Number 1 on the list of 10 Business Secrets I wish everyone knew
A business is not what you do, what you own or what you sell. A business is culture – a set of common beliefs that bind people around an objective or goal. Your employees take your business home with them every night.
It’s no mistake that three of the biggest and most successful corporations in the world won’t hire grads with more than two years’ experience (P&G, GE, Exxon) They want people that are ambitious and willing to absorb & improve their culture.
Think about your mission and what defines your business. Make it bigger than you and people will give you their hearts and souls. Here are the rest of my top 10 business secrets.
Business Secret # 2
Everybody Matters – from the smallest to the biggest. How can I help this person to succeed?
When I see businesses only hiring contractors, not paying people a living wage, not providing stability – I know that business is not built to succeed.
People carry your businesses in their heads. We need to start with the assumption that we’re going to try keep them all and we’re going to make everyone successful.
If you can’t make a living wage in your business, get out! You’re ruining the margins of everybody else.
Business Secret # 3
Leaders know their numbers: It’s not enough to pay your accountant and abdicate your responsibility. Leaders know their sales, their margins, their receivables and their goals. They’re responsible for achieving their goal so they have to know where they are during the year. If you feel too trapped by “doing”, pull yourself back a level and focus more on the strategic.
Business Secret # 4
How did we do? A million dollar phrase – if every business asked their customers at the end of every job, you’d learn so much, you’d be unstoppable. A lot of times, we’re afraid to ask because we think we already know the answer. I asked this question once and the client asked us to take on more work.
If it’s not great and you continually know it – find a new approach or find a new job.
Business Secret # 5
Growth is everything – Your business should be naturally expanding. A business shrinking is a business dying. A one person business is a job. A business that closes when the owner dies is a job. Businesses naturally lose clients all the time. It’s important that your new client rate exceed your cancellation rate but more importantly to have some analysis of why customers leave. A growing business provides the necessary stress or pressure for your team to respond effectively and efficiently making your business better. One of my old bosses said he liked to keep everyone’s plate at 110% to keep them motivated – it worked.
Business Secret # 6
Creativity is the Lifeblood of Business – Technology, your competition, the regulatory environment, and interest rates can have radical changes on your business model. Think of the effect of mp3/file sharing on the music industry. Of late, think of the effect of the sharing economy on the taxi and hotel industry.
Great businesses experiment continually. They try new ways to get new business, they measure the results, abandon the bad and improve the good.
Young people are a font of knowledge and usually cheaper to boot. What sounds like a naïve question – ie why do we do this, has a kernel of genius in it.
Business Secret # 7
Great Businesses Spend Higher Amounts on Advertising and Customer Acquisition – they understand what the customer wants, what their value proposition is and they expect higher margins. This is a great place for experimentation – have you tried networking, golfing, board of trade, sponsorship, direct sales, mail, commissioned reps, stealing a rainmaker from a competitor, new websites, google, SEO, Facebook, ad words, mobile.
Business Secret # 8
Business Rewards Achievers – Whether it be in academics, sports, music or other endeavours, past success is the best determinate of future success. Drive, sacrifice, ingenuity and determination are transferable skills. Achiever leaders instill a performance culture and inspire those around them to live up to their standards. Attention D students – time to change your ways.
Business Secret # 9
Bigger is always Better. Bigger means you can pick your place in the market. Bigger means you can supply low end and high end goods with good profit. Bigger means you can set terms. Bigger means specialization of labour, lower costs and better service. Bigger businesses can offer multiple products at the same point of contact selling wide and deep.
Capital is King – bigger investments should draw bigger returns. Capital follows good business ideas and runs from bad one. The best businesses are self-funded, boot strapped or only require normal trade credit.
Business Secret # 10
Taxes – a necessary evil. In experiments, people preferred to avoid a small loss rather than risk for a small gain even when the probability of each was identical. We’re programmed to want to avoid tax. I had a client with a commercial property that sat vacant for four years – he had a series of losses which resulted in tax refunds each year due to the high mortgage interest payments – when the property was finally rented, he was aghast at having to pay taxes even though his cash flow increased by $14,000.
Paying taxes is a good thing. It shows your business is making money and your efforts are being financially recognized. Great businesses want their businesses to be in compliance and be built to last. Looking over your shoulder for the tax man is no way to grow a business.
HST collected is not your money. Its money collected on behalf of the government and held in trust. The introduction of a 13% tax and annual filing creates a cash flow time bomb for early stage businesses. If you’re registered for the HST, talk to your accountant about how much to put away for the taxman.
James Abbott, CPA and Associates Pickering Office
James Abbott, CPA and Associates Toronto Office