Business Information Bulletins - "Common business questions and answers"

 

Why do so many small businesses fail

and how can we reduce the 'drop out' rate ?

 

Who are the successful business owners and what makes them special?

Contrary to popular belief, those people who make a success of their businesses don't do so particularly because of what they know - they do so because of what they seek to know!!!!!  In other words, successful business owners are ALWAYS looking for new and better ways of doing things - learning more about their industry...their customers...their performance!  It never stops.  To stand still in business is to be run over by your competitors!

We can always learn more (and should do so), by getting advice about marketing, finance, advertising, analysis, planning, HR, tax, operations - that's not that difficult!  The real challenge is finding out what you DON'T know about running a successful business, rather than sitting on your laurels thinking that what you do know is enough to make a real commercial difference.

If that was the case, your business would be a raging success right now!  But we know that 40 to 50% of start-up small businesses are no longer trading after ONE year!

The key to success, in any business - large, medium or small.... is getting it right, at any cost!!

It's about having a 'feeling', a PASSION or a vision, - something that is way out in front......and you must remove all the obstacles that prevent you reaching the commercial destination you believe is waiting for you!

However, dreaming aside, there must ALWAYS be a grounding reality within the vision.  What's the point of building the best, and the first restaurant.....with the best food and service, in the middle of 'poor' area simply because the land is cheap. The locals can't afford to come and those diners who could, would never visit the area!

It is common knowledge that despite having the greatest dreams for a business on earth, the most successful business operators are also "pragmatists" - those who approach commercial (and personal) life in a common sense, down-to-earth manner.  They have a great regard for detail, process, communication and people. 

These people realise it's all the little things in a business that go wrong that can bring a business down.

Not the strategy, not the image, not the misinterpretation of some elevated business principle - but things like the friendly, informative phone manner; the retail sales smile; the order correction by the warehouse; the immediate credit offered for a faulty product, and the manager who REALLY phones back!

It is the mundane, the boring, the seemingly insignificant little things, that make up every business - every day, that you have to get right - if you don't, no-one will tell you - they will simply vote with their feet and go somewhere else.

The 'three' people you need to start a busines: -

Who is it that starts a new small business? 

Is it someone who has the required capital and is prepared to put that money at risk to make more money?

NO!!!  Nine times out of ten, it is someone who is currently working for someone else and either doesn't feel valued, paid enough or believes they could a better job managing the operation than their  boss, (who doesn't seem to care anyway!).

These people know all they need to know about the technical (or content) aspects of their job - they are good at what they do and most people at work know this.  So why wouldn't clients pay them directly for the same output if they had their own business - well, they would.

However, there is more, MUCH MORE, to running a business than just doing work for clients!!!!  And that's why we need these other two people to help make our business successful.   We have the 'technician' - the person with the skill and knowledge to produce and deliver what the customer is paying for - that's you!

But we still need the person (the entrepreneur) with the vision and the dream of what is possible - where the business should head and why!  We also need the person described above as the "pragmatist" - the person who is realistic about what can be done, how it should be done and what it should cost.  This person makes sure that the business makes a profit, keeps up with trends, invests in new technology - in short, this is the 'manager' - the person who makes sure the business is focused on (and knows) what the customer wants and ensures that this happens consistently and profitably.

SO - these three people (from the descriptions above) have different (and essential) jobs to do for the business and therefore will need to have different skills, knowledge and experience.

However, when you decided to start your own business you didn't plan on employing two other 'experts', did you?  Definitely not!!  You can't afford what these people would cost!!

SO - Who are they? - Where are they?

THEY ARE YOU

ALL OF THEM

THEY HAVE TO BE!!!

IT'S TRUE!!!!!!!

When anyone starts their own business, that person has to take on all three roles mentioned above - because they are all essential for the success of the business.

The Entrepreneur - the person with the vision, passion and drive
The Technician - the person who knows and does the work
The Manager - the person who makes sure everything works together to sustain a profitable operation

ALL these three roles will be carried out by the one person - YOU!

And it is the traditional commercial and personality conflict between these roles that very often sends a small business to the wall in the first year!

