Have you set the proper foundation for real business success?
Business success is what we all want when we run our own business. But what really is business success? It is sometimes an elusive concept that we can never seem to reach.
I can assume that you are looking for greater success than you are currently achieving, as you wouldn’t be reading this newsletter otherwise. What I would like to do is explain my concept of business success and why I think most business owners struggle to achieve the level of success they really want. Then I will detail how, from my experience and observation, real business success is achieved.
What Is Business Success?
The most obvious fact is that business success means different things to different people. For some it means to build a corporate icon like McDonalds or Microsoft or Dell. You may feel that goal is probably out of your reach, but the guys who started those businesses started from exactly the same place you did, with limited resources and just an idea. So you could probably do it too if you really wanted to.
However, you may be satisfied with a more modest level, with a business that provides you with an income level and the freedom that enables you to have the lifestyle you want.
Many others however, seem to be satisfied with having a business that just survives from month to month and makes enough to pay the monthly bills.
However, the last option doesn’t rate as a success in my books and it shouldn’t in yours either. Anyone who is satisfied with that has just opted for mediocrity.
Let me put it to you this way.
In my opinion, the most basic level of success you can achieve in business is to have a business that runs profitably, provides you with an income that enables you to do what you want in life and allows you the freedom (time) to do what you want whenever you want.
Many people may want to go further.
However, I know that for some, that goal even seems out of reach.
Some people claim to be successful without that.
You may wish to tell me that your business is successful because it provides you with an annual income of a million dollars. My response would be, “That’s great. You have made a good start. But you don’t have a successful business until the business operates independently of you.” What you may have if you are earning a good income in a business you own is actually a vocation. You don’t yet have a successful business.
Now don’t get me wrong. I’m happy for you to be earning a million dollars in your business as long as you understand that there is still some work to do to finish building your business to achieve real success. Unfortunately, many business owners get stuck living in a business that is never fully built. They may make a good income, but they don’t have the benefits of freedom and lifestyle that a successful business provides, if the business is still dependent on them.
If you are in this situation, it may be due to your concept of business success.
I find that most business owners haven’t really defined what business success means for them.
Most business owners I talk to are focused on the problems in their business and try to achieve success by working on improving the problem areas, trying to get their people to perform more effectively or efficiently, or to get more customers, or to achieve higher profit margins. However, when you think about problems all the time, you usually end up with more problems. What you think about is what you get.
The only way to avoid being consumed by the problems your business has (and every business has them), is to have something else to focus on. What you need to focus on is a very clear definition of business success. When you have clearly defined what your business will be like when it is successful, you can focus on doing what has to be done to get it to that level.
Most business owners never achieve the level of business success I am talking about. The reason is they have never clearly defined what that success looks like.
Trying to do a bit better and solve problems without having a clearly defined destination is like wandering around lost in a jungle, just going from one place to the next place that looks a bit better than where you have come from. Your life may get to be a little more pleasant in the new place, but ultimately, you are still lost. But if you have an aim to reach the pinnacle of the mountain that is off in the distance beyond the jungle, you will always make your way towards that pinnacle, even if you have to travel through territory that is worse and more unpleasant than where you have come from. Eventually you will do what has to be done to get to the pinnacle.
Another problem that we face in developing our business success concept is that most business owners tend to think about their business from the perspective of an employee rather than the perspective of an investor.
When we own a business that we also work in, we have both roles. Our problem arises because most of us are not already wealthy when we get into our business. In the normal situation, we see the business as our vehicle to earn our living. Therefore we see ourselves operating as an employee in the business to earn our salary from what we do in the business. However, a wealthy person who invests in a business has a very different perspective.
A wealthy investor sees a business as a vehicle to earn passive income.
The perspective of the wealthy is to view the business as a means to earn a better than average return on investment by way of dividends and to build the equity in the business to achieve a capital gain when the business is sold. If the wealthy investor also chooses to work in the business, their role is often different from the employee owner.
The owner employee tends to work in the business focused on the work of the business, i.e.producing the product or service or selling the product or service. The owner investor on the other hand tends to work on the business, creating systems that improve the business’ ability to generate better profits and capital growth. The owner employee’s business is always dependent on the owner’s input. The owner investor is always free to let the business run by itself. The benefit of their involvement is that they work on increasing the business’ success, while the employee owner is focused on business survival.
How to Achieve Real Business Success
Achieving real business success follows a similar path to that of building an investment property. You need to view the process as a wealthy investor would, not as an owner employee or as an owner builder would view building their own house to live in.
