Top 10 Basic Business Principles

One of my favorite authors – Guy Kawaski – often shares his ideas in groups of 10: Top 10 Lies of Entrepreneurs; Top 10 Lies of Venture Capitalists. When I was recently asked to speak to a group of entrepreneurs and business owners in Soweto, I decided to try out this practice. The purpose of the presentation was to get back to the basics of business, to examine what sits at the foundation of a successful business. Here are my ideas – my Top 10 Basic Business Principles (BBP's as I call them):
1. Decide what you do (and what you don’t do)
Broaden your vision but narrow your focus - being effective in business is about knowing what you do and don’t do. Making a conscious choice in this regard can help you focus and enable you to avoid getting pulled in too many different directions. Being strategic is as much about knowing what it is that you don’t do as it is about deciding what it is that you do do.
TO DO:
Make a list of what you do do
Make a list of what you choose not to do
2. Decide who you serve (and focus on them intensely)
You can’t be everything to everyone so at least be something to someone – knowing who falls into your target market will assist you in meeting their needs. By meeting peoples needs you offer value but if you don’t know who it is that you intend to serve it becomes a lot more difficult to offer them value and you end up being useless to everybody. Be specific about your target market – age; gender; preferences; class; geographic region etc.
TO DO:
Define your target market (now) – be specific
3. Decide what makes you different (and do it)
Howard Schultz, CEO of Starbucks said “Whatever you do, don't play it safe. Don't do things the way they've always been done. Don't try to fit the system. If you do what's expected of you, you'll never accomplish more than others expect.” Being successful is about being different. There are so many offerings in the market place that if you are not clear how you are different you will just get lost in the crowd. People are attracted by difference, so stand out. One of my favorite pieces of writing focuses on the value of being different:
“Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can praise them, disagree with them, quote them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They push the human race forward. While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” - Apple Computer Advert, 1997.
TO DO:
Make a list of things that make your business different. Review this list – do these things truly make you stand out.
4. Manage cash flow (very closely)
Your bank balance is your truth – monitor it; know it; respond to it. To many business owners and entrepreneurs are afraid of knowing what is in the bank. By not checking on your bank balance you are not going to change it. The reason most business shut down is not because they are not making profit, but because they run out of cash. You can be making loads of profit but if you can’t pay employees and creditors you will ultimately be put out of business. Not monitoring what is in your bank account is akin to driving your dream car along a winding farm road at night with no lights on. You can see where you are going and adjust for obstacles in your path so you land up crashing and destroying your dream. Entrepreneurial happiness is a positive cash flow.
TO DO:
Check your bank balance
Build a process to monitor your bank balance daily
Put things in place to keep the bank balance positive:
o Get invoices out timeously
o Incentivise customers for early payment
o Follow up on outstanding payments weekly
o Don’t pay expenses until they are due
5. Manage employees (incentivise them for success)
Andrew Carnegie said: “Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.” Without able and willing employees your business can’t grow. Employees offer you the largest amount of leverage for creating success in your business. Focus on them intently, understand their values and what drives them, invest in their development and care for them intensely and over the long term, when all is added up you will be handsomely rewarded. Employees are what really make a business; an entrepreneur just creates an environment in which they can flourish.
TO DO:
Plan a one-on-one discussion with employees. Find out their perceptions; show them you care, tape into their source of motivation.
6. Manage customer expectations (under promise and over deliver)
The most powerful marketing tool for any business is “word of mouth”. If you promise and don’t deliver. Word of mouth turns into a negative spiral. If you are conservative in terms of what you promise and then surprise customers they talk about it. Make customers talk about your business for the right reasons.
TO DO:
Think before you promise
Keep a promises made list with dates – try deliver well before each date.
7. Set goals (and go after them)
“The future you see is the future you get.” - Robert G Allen. The power of commiting yourself to something will pull you and your people in a direction. If you commit to nothing you will go nowhere but if you commit to something challenging but attainable it will mobilize you and your team to achieve great things. Write your goals down and share them with others, with passion.
TO DO:
Write down you business goals for the next:
o 30 days
o 1 year
o 3 years
Put the company goals up in place where people can see them.
8. Expose yourself (tell the market what you do)
Get out there and make the services of your business known. Create a website; exhibit at a trade show; sponsor a local sports team; write an article for the press; send out an email news letter – do what ever it takes to get people to associate your company with your product or service. This need not be expensive if you work hard and be clever.
TO DO:
Plan a different promotional activity each week for the next 5 weeks.
9. Persevere (through the tough times)
“There is a very, very, very fine line between success and failure …. it is about being constantly hammered and coming back from the hard times and low moments.” - Robbie Brozin, Nandos. Successful business people are defined not by how they react when things go well, but rather how they react when things go badly. Great businesses are built in the tough times and low moments when the business manager buckles down and decides to do what needs to be done to get through. All businesses go through tough times but the good ones persevere through them to come out the other side and enjoy the success that follows.
TO DO:
Think about what could go wrong in your business in the next 12 months. Decide now how you will react if and when this happens.
10. Always maintain your integrity (in everything you do)
This is the glue of a successful business and a successful business person. Integrity builds trust and trust is the foundation of any successful enterprise – trust with employees, customers, suppliers and shareholders. Do what ever it takes to maintain trust and operate according to a set of values that have a moral grounding.
TO DO:
Look at yourself in the mirror and ask: “Is everything I do ethical and right - would I be willing to share all my business dealings with my mom?”