We need to understand the differences in personality and drivers between these "three key company personnel"!  It would be great if all new business owners had these three skill sets and experience in equal proportions - but that never happens.  Remember, it is normally the Technician in us who is starting the business, therefore, it will be the Technician type personality and attitudes that prevail in the business owner's decisions.  But technicians can't (usually) run businesses profitably.

Let's explore each of these 'business personality types' and determine how they can best work together for the benefit of the business.

The Entrepreneur

This is the visionary - the dreamer - the power and the energy behind the imagination of what is possible in the future.  This person is always thinking 'what if' or 'how about' - these are the innovators....the people without which we would never have any new products, services or scientific discoveries.

These people are bored with the status quo - that's yesterday's method.  Entrepreneurs also need control over their environment - to do what they want, when they want. Process and protocol are barriers to the entrepreneurial spirit and path ahead.  This is why the Manager and Entrepreneur are often in conflict!!

The Manager lives in the past or present - the Entrepreneur lives in the future
The Manager needs order and process - the Entrepreneur needs control
The Manager says why - the Entrepreneur says why not!
The Manager thinks sequentially and logically - the Entrepreneur thinks laterally and creatively

The Entrepreneur creates havoc and confusion around himself for others, but expects them to help in his futuristic projects and dreams.

As a result of this cacophony of effort and energy, the Entrepreneur will rapidly move far ahead of their  disciples, leaving them and the Manager to clean up the mess (but without the Entrepreneur there would be no mess!!!)  They see most people as simply problems that get in the way of the ultimate dream - but we need them to light the fuse of change!  Without the Entrepreneur there would be no innovation!

The Manager

This the pragmatist, the worrier, the planner - the person without which there would be no order, no predictability, no process and probably no profit!!  The Manager makes sure everything is in the right place and working as desired.  Where the Manager sees issues and problems with events, the Entrepreneur sees opportunities.  Without the Manager there would be no business, no society!

The Technician

Things aren't supposed to be dreamed about - they're supposed to be done!  If you want something done right - do it yourself!!  The Technician is happiest when they is working...producing, but only one thing at a time.  They need to be in control of the work flow because you can't do two things simultaneously!  It is because of their need to control work flow that they mistrust anyone who is trying to change the rate - get more work done than is necessary or POSSIBLE.

Thinking to the Technician is not productive unless it relates to the work being done - thinking gets in the way of work....that is, unless it improves or modifies the method by which the work is being done.  The Technician is resolute - simply, if they didn't do it, it wouldn't get done!

The Manager is a problem for the Technician because the Manager needs to impose order and business discipline on the work flow, thereby reducing him to part of the "system".  This 'dehumanises' the Technician and challenges their individuality.

To the Manager, the Technician becomes a problem to be managed - to the Technician the Manager becomes a meddler to be avoided.  And, to both of them, the Entrepreneur is the one who got them into trouble in the first place!

The Manager says why - the Entrepreneur says why not - the Technician says why bother!

And here's how it works - OR (mostly) doesn't work!

  • The Entrepreneur wakes up with a dream, a new vision!

  • The Manager screams, "oh, no - not again!"

  • And while the two of them are battling it out, the Technician decides to go into business on their own.

  • Not to pursue the entrepreneurial dream - but to get control of the work from the other two!

  • To the Technician it's a dream come true!  The boss is dead!

  • But for the business it's a disaster, because the wrong person is at the helm.

  • Watch out world - the Technician is in charge!

WHERE IS ALL THIS LEADING????????

Somehow, we need to get these "three people" working together and viewing their roles in "their" business as integral to the success of the operation.  They all need to feel that their contribution is vital, necessary and acknowledged by their peers.  We need to get them 'all on the same page' - looking at the commercial challenges for the future of the business - and all having a feeling of 'control' and ownership!

How do we do this?  We get 'them' all on the Business Analysis and Planning team.  (See "Why do I need a business plan" in Business Information Bulletins AND The Business Health Check in Products).  This way, maybe 'they' will all be able to appreciate and understand that for a business to succeed, long term, it needs different skills and knowledge.  These three 'business partners' need to decide whether this new commercial being is a business with a commercial future OR a job for the Technician!!!!

The Business Solutions Shop focuses on these key business issues as a specialty!

[Subject source = 'The E Myth' by Michael E. Gerber]

 

back to top

 

The Business Solutions Shop Pty Ltd 2005.