It is said that the 3 keys to success are location, location, location. That isn’t true. In any business, the 3 most important things are preparation, preparation, and preparation. Finding the right location is part of preparation. Success happens when opportunity and preparation meet. All of us will have opportunities in our lives but if we aren’t prepared then the opportunity is lost.
Jump in the pool
or dip your toe in and test the water? Too many times an entrepreneur gets an idea and goes all in spending large amounts of money on their new business. But, in many cases there are ways to test the idea or as they say “proof of concept”. Look for creative ways you can try out your idea before committing a lot of money to it. Some of the best advice I ever got was from my friend Bob Morine who simply said “try it out and make a little money first. If that works, go a little farther and make a little more money and gradually build up your business.” As Jim Collins says in “Great by Choice”, fire bullets, not cannonballs until you’ve zeroed in on the target and then, and only then, go all in.
Is your business on defense or offense?
You’re on defense if everything stays the same. The defense is a sure way to get passed by the competition. But offense means more marketing, new equipment, etc. which means costs. You have to be in constant improvement mode but going on offense you have to know your numbers, what you can & can’t afford, what the expected return is, etc., or all that new expense can put you out of business. Fail to plan & you plan to fail.
Know Thy Numbers
It is extremely difficult to make a good business decision even if we have perfect information. However, it is impossible to make good decisions with bad information. Make sure that all of your business information systems (customer, manufacturing, financial, etc.) are generating accurate information.
Would you drive your car but not look at the road? Many small business owners do that in terms of their financial information. They just turn things over to their bookkeeper, accountant, or CPA and never look at the reports. No matter who is doing your accounting you still need to review what they are doing and ask questions about things that don’t make sense. You don’t need to be an accountant but you do need to know where to look, what to look for, and what to do with your financial information; and a lot of that is just common sense. You can’t just set it and forget it. That can lead to a car/business crash. You may not like accounting or work with numbers but you are the owner and as such you MUST know every aspect of your business.
We all want to save money both in our business and personal life. One way to do that is Do It Yourself (DIY). But is that always a good idea? Could I do my own electrical, plumbing, car repair, website, signage, home inspection, legal, accounting, landscaping, HR, IT, marketing, countertops, coach my own business, edit my own book, etc. Yes, we may be able to do those things but should we? How good will the work be? What are the risks of doing it poorly? Short term savings – maybe. Long term consequences – probably. Do it right or do it over – probably. Potentially disastrous consequences – fire, leak, employee problems, IT systems crash, IRS issues, lawsuits, poor performance in general, and in all too many cases – bankruptcy. Over 1/2 of small businesses fail in year 1 and 75% are gone in 5 years. Does DIY really save money? As the old Fram oil filter used to say: “pay me now or pay me later”.
Control your calendar. If you don’t the world around you will control it. How? Simple: 1-Make appointments with yourself to work on your business. 2-Work on the most important thing rather than the easiest or most enjoyable task
What You Have To Know To Run A Business
In the book “Shark Tank-Jump Start Your Business” Robert Herjavec is quoted as follows: “Cash is the lifeblood of your business. There are very few things in business that will kill you, but running out of cash is one of those things. you can recover from almost any other mistake, but if you run out of cash you’re dead. you don’t need to be an accountant, but if you don’t know your numbers you can’t run a business. It’s that simple.” Robert Herjavec is one of the sharks on the hit TV show Shark Tank where entrepreneurs pitch billionaires for an investment in their company. Profits, Taxable profits, and Cash Flow are all different things and it is the owner’s responsibility to have at the very least a basic understanding of accounting principles. You don’t have to be an accountant but you do need to know what to look for, where to look, and how to use your financial information.
You don’t have to be smart to run a successful business but you need SMARTS. You’ve all heard about SMART goals (specific, measurable, attainable, relevant, time-bound). But this formula is incomplete. All goals are but a wish unless there is a plan or strategy for achieving the goal. So add the ‘S’, Strategy, and your SMARTS will lead to great success.
Are you a DWIT?
I hope you are a DWIT because DWIT’s are successful people. Successful people Do Whatever It Takes. Being a DWIT doesn’t mean working hard or long hours or being smart. A DWIT does the things that they aren’t comfortable with. They learn to do the things they aren’t good at. It’s not about being an expert in an area outside your core expertise. It is about knowing where to look, what to look for, how to use the tool or information and be able to ask your employees and contractors intelligent questions in order to properly manage your business. DWIT’s may not know marketing but they are willing to learn. DWIT’s may not be comfortable with technology, software and social media but they learn enough to use it and leverage it to reach their goals (people who ignore this area are obsolete). DWIT’s may not like to read but they do it anyway because they know don’t know everything and need a constant inflow of new ideas. DWIT’s may not be good with numbers and accounting but they learn enough to be able to ask questions, monitor progress toward goals and recognize when things don’t look right. Today’s business environment is extremely complicated and full of competition and lots of regulatory requirements. You can’t possibly “know it all” or do it all yourself. You have to rely on and manage employees and contract vendors (including contract employees) but you can’t just turn things over to others and never look at them again. You have to be able to manage all aspects of your business and in order to do that you have to be “conversant” in many different area’s including the ones you don’t like or aren’t good at.
Why spend money you don’t have to?
People & businesses do it all the time. Here are some prime culprits:
1. Late Fees on loans or credit cards: If it only occurs once every couple years you can probably call and get the late fee forgiven. But why incur it in the first place. Simply have your regular monthly payments automatically deducted from your checking account. But what if they take out too much money? Yes, that could happen but I’ve been doing this for 25 years and it hasn’t happened to me yet. Just be sure and reconcile your bank statement each month.
2. Does it make sense? If you are tracking expenses each month you can see if they make sense. I track my water bill at home. When I noticed that the water consumption almost doubled one month I started checking and soon found out there was a leak in the line coming into the house.
What’s In Your Bag
We have each been given a bag of tools,
A formless rock and a book of rules
And each must make, ere life has flown,
A stumbling block or a stepping stone
Learn From Your Mistakes
The past is the past and nothing can change the errant decisions we’ve made or allow us to avoid their consequences. But the wise person is one who learns from those mistakes and determines how to avoid making them in the future.
Customer Conversion Cycle:
How effective are you in converting leads and referrals into customers? If you don’t track it then you won’t know. When someone contacts your business do you ask them how they heard about you? Was it from your website, or a magazine ad, or a radio spot or… If you don’t know how they heard about you then you don’t know how effective your marketing efforts are. Of the inquiries you get, how many do you get to quote on? Of the ones, you quote on how many make a purchase and become a customer?