As the Editor of My Business magazine, I talk to a lot of people about how to build businesses. Over time a few themes come up again and again, and I’ve distilled them into ten tips.
1. Don’t tell your customers what you can’t do - find a way to do what they want
A few months ago I went to a furniture store and bought two big chests of drawers and one small chest of drawers. The small chest was two metres long and would not fit in a car - not even most 4WDs, but it came from the “homewares” section of the store and I was told it could not be delivered. This was insane: I was spending $2000 in the shop, yet staff were telling me they could not find a way to arrange delivery of all three items because of an internal product classification!
I asked to speak to the cashier’s supervisor, who sorted it out in a heartbeat, but why was I pushed into a bureaucratic mincer to start with?
The lesson: don’t tell your customers what you won’t do, just find a way to delight them. And empower your people so they can do the same without having to seek managerial intervention
2. Plan your exit from day one
Some people go into business to replace a job. That’s the wrong attitude, because what’s the point of buying yourself a job when business is riskier than being on a salary? And why treat it as just a job when being in business is a chance to build wealth?
Don’t think of your business of a job. Instead, always be thinking about your business in terms of how you might one day realise its value by selling the business, franchising it, selling the business methods you develop or licensing your IP. If you think this way you’ll build value, not just pay yourself a wage.
3. Involve your customers and build a community
By now you know the mantra about turning customers into advocates for your business. The way to do this is by involving your customers in the way you run your business and design your products and services. This could be a competition, inviting them in for a focus group or an ongoing investment in a vibrant social media presence.
Whatever you do, consider the next tip too ...
4. Be genuine with your language
Australia’s patent office employs more than 300 PhDs, all experts in very, very granular fields. These people are super-smart, have umpteen university qualifications and really know their stuff.
I mention this because when I hear a company say it has “the best people” I think to myself that maybe, of all the organisations in Australia, perhaps only the patent office is anywhere near being able to sustain that claim.
There are two things to learn here. One is that claims like having the best people are impossible to sustain and therefore aren’t a differentiator. Think about it: will your rivals admit to hiring stupid, kindergarten-dropout, junkies with criminal records?
Of course not.
Like you, they have good people. And if you want to be utterly blunt, like you they probably have a mix of enthusiastic people, unenthusiastic people, plodders, go-getters and every other type of person.
The second is that it’s way too easy to fall back on cliches like this when you describe your business. Everyone is committed to quality. Everyone is customer-focused.
Except everyone isn’t, too. Every business sometimes cuts corners. Every business sometimes pisses off a customer.
This means that all these terms are valueless and meaningless. Instead, try to describe your business truthfully. Explain what you do and how you do it, and make it real … not just a cliche.
5. Don’t procrastinate with people
People management is the hardest thing to do in business, and therefore the easiest thing to put off.
If someone needs a reprimand, do it fast.
If someone’s not working out, fire them fast.
This may sound harsh, but nothing hurts a business more than the wrong people, because you’ll spend a lot of time trying to work with the wrong people. It takes less time to find the right people.
The flipside here is that you can’t procrastinate with learning good people management skills and the industrial relations laws, because if you don’t learn how to reprimand someone without making them hostile or set yourself up for an unfair dismissal claim, you’ll waste more time than you can possibly afford.
6. Outsource, outsource, outsource, delegate, delegate, delegate
Startup businesses often try to do everything in-house, and that’s nuts because a business is all about selling unique expertise or services.
If you are trying to do everything in your business, or refuse to trust work to others, you’re reducing the time you can spend practising the special skill that makes your business unique.
So stop doing everything, and be very selective about the new skills you learn on the job, and delegate or outsource the stuff that isn’t a core skill that represents competitive advantage.
And don’t give me the line that it’s too expensive to outsource: get creative and find an intern, or an offshore worker, and get the job done at a lower price.
7. Let professionals advise you, not just service you
An accountant recently told me: “I’m a very expensive book-keeper, but a very reasonably-priced management consultant.”
The quote has stuck with me because it’s really important to get a perspective on your business, because when you work in you simply can’t see it objectively. And no matter how much reading you do, you can’t get every useful perspective.
So hire someone to offer you perspective. It could be a coach or a mentor. Or it could be your accountant.
But whatever you do, make sure you pay these people for their advice and perspective. If you hire a mentor, don’t use them as a shoulder to cry on or someone to vent to. If you use your accountant for business advice, don’t just ask them to do your BAS.
Whoever you turn to for advice, use them for the perspective they offer and not as just another service provider.
8. Figure out your key indicators and check them every day
Every business has key indicators that represent their pulse. It could be stock levels, outstanding bills, sales pipeline or another indicator.
Whatever the number is that makes the most difference to your business, check it obsessively. That way your finger will be on the pulse and you’ll know trouble is on the way in time to react to it, instead of being swamped.
9. Automate and systemize, then automate and systemize some more
Lots of business commentators adore fast food franchises because they have lots and lots of processes. That means they can hire teenagers and quickly bring them up to impressive levels of productivity.
Do the same in your business so that there is always a process for routine tasks that anyone can learn and perform. As you do so, consider if any of the tasks you assess can be automated. If they can, invest in technology that takes work away.
10. Codify your competitive advantage
I once did business with a company that was formed by a group of gun sales people, the guys who always made their targets. One day, those guys all got together and wrote down the way they did things, and turned that into a methodology. The company that delivered that methodology sold for $400 million.
The lesson I learned from this story was that figuring out just what it is that you do best and makes you different is essential. Plenty of other commentators have told me the same since and most say that once you know how you differ, or at least make the effort to understand it, you are in a much better position to compete.
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