As a business owner, you are the master of your craft, but you may be struggling with the complexity of business activities, often feeling overwhelmed, frustrated, and angry. Perhaps you exist in a condition of entrepreneurial poverty…a situation where you are in business but not generating enough income to have the lifestyle you envisioned when you started. You put in far too many hours for a fraction of the outcome you desire. Unfocused effort results in a waste of time, energy and money. You can do business better.
Because it’s difficult to know what to do and when to do it, a normal tendency is to rely on trial and error which seems to be the best option for working through complicated business issues. Persistence and luck is the traditional path to prosperity. Fortunately, what you learn from this article will help you to do business better. You will realize that success in business is within your control. It takes work but, done right, takes less work than you’re doing now.
In my youth, the sport most people played in my community was basketball. When I first began playing the game in my back yard, I spent a lot of time launching the basketball at the hoop. I called it shooting, but I missed so regularly that my brothers called it “chucking.” After reaching a point of frustration at not being able to consistently make baskets, I set out to find a better way. Since basketball is a skill-based activity, I was able to find a book in the library titled The Fundamentals of Basketball and study the basics of shooting. After mastering the fundamentals, I was able to make shots more consistently and improve to the point where I played basketball in high school and college. Most importantly, when I wasn’t shooting well, I could fix what was wrong by refreshing myself on the fundamentals.
In any skill-based activity, you must master the fundamentals before you can strive to reach the heights of success. The fundamentals are the basic skills that enable you to participate in the activity and eventually excel. In every skill-based activity, fundamentals must be learned, practiced and mastered.
Business is a skill-based activity, so it would seem logical that success would be founded on fundamentals. In practice; however, there is no consensus on what constitutes basic fundamentals for business, so trial-and-error rules the day. As a result, many small business owners struggle to achieve profitability.
In 2012, I began a journey to find a solution to this condition called entrepreneurial poverty. For the next four years, I worked with small business owners to confirm that entrepreneurial poverty was a real problem with wide-ranging implications for society. I also needed to know why free services had not moved the needle on the “failure to succeed” statistics.
In 2016, after validating the magnitude of the problem and attempting to solve it using various approaches with less than satisfactory results, I started a course of study to get help with creating an effective solution. I was accepted into the PhD program at Benedictine University and over the next three years, I completed a research project that resulted in my dissertation titled Organization Design for Small Business: A Discovery of Business Fundamentals for Executing a Purposeful Path to Profitability.
I started the PhD program with a certain set of ideas that I intended to prove qualitatively and quantitatively, but over the course of the program, I realized that certain foundational insights on how to succeed in business were missing. My research confirmed that there was a lack of consensus on the basic fundamentals that business owners must master in order to become purposeful in leading a company to prosperity.
Given my history with games of sport, as both an athlete and a coach, this lack of consensus struck me as odd, because everything that applies to a game applies to business. There are rules, there is competition, there is a way to keep score and there are winners and losers. There is strategy. There are coaches and players. The game of business is not new. It has been played for centuries. Therefore, it seemed that basic fundamentals for playing the game of business would be evident, but if you ask ten business owners to list the business fundamentals, you will get twenty distinctly different answers. That conclusion prompted me to focus my research on revealing the fundamentals that frame the game of business.
Small Business Administration statistics show that 50% of small businesses fail within five years. I decided to explore what the 50% who succeed know and do that the 50% who fail do not know and do. Therefore, my initial study sample consisted of 75 business owners who had succeeded in building businesses from zero to $100 million in annual revenue. I concentrated on their efforts in the pre-profitability stage to learn what they did, when they had no resources, to position their company for the success that came later.
To qualify as a basic business fundamental, within the context of my study, activities had to meet specific criteria:
Given these parameters, three business fundamentals emerged – Selling, Cultivating Relationships and Research. Let’s break them down one at a time.
Nothing happens in business until someone buys something, but many small business owners attempt to circumvent the process of selling their product or service. There are several reasons.
To help us determine what to do, let’s define “selling.” Selling has the reputation of persuading someone to make a purchase that they would not otherwise make or to “hard sell” someone by not taking no for an answer. It’s about facing down rejection, the ABCs of closing, or numbers, numbers, numbers. In the context of how selling emerged in this study, it’s actually about identifying the painful problem that a person is experiencing, determining whether your product or service is a suitable solution, setting the price and signing a contract. It’s a personal interaction aimed at helping a person make a purchase. To qualify as a sale, money must change hands. Repeat sales are the result of a satisfactory experience.
In my study, seventy-five out of seventy-five entrepreneurs engaged in some sort selling activity early in the process. Selling served to do more than just acquire a few dollars. It provided the feedback that let them know they were solving a problem in a way for which people were willing to pay.
