My top 10 rules for business success
At Prime we have seen hundreds of businesses over the years. You often see two very similar businesses, similar sizes in the same industry or trade. One succeeds and the other fails. The failed entrepreneur blames it on the recession, the banks won't lend, the Government, the local authorities etc; but how come the other business succeeded?
Here are my ten business rules for success:
1. People start a business because they are good at doing something; but they need to morph that into becoming good at running a business. Some can, some can’t. Just because you are very good at doing something doesn't mean you will make a fortune out of it. Beware the lifestyle business. Take the rose coloured glasses off and listen to advice.
2. Retain profits initially made to internally fund the growing business. When you have a track record you will be able to go out and attract investment or finance to fuel further growth. It will be difficult to do that on day one as you have no credibility. Accept that. You will gain a lot of respect for ploughing money back in the early days. It is not a job, don't treat it like one.
3. Know your key performance figures. This is not irrelevant business textbook speak. Some businessmen run their companies by gut feel, the back of a fag packet and their bank balance. If the bank asks for monthly figures or a profit and cashflow forecast it is an irrelevance and an annoyance; they know all about their business and how good it is, why don't people just believe them and let them get on with it. Don't be one of those.
4. Have a think about your attitude to risk before you make key decisions. A bit like going into a Casino knowing how much you can afford to lose. Not figuring it out when it’s too late.
5. Expect the unexpected and learn to deal with it. Keep focused.
6. Build the business in manageable steps. Lots of businesses have gone bust growing too fast uncontrollably – its called over-trading. Hire good staff and let them do what you pay them to do, not looking over their shoulder every five minutes.
7. Put some money away out of your profits perhaps into a holding company to ring fence it and protect it so that its available for future controlled investment
8. Engage in lateral thinking with decisions – it can minimise risk. Perhaps consider contingency fees with advisers helping with certain aspects of your business – offering a share in improved profits or costs lowered rather than a fixed fee for no result. Do deals with customers or suppliers at key points.
9. Make investments into your business properly and in a structured way – not looking round for wherever you can raise cash from at a moments notice and throwing it into the pot; you may never get it back. If your business is making losses know when to stop. Don’t raise a second mortgage to keep it going – it will only prolong the inevitable and increase your personal loss. Don't put your head in the sand.
10. If your business is successful don’t think that everything you touch will turn to gold. I have seen many successful businessman put their hard-earned profits into something completely different which they have no experience or knowledge of, only to lose it. For example, a successful high street retailer builds a chain of successful shops and then puts a stack of his kid’s inheritance, as Theo calls it, into a Night Club because it sounds like fun and he wants to be associated with it. He doesn’t have the time to spend on it, the people running it aren’t any good, nor is the business, and it fails. He loses the lot. His main business may have to work for 6 to 12 months just to make back the loss. Not good. Know what you're good at and what you're not.
What are your rules for success?