Late last year I had the opportunity to speak to some people who needed help in their small businesses. Some needed help desperately, others were not yet desperate but were certainly heading in an adverse direction, and one, just one, really only needed guidance and an outside voice to check with on a regular basis.
They were in a diverse range of industries, but there was one common factor; they were all ‘operators’, not business people. They had a job, not a business. And that is something that, if not recognised, can lead to failure and despair.
I suppose it goes back to why you started your business in the first place. So many small business owners start their business because they were good at what they do, whether they were a tradesman, a technician or a professional.
And in running the business, they did what they did. They provided the trade, technical whatever's or professional services their business offered.
Is that where you are at the moment, being the “operator” in your business, the person at the centre who actually does the work of your business? How much time do you spend “doing” in your business as opposed to:?
• Finding a continuous stream of customers for the business;
• Developing systems and procedures so your business has a sound foundation and others can do what you do;
• Improving and growing the profitability of the business.
The first of these points refers to the fact that business starts with a sale. In any business, whether starting one or expanding one, the customers, prospects and marketing strategy come first.
As the infinitely wise Peter Drucker said, “The purpose of a business is to create and keep a customer”. If you do this, then profits will follow. Who is best placed to educate and inform potential customers of the benefits of your products and services but you, as the expert. Can creating a stream of customers really be left to others?
The second and third points underlie what Michael Gerber (“The E-Myth”) referred to as “working on the business, not in the business”.
If your principal role in your business is as an operator rather than a marketer and business builder, then you have a job and not a business. Do you describe yourself as, for example, a builder, or as being in the building business?
Are you working for your business or is your business working for you?
When asked, I’ve always said to people looking to go into business “Do you enjoy what you do?” It’s an important question.
It’s important, because you’re swapping one boss for many. Running your own business takes considerable time and effort. It can also be stressful. If you don’t enjoy it, then you won’t be able to see it through.
If you don’t enjoy it, you it will probably because you end up working for the business rather than the business working for you. Working for the business becomes just an endless grind. Nothing changes, day in, day out - week in, week out - month in, month out – year in, year out.
What business are you in? That’s the first question you need to answer. Get this wrong and you will head off in the wrong direction.
Probably the most famous example of a business getting this wrong is Kodak. They saw themselves in the business of providing photographs, which in their mind was film, chemicals and equipment to go with it. They failed to recognise that they were really in the image business and that, with changes in technology, there were many ways of providing images.
It was not just digital photography, although that provided the deathblow. The inventor of photocopying offered his patents to them, which they turned down because they weren’t in that business. They later tried to get into the photocopying business and compete with Xerox and the others, but were too late.
And then of course along came digital photography – goodbye Kodak.
A client’s dilemma bought this to mind; they were passionate about their business but had to turn to other subset skills to survive. Partly because they only operated in the business and not on the business they failed to recognise how this was leading them astray and causing many of the problems.
Next week I’ll look at the other steps you need to take to get your business working for you.
Is your business travelling as well as it could, and should?
If you have some of those dark recesses in your business, if you are floundering in a lack of light and seek illumination, the end of the year has come and gone and 2016 is upon us. I have only three spaces left for a business assessment this month
If you would like to avail yourself of one, and there is no cost – this is my gift to you, book a Strategy Consult here.
© Copyright 2016 Adam Gordon, The Profits Leak Detective
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?