn create great employees,” says McBean. This happens because procedures and processes operate the business, and employees operate the processes.
3) Protecting your business assets should be your first priority. Surprisingly to some, sales, profits and growth don’t come first. Assets – which include tangible and intangible assets – are what power sales, profits and growth, so they come first. And successful owners don’t stop at protecting obvious assets (with insurance, for example). They understand the importance of every asset, because those assets represent invested cash which should be managed to produce maximum profits.
4) Planning is about preparing for the future, not predicting it. Effective planning is a mix of science (gather key information, for example) and art – taking that information and turning it into a plan that will move your business forward over a specified period of time. Nobody knows what tomorrow will bring. But you can make educated guesses with the right tools and effort.
5) If you don’t market your business, you won’t have one. Some business owners believe their product or service will speak for itself. Others just aren’t savvy about advertising and marketing. But if people don’t know what you deliver, you can’t succeed. New business owners tend to be especially nervous about spending scarce dollars on advertising. But without marketing, little good can happen. Look at it as an investment, rather than an expense that less successful competitors think it is.
6) The marketplace is a minefield. Every company has competitors, and if you don’t now – and you are successful – you soon will. “To grow and succeed, you have to continually focus on the market, react to it and fight for what you believe should be yours,” says McBean. “If you don’t, your competitor will win the war.” You need to be cionstantly on your game and follow up your marketing efforts by capturing and retaining each customer your efforts attract.
7) You don’t have to know the business you are in – but you have to know business. Sure, you need to know the inner workings of your particular industry. But even more importantly, you need to understand at least something about general business fundamentals such as accounting, finance, business law and personnel, and how these impact each other and the decisions you make. You have to know what’s going on in your market, but it’s just as important to know how to translate that information into more sales and net profits.
Copyright © 2000-2013 BizBest® Media Corp. All Rights Reserved.
About the Author: Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.