The house building process commences with finding the right location, conducting site tests and developing the plans for the house. A builder could never build your house without a plan documented in black and white (or blue and white if it’s a blueprint, but you know what I mean). Imagine trying to successfully build your house if you try to build the concept you have in your head without actually developing a proper plan before you start. Can you imagine how disastrous that would be?
Unfortunately, many owner employees try to build their business without ever having developed a proper plan and without having done the proper site testing and location evaluation, i.e. environmental analysis and market testing. This should be as hard to believe as it is to believe that you would start building a house without the plans and site testing. After all, your business has the potential to be far more valuable than a house.
Once the plans are completed, taking into account the findings of the site testing, construction can commence. Construction always commences with establishing the foundations. In a business, establishing the foundations is done by establishing marketing systems to ensure there is always a solid foundation of customers to build the business on. Unfortunately, many business owners never develop proper marketing systems. They always struggle to find enough customers to scale successfully, because their marketing is haphazard and reactive.
Once the house foundation is established, the framework and supporting structure and wiring and plumbing systems are built. Because these structures and systems are developed according to plan, they are purposely built for maximum effectiveness and efficiency. In your business, this equates to establishing a sound organisational structure and developing the operating systems and management systems that will support the effective and efficient performance of the business. Unfortunately, in many businesses that are built without proper planning, these systems tend to just evolve. However, there is often little integration between the structure and systems and where the business is going.
Because the systems are just catching up with the growth, the systems are often inadequate to support the business as it grows. This creates huge bottlenecks and limitations. This is like setting up the wiring for a three room house, only to end up having to stretch it to an eight roomed house. You could end up having to use 25 watt light bulbs where you should have 100 watt bulbs, just so you don’t overload the circuits. Or you can never use the dishwater and the heating at the same time, because it will always blow the fuse.
Your house is so under powered that it creates frustration and difficulty for the inhabitants. Imagine how the inhabitants of your business (the employees) feel by having under powered, inefficient and ineffective systems to operate your business. Can you really expect the business to perform brilliantly if it evolves like this, instead of being purposefully built.
After the structure is built, the roof goes on, the walls are clad and the internal decoration is finalised. This process is analogous to recruiting and selecting the people in your business. You need to follow your building plan to ensure you get the right fittings and fixtures and that the whole decor works well together. Your business must also employ the right people in the right positions to enhance its performance. This means that people are employed as a result of careful planning, rather than in a reactive manner to fill a hole or to prop up a weakness.
Your house is now complete. Does the investor owner move in and live in the house? No. The house is let out to tenants who pay rent. The owner earns a yield from the investment by way of rental income and eventually enjoys the capital gain that comes from the increased equity that grows in the property over time. Once your business is properly built, you have the ability to earn income from the profits the business produces and you earn capital gains from the increasing value the business develops over time. You need never work in the business again unless you want to.
Where are You Living?
Are you living in your DIY business, or are you building it towards your freedom day when the construction is complete and you can enjoy the fruits of your labours and investment?
If you are living in a business that has an inadequate structure, incomplete walls and unsatisfactory decor, perhaps you haven’t really thought ahead about what success really means. Most issues in poorly developed and underperforming businesses can be traced back to a poorly developed concept of business success and a lack of adequate planning. Perhaps you are looking through the eyes of an owner employee rather than those of an owner investor.
The challenging business environment we see today results in many business failures due to never having established proper foundations. Apart from the business failures, we also see many business owners trapped in businesses with inadequate structures and unattractive decor due to a focus on business survival instead of having a clearly defined and designed concept of business success and a focus on building the business to the successful level where the business operates profitably and free of the owner’s input.
If you feel trapped in a situation where your business is still dependent on you and you are not totally satisfied with the results you are achieving, examine your focus and see whether you have a clearly defined concept of success and a documented plan that is taking you towards that freedom day. If that’s not the case, you probably need some professional help to plan and build your business as a wealthy investor would.
If you don’t yet have a copy of my book, Run Your Business on Autopilot, please take advantage of my offer to download the book for free. If you would rather have the physical book, you simply have to pay postage and handling and I will send it to you. You can complete your address details and payment on the next page after you enter you email address to download the book.
The book itself goes deep into the process of how to build your business like and investor would and how the concept of leverage is the necessary ingredient in creating a business that works for you instead of you being the one who makes it work.
In case you can’t see the link to get the book, it’s available for free at www.businessonautopilot.com.au.
Go there and get it now if you’ve ever thought your business isn’t as successful as you have wanted it to be.
This presentation contains images that were used under a Creative Commons License. Click here to see the full list of images and attributions: