Here’s my gripe: Authors, consultants and others who use huge companies as examples for whatever point they are trying to make or sell. In the 1990s it was Microsoft. You’d hear, “This company is going to be the next Microsoft.” No it isn’t and it wasn’t. Now we hear the same things about Facebook, Google and, especially, Apple. How many books, seminars, blogs, et al tout something about these huge companies that your small business should emulate?
Maybe it’s Facebook’s culture. Or Apple’s design innovation. Or Google’s, well, just about everything about Google. These are companies that are tremendously successful, familiar to all of us and do many things extremely well.
Can owners of small businesses learn from these success stories? Of course they can. Can your small business pattern itself on Facebook, Apple or Google and enjoy huge success?
Let me be the first to break it to you: No. Stories from these huge companies are entertaining, somewhat instructive and help sell books and lectures. But your small business is never going to be like these behemoths. Sorry.
Back to Basics
There is no shortage of business book authors, pundits, advisers and consultants dispensing advice to business owners. Some of the most popular topics include:
- Engaged employees. (Which presumes engaged employees are better employees.)
- Empowered employees. (Same again.)
- Strategy (especially Blue Ocean Strategy).
- Culture eats strategy for lunch. (Strategy is relatively unimportant if you’ve got a great culture.)
- Being a Visionary Leader.
What’s wrong with these topics? Nothing, really. They are certainly intellectually stimulating. And they probably make a business better. Maybe they just assume the fundamentals are in place and it’s time to get on to the higher level management issues. But in my world, often the fundamentals aren’t in place. Here’s what I mean by fundamentals:
Value Proposition
I can’t think of anything more important to a business than the Value Proposition. But hardly anyone talks about it or writes books about it. What is the Value Proposition? Whatever good or service you sell, needs to fill a need that customers have. Customers must find your product or service compelling. And you need to be able to provide this good or service at a cost that creates a healthy margin between what customers will pay you and your cost. That’s called Gross Profit or Gross Margin and it matters a lot.
Salability
This is related to the Value Proposition but not quite the same. In this case, I mean your good or service needs to be understandable to people. Confused people don’t buy. They need to understand what you do or what your product is. If they have pain, you can make the pain go away and customers understand what you’re going to do for them, you’ve got something that will sell.
Financial Information
Good financial information is another business fundamental in my view. Without it you’re guessing. Financial information allows you to manage the business and fulfill your reporting needs to all stakeholders. Good financial information will not create a good business. But not having good information will hold back an otherwise good business.
Rigor
What I mean by Rigor is that businesses need to have discipline. Employees need to be not just engaged and happy, they need to be productive. Overhead needs to be controlled. There needs to be a sense of urgency. Businesses need to accomplish things; just being busy doesn’t cut it.
People
So how do you create a great value proposition that is salable, have good financial information and maintain rigor in your business? You, the owner, create much of this and you spread it by leveraging the great people you hire, train and retain. Have I just contradicted myself? Maybe, but perhaps that is the yin and yang of business.
That’s five things, all very important and not very sexy. I guess that’s why I’m not selling books. I’m just helping people make more money.
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