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Computer Times
Less than 30 percent of businesses last more than 10 years, and most failures happen within the first few years of operation. Some key reasons for early failure include an ill-conceived business idea, poor planning, lack of capital, and ineffective leadership, to name a few. To help you keep YOUR business alive for well past the 10-year point, it is important to understand some key facts of business life. The Facts of Business Life, a new book by Bill McBean, the author of this article, makes it clear when each fact should be implemented and how each fact should be implemented on each level. While there are no guarantees for entrepreneurs, applying the facts of business life can tilt the odds in your favor.” Fact 1: If you don’t lead, no one will follow. At first, this statement seems mind-numbingly obvious. But often, “leadership” is one of those words that is thrown around by people who haven’t given much thought to what it looks like in action. Good business leadership begins with defining the destination and direction of your company and deciding how the business should look and operate when it arrives. Also, it involves developing and continuously improving on a set of skills in order to move your business from where it is today to where you want it to be tomorrow. What’s important to understand is without effective leadership your managers or employees have no idea what is important to the owner, what to manage, or what success and failure look like. In other words, in order to have effective employees, your business first has to have effective leadership, which has to include defining success and failure based on the eventual destination. Another important aspect of being a good leader is developing a company culture that’s expectations-based, and reward those who meet and exceed those expectations. The good news about leadership is that the most important aspects can be learned, and it’s essential that owners do so.” Fact 2: If you don’t control it, you don’t own it. Control is the owner’s management reality. If you don’t control your company by defining key tasks and dictating how they must be handled, and inspect what you expect, then you don’t truly “own” the business because all you are is a spectator watching others play with your money. There are two overriding or macro concepts successful owners understand over their unsuccessful competitors. First, great procedures and processes need controls and these, in turn, help to create great employees. This happens because procedures and processes operate the business, and employees operate the processes. This is one of those business basics that owners must understand to be successful. Second, they must also understand that they need to clearly state and emphasize that there will be consequences when standard operating procedures and processes aren’t followed. Fact 3: Protecting your company’s assets should be your first priority. Your company's assets include both tangible and intangible assets, both of which power sales, profits, and growth. Usually, owners understand the need for insurance on assets like their buildings and equipment. In fact, bankers insist on insuring specific assets they lend money on like facilities, equipment, and sometimes even insurance on an owner’s life. However, successful owners don’t stop at protecting obvious assets. They understand the importance of every asset, because assets represent invested cash, which should be managed to produce exceptional and maximized profits. Fact 4: Planning is about preparing for the future, not predicting it. Nobody knows what tomorrow, next week, or next year will bring for your business. But you can make educated guesses based on the most current, accurate information available as well as your own past experiences, and this should be an ongoing process. Effective planning is a mix of science (gathering pertinent information) and art (taking that information and turning it into a plan that will move your business from “here” to “there” over a specific time period). Being able to plan better than your competitors can give you a significant competitive edge in the market. Ford Motor Company is a great example. In 2008 and 2009, its competitors, GM and Chrysler, ran out of cash and needed taxpayer bailouts to avoid bankruptcy. But not Ford. Years prior to the credit crunch, Ford began to restructure its debt and raised billions as it continually added to cash reserves. Was this luck or good planning? Industry insiders will say good planning. The point is Ford knew, as you should, that planning is important because it focuses owners on what’s important and it prepares them for what lies ahead.” Fact 5: If you don’t market your business, you won’t have one. The bottom line is, if people don’t know about your product, you won’t be successful. You have to make the necessary effort to connect consumers to your company. And when you do, you’ll begin to see marketing as the investment it actually is, rather than the expense that less successful competitors think it is.” Fact 6: The marketplace is a war zone. Every company has competitors, either fully operational or entering the market to capitalize on your success. Not only do you have to fight to win market share, you need to retain it as well. Thus, you must develop a warrior mentality and maintain it for as long as you’re at the head of your business. You need to continually focus on the market, react to it, and fight for what you believe should be yours. If you don’t, your competition will win the war. The point being, great marketing has to be followed up by having your company ‘on its game’ in order to capture every customer your marketing attracts.” Fact 7: You don’t just have to know the business you’re in; you have to know business. Yes, of course, you need to know the inner workings and nuances of your particular industry if you want to be successful. But, you also need to understand the various aspects of business as it is more broadly defined, such as accounting, finance, business law, personnel issues, and more, and how all of these impact each other and the decisions you make. At the end of the day, what is most important is not how much you know, but what you do with that knowledge. For example, it’s important to know what’s going on in your market, but it is just as important to know what to do with that information and how you can translate it into more sales and profits. About the Author: Bill McBean is the author of The Facts of Business Life: What Every Successful Business Owner Knows That You Don’t (Wiley, October 2012, ISBN: 978-1-1180949-6-9, $24.95, www.FactsOfBusinessLife.com). A graduate of the University of Saskatchewan in Saskatoon, and Mount Royal College in Calgary, Alberta, Bill began his career with General Motors of Canada Limited in 1976, moved on to Bank of Nova Scotia (ScotiaBank) as manager of a sizeable commercial lending portfolio in 1981, and three years later opened a new GM automobile dealership in Yorkton, Saskatchewan, his first business as a “start-up,” beginning with ten employees. This first venture became one of the most profitable GM dealerships in the region. Then, in 1992, he partnered with a friend to purchase an underperforming automotive dealership in Corpus Christi, Texas, in 1992, increasing revenue fivefold, and raising the employee count from 70 to almost 300. His company’s financial success became well-known in the industry and in 2003 it was purchased by AutoNation, the world’s largest automotive retailer. Outside the automotive industry Bill started several successful businesses and became a general partner of McBean Partners, a family-owned investment company. He is also partner and chairman of Our-Mentors, a company that works with owners to improve their businesses for long-term success, and Net Claims Now, which provides companies in the restoration industry with invoicing, accounts receivable collections, cash flow services, business coaching, and business lead generation services.
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