The skills that helped you start your own business are not the ones that will make you successful in the long term. Inc. Magazine states that 96% of new businesses fail within the first 10 years.
The great plumber who decided to start his own business – the skilled web designer who felt it was time to work for herself – the smart accountant who decided to open an accounting firm. Only about 4% of those who attempt the dream of business ownership succeed. This article describes seven characteristics of those who do.
Only the paranoid survive
Some business owners achieve quick success. Often, success breeds confidence and confidence turns into complacency. The minute you think you’ve made it, is the first minute your company is at risk.
Controlled paranoia is a good thing. Too much of it and it polarizes you. Too little of it and you begin to fade into mediocrity. If you’re always worried you won’t survive the next year, and that anxiety drives you to strengthen your processes, improve your customer experience, increase the value you bring to your target market, and other positive behaviors, you’ll likely be included in that 4% who make it past the 10-year mark.
There’s no “I” in team
You’ve heard it before and it’s just as true in business as in sports. Humility, kindness, generosity and empathy for others are traits critical to survive in small business leadership. It’s not about you. It’s about the people who will help you get there. If you’re focused on your own success and development, while ignoring the personal and professional needs of your team, your time as a business owner has an expiration date that will likely come more quickly than planned.
If you can align the personal and professional desires of your people with the goals of the company, you’ll be part of the 4% that make it past the 10-year mark. Best of all, you’ll actually be changing the lives of those around you – for the better.
You miss 100% of the shots you don’t take
If you want to grow a successful small business, you better be willing to put your life on the line – I really mean your money on the line. Money to business is like blood to your body. To survive and sustain, you must have it.
In my corporate days when making a pitch to get money to fund a project, I’d say “you have to spend money to make money”. In small business, now it’s your money. If you’re unwilling to invest in equipment to improve your service, or invest in people to improve the value you bring to your customers, you will fail at business ownership. If you’re always waiting for the revenue to fund resources, you won’t grow your business. You must be willing to “step across the line” and take some risks.
Stay true to yourself - and to your team
You had an idea about how to do something better. You just got fired and had to figure out how to survive. You had a special skill that brought value to the marketplace. Whatever the reason you got into business for yourself, stay true to your business and your people.
Decide who you are as a company – what you stand for – what you value the most – what you’re best at. Stay true to those tenets. In small business, there are temptations to seek the next “shiny object”, to veer off into another line of business, to fade from the core principles of who you are.
Whatever you do, stay true to your core business. As a former Circuit City executive, I saw how the creation of Carmax sucked attention and talent away from the core Circuit City business, and contributed to its ultimate demise. Carmax is a great firm, but so was Circuit City.
Don’t ignore opportunities to pursue another business along with your core business, but be cautious not to weaken foundational pillars of your core business. Also, don’t try to be everything to everybody, because when you do, you become nothing to nobody.
Four Disciplines of Execution
Jim Collins in his famous book “Good to Great” described a “culture of discipline” as one of the core attributes of those companies that became great. Discipline is the act of following a defined process on a consistent basis to achieve desired results.
But first you have to have a process to follow. Define your objectives and the core processes to achieve them, and then institute a series of steps to ensure consistent execution of those processes.
Sean Covey authored a book called “The 4 Disciplines of Execution” and the principles of this book have become a foundational element of how we lead my company. It has transformed our organization and lead to remarkable revenue gains and significant improvements in customer experience.
Identify the few processes that deliver value to your customers and achieve the most important goals of your firm, and drive a culture of discipline around those processes with your entire team.
Great players go where the puck will be
By most accounts, Wayne Gretzky is the greatest hockey player ever. His famous quote, “Good players go where the puck is, great players go where the puck will be”, is one that applies to small business as well.
There’s no lack of competition in most sectors and customers are always seeking more value. This requires small businesses to constantly evolve and transform themselves into what customers will value in the future.
Many small businesses struggle with figuring out what’s next and how to continue to improve. They focus on getting better at what they do but fail to look at the horizon about what’s necessary to compete effectively into the future.
There are two strategies for small businesses to understand how they must evolve. First, attend industry trade shows and events, and read articles from leaders in your industry. Getting exposure outside your limited sphere of knowledge will broaden your perspective and ignite ideas. Second, talk to your customers. Ultimately your customers will determine what is important, and serving their needs is the single most important thing a small business can do to thrive.
Inspired people, inspire people
In my corporate days the concept of recruiting, developing and retaining people was as much a cliché as it was a principle. In small business, it’s not a cliché or a principle – it’s a requirement. When you boil it all down, the only competitive advantage any company has is its people.
Hire slow – fire fast. That’s easier said than done in small business when cash flow is a challenge and customers are demanding service. Nevertheless, develop and invest in a disciplined recruiting and hiring process that gets you quality candidates and enables you to evaluate thoroughly.
You can hire great people, but if you can’t retain them, your company will be a revolving door for talent. Recent surveys that ask what employees want reveal “respectful treatment” as the most important. After that, it’s “trust in management”. Only after those two do you hear about compensation and benefits.
Since respect, trust and competitive compensation are “table-stakes” to retaining good people, what does it take to retain great people? In my experience, helping employees grow, learn and get them on the path to reaching their potential are the most important things a small business leader can do to retain people and change their lives for the better.
Developing people takes a lot of work. The first part is understanding how you can help them grow and what they want to become in life. Their work experience should provide growth opportunities and help them develop skills that are aligned with what they want to become. A personal development plan that is tracked and re-visited on a regular basis is critical to creating an environment for personal growth.
If you want to create a sustainable small business, the skills that got you into business ownership in the first place may not support your long term success. Don’t be self-centered in your leadership and focus on the growth of your people. Remain paranoid and be willing to take risks, putting your money where your mouth is. Protect your core business and don’t follow all the shiny objects. Create an environment of disciplined execution and constantly evolve to serve your target market better. Do these things and you’ll likely be the exception – one of those 4% of businesses that survive more than 10 years.