In Part 1 I reviewed the top 25 reasons small business fail. But while avoiding failure is obviously important, it won’t guarantee that you will make massive profits and build a business that has value once you decide to sell it.
So what is it that the very best business owners do that makes them successful?
The answer can be found in a paper released by Moya K. Mason earlier this year titled, What Causes Small Businesses to Prosper? (http://www.moyak.com/papers/small-business-success.html). In it, she writes,
“What does matter, it turns out, is having a strong grasp of business basics. Without exception, companies that outperformed their industry peers excelled at what we call the four primary management practices – strategy, execution, culture and structure.”
My own observation of small business owners who prosper agrees with her findings. But communicating to them that they need to increase their strategy, execution, culture and structure usually is met with blank stares or comments like, “No kidding, but how do I start?”
Because of that, I have developed detailed action steps for improving in these four areas. The following are the key areas that every business owner must work on in order to obtain massive profits:
- They must acquire a strong, working knowledge of business basics.
- They must have a strategic profit plan.
- They must build their strategic profit plan around a clear value proposition for the customer.
- They must be committed to marketing and selling their product continuously.
- They must make all decisions and analyze all results based on actual data. Gut reactions are fine for small decisions and when you are a startup company. But the best companies rely on accurate data to make decisions.
- They must concentrate their sales efforts on a particular niche (or niches) rather than trying to be all things to all people.
- They must develop a way to make their product something their customer “must have” rather than something that would be “nice to have”.
- They must continuously turn out innovative products and services rather than reacting to events.
- They must deliver products and services that consistently meet and exceed customers’ expectations.
- They must hold themselves and their people to the expectation of a high level of performance.
- They must empower their employees and managers to make independent decisions and to find ways to improve operations.
- They must make it easy for their employees and customers to work with their organizations.
- They must recruit “superstar” employees. They must hold on to their most talented employees. And they must actively work to develop more “superstars”.
- They must use a mentor or a coach. Being the boss is a lonely job. Don’t try to go it alone.
- They must practice the “Golden Rule” in all of their business and personal dealings.
- They must develop a good accounting system that provides them with strong management reports.
- They must become lifetime learners in their business. It is a serious red flag when I, as their CPA, know more about trends in their industry than they do.
(Be sure to check out part 3 of this series where we outline how you too can build a successful business!)