The direct sales process brings as much value in terms of customer information and insights as it does revenue. When someone makes a decision to forgo a purchase, there are rational reasons for that decision. Perhaps they don’t want the product. Why buy a hammer if you never plan to build anything? Perhaps they don’t need the product. Why buy a hammer when the task can be completed using the heel of a shoe? Perhaps the price is too high or the quality is too low. Maybe the timing is not right. If you walk away from a prospect without answers to these questions, you’ve missed a golden opportunity to understand your customer.
Once you have paying customers, you can more easily identify the patterns of the people who purchase. This will help you target your marketing. If you attempt to pay for marketing before you can describe your ideal customer, you risk running out of money before you find the group of people who are most likely to purchase your products or services.
As a business fundamental, cultivating relationships includes both internal and external relationships. It involves more than going to networking events and collecting business cards. Cultivating relationships means understanding where you need assistance and identifying people who have the skills you lack. It means connecting with people before you need their help, so those people will be ready to help you when your back is against the wall.
Cultivating relationships includes learning the strengths of the people around you. When you need help, ask people to do what they do best. They will be happier to help and will get the task done quickly and well. Some people have specialized knowledge in a specific area and are best suited to help you when you need that expertise. Some people will serve as a support structure for you. They encourage you, inspire you, and lift you up when you’re down; and some people will promote you and connect you to others who can help you.
Few individuals are experts at every aspect of business. Some people have the ability to invent, innovate and create. Others have the ability to take an idea and turn it into money. Some can take a profitable enterprise and scale it. Elon Musk is an example of someone who has proven he can do all three. His engineering skills and ability to see what needs to exist in the world combined with his experience at growing businesses enabled him to build Tesla, SpaceX, Solar City and other game-changing companies. For those who can’t do it all, cultivate relationships with people who can help.
To effectively cultivate relationships, you must have criteria to determine who you need to meet. The next step is to identify the sources through which you can find them. You can hire an agency to do a search or you can use social media to perform your own search. Different platforms will reveal different types of information, so consider carefully what you need to know about a person and why it will be useful to know it. Having criteria will help you assess what you read on their profiles as you prepare for meeting them in person.
As the CEO of your company, you must always be on the lookout for talent. Talent management includes talent identification, talent acquisition, talent development and talent retention. Your business is powered by your people. If you take care of them, they will take care of your customers. Employees who are invested in the success of the company will contribute both their actions and their intellect to the growth of the organization.
All business owners periodically hit a wall where they don’t know what to do next. Research skill gets them over that obstacle. Mastering the skill of research involves defining the problem, gathering information, identifying solutions, testing alternatives, and repeating the process as required. Research skill is critical for every business owner.
Research feeds resourcefulness, which is simply stated as the ability to figure things out. Figuring things out means using an intentional, maybe even scientific, approach to taking actions that have a good chance of succeeding. A trial and error approach is not out of the question as long as each trial eliminates an error that brings the next trial one step closer to a solution. Thomas Edison went through thousands of trials on his way to making a successful filament for the lightbulb.
Research comes in many forms from the Socratic Method to the Scientific Method. Research can be qualitative or quantitative. It can be short term or long term. Research involves your eyes and your ears. It’s conducted through reading, watching and listening. Sources include trade journals, videos, books, magazines and online articles. The most valuable business research of all is that which gains insight from people by using tools such as interviews, surveys and focus groups.
To have an effective research process, tracking and documentation are critical. Each additional bit of information leads to insights that reveal the next important step. Without tracking and documentation, new knowledge is lost and flashes of insight are less likely.
Research is best accomplished by igniting your curiosity. Search relentlessly for answers. Be ecstatic when you actually come up with more questions. Incorporate research into the routine of running your company. The results will speak for themselves.
You thrive and win in the game of business by doing first things first – master and apply the fundamentals. Your company grows exponentially when your actions reflect fundamentals. Chaos and crisis are common in commerce, but can be conquered with consistency.
Applying fundamentals contributes directly to your ability to successfully play the game of business. The good news is you don’t need to pause your current business activities to get formal or costly education before you start. You simply need to make a subtle shift from guts and guesses to a focus on fundamentals.
To put this approach in action immediately, take the following steps:
– Apply Business Fundamental #1 – Selling: Ask yourself…What am I selling? Am I solving a painful problem with a solution for which people are willing to pay? What am I learning about my customers that will help me serve them better tomorrow than I did today?
– Apply Business Fundamental #2 – Cultivating Relationships: Ask yourself…Do I have the right people on my team, doing what they do best? Have I made the right connections in the community and is it time to ask for their help?
– Apply Business Fundamental #3 – Research: Ask yourself…How do I frame the problem accurately, gather the information I need, and identify a way to overcome this obstacle? How do I figure this out?
It is true, as they say, that if you always do what you’ve always done, you’ll always get what you’ve always gotten, and of course, insanity is defined as doing the same thing over and over and expecting a different result. From today forward, do something differently in your business. Focus on the fundamentals.
