It should not be a surprise to anyone that the entrepreneurial spirit is what drives America. According to statistics from the U.S. Small Business Administration and the U.S. Department of Labor, small businesses and start-ups are responsible for creating two out of every three new jobs in the country. And more than half of all working Americans own or work for a small business.
However, it is also true that statistically, only half of all new establishments survive five years or more and about one-third survive 10 years or more. If you already have a business or thinking about having a business, you shouldn’t let that discourage you. As successful entrepreneurs and business advisors, we have worked with business people in all walks of professional life, teaching them how to practically achieve success and conduct business using timeless principles. And we have discovered that there are essentially six vitally important steps a businessperson should focus on to ensure that they will have a successful business. Here’s a look at what those steps entail:
- PURPOSE: Many businesses have trouble surviving because the essential focus is on “what” is the product or service that is being provided, and in some instances the “way” it is done. Yet, the true focus should be on “why” you are in business. I’m sure many people are saying “to make money,” and that is true. But in reality, that should be the result from being in business. But what is the true cause for the business being started? Why does the business exist? Why should you or anyone else care? Knowing the purpose addresses “why” the business exists, which now can be used externally to promote and develop employees, peers, suppliers, customers, and (yes even) family members. Peter Drucker, management consultant, educator, and author, said it best… “your business is to develop people.”
- HUMAN RESOURCES: Selecting the right people to work with is critical for a business. Many companies have failed due to having the wrong people in the wrong positions, or because they hire people that compromise the integrity of the company. When a company takes on personnel that are dishonest, lack knowledge and/or skill, are lazy, disobedient or agitators, it compromises the company’s image and causes strife amongst the work staff. However, when a company looks to hire personnel that are honest, knowledgeable, people friendly, and have a willingness to not only be taught but to teach others; it creates a ‘win-win’ situation for the company and all those associated with it.
- FINANCE: Starting and growing a business is never easy (if it was, then everyone would do it)! And yet, many people attempt to go into business without being prepared; thus making the actual business seem more like a ‘hobby’ then an actual business. As we have often said to others…”if the business is treated like a hobby, SHUT IT DOWN because it’s too expensive! In many instances, businesses have been started by taking on debt. In doing so, this now places the company and its owners in financial bondage. Long term debt and surety can hemorrhage a company’s profits and stunt corporate growth. Now, some are asking, “Is it ok to borrow money to start my business? The answer is this… while it certainly is not prohibited, it is certainly discouraged. If you must borrow money, do everything possible to pay it back promptly and in full. The goal should be to become debt-free as fast as possible. Remember, the goal in business is to make money…not lose it!
- BUSINESS RELATIONSHIP & INTEGRITY: It’s amazing how many businesses attempt to establish partnerships with companies that lack the same vision, mission or integrity. We’ve often said that two of the most important assets any company owns are its name and image. When a company establishes a relationship with another company, it is critical that there is an understanding of the purpose of the relationship; that the goals are the same; that expectations are set, and that everything is placed in writing. Companies have been literally destroyed because the ‘partnership’ that was established had compromised their integrity. Take the example of Arthur Andersen LLP – formerly one of the “Big Five” accounting firms in the United States. Its founder was a zealous supporter of high standards in the accounting A stickler for honesty, he argued that an accountants’ responsibility was to investors, not their clients’ management. But after Mr. Andersen’s death in 1947 and with the company’s clients desire to maximize profits, Arthur Andersen’s performance and alleged complicity as an auditor little by little started to unravel, eventually coming under intense scrutiny when it compromised its integrity in using inappropriate auditing practices to protect a major client Enron (FYI… a year later, they had to withdraw their audit opinion for WorldCom). In an instant, the 89 year reputation of Arthur Andersen LLP. Had been destroyed simply by having their reputation compromised by one relationship.
- GIVING: It’s amazing how often this does not happen in business. Yet, if you were to ask many of the top business executives in the world, they would tell you that it is BECAUSE of their giving, their companies are where they are today. When it comes to giving, there are three things that a company and their personnel have to offer:
- Time: While it may not seem like it is valuable, it is a tremendous gift to give to those that do not have it. For example… if five companies each had two people volunteer 8 hours of “sweat equity” for only one day, it would equate to the amount of work one person would do in two weeks! How much value would that bring to a non-profit organization, a child or a family in need?
- Talent: It should never be said that a person is not “gifted” enough to do anything. Everyone has a special gift that can be used for something. Can you cook? Fix a meal for the homeless. Good with tools? Take your talent to a house of worship or help provide restoration in an impoverished community. Have children that are only 5 years old and wants to give? Have them volunteer to do artwork at a senior citizens center. A person’s talent holds tremendous value, and it does not cost much!
- Resources: There are literally thousands of non-profit organizations (and disenfranchised citizens) that are always in need of a business’ money, materials, staff, and other assets in order for them to function effectively and efficiently. Why not attempt to have your business ‘adopt’ an organization that could use the resources you have available? Have the personnel elect an organization they would like to support. Keeping everyone involved in the selection helps to not only encourage giving, but allows others to feel good that they were a part of the process.
- BUSINESS PLANNING: It is often said in business that “when you fail to plan, you plan to fail.” That really does hold true not only in business, but in life as well. A business should be designed to not only fulfill its owner’s needs, but the needs of others as well. A business should always be adding value: value to families; value to communities; value to all those you meet on a daily basis. A significant amount of time should be spent to review “what’s next” for the company. Not only immediate goals should be established, but focus should also be placed on mid and long range goals as well. Questions to address include: Where will we be in the next six months? (Immediate); What is the plan over the next year? (mid-range); In the next five years, we need to be… (long range). Go into the planning stage knowing that it is intended to keep focus on where the company is heading, and why it needs to head there.
Business truly is not for the faint of heart, and is not easy. Many owners are willing to share their own experiences and challenges that they had in the past. But without a doubt; staying focused in applying these six major principles to a business will most certainly almost guarantee the organization, its owners and personnel, a lifetime of success.
If you want to grow in these 6 areas we invite you to join us for a 6 week Online Course focused solely on providing value for you to grow your business the right way. Click HERE to register.
The authors of this post, Warren Winston and Ernest Sessions write on Values-Based Business and work 1-on-1 with Business Leaders across the world.