For me, in my experience, there is a massive difference between a director who has studied about the art of business and one who hasn’t. You see, the biggest challenge for business owners with no prior business experience is that they tend to approach running their business like a normal job – with a time for money attitude. Of course, this results in a level of thinking which believes the only way to achieve more is to do more – but the problem with that is you can only scale it so far because try as you might to squeeze more and more in, there’s only 24 hours in a day, and 7 days in a week. Even the most successful entrepreneurs on the planet have the same amount of time, so the formula simply can’t be ‘do more to achieve more’.
At least the strategy needs a different focus – and that focus should be on leverage. Learning to build a team, to build systems, and to leverage those to the greatest degree possible outside of the traditional time for money model.
Business owners who struggle are often world-class at their trade skill (what they do), but what they’re missing is the business skills and acumen required to build systems that run the business by using the highest order of level possible. My philosophy is to build systems that run your business, and then hire world-class people to mange and evolve those systems over time; and those systems should massively leverage the time of the staff you have working for you so that you can produce results way greater than the sum of the parts that got you there. That’s the beauty of leverage – 1+1=10.
You might have a builder, for example, who is simply outstanding at building houses, but hasn’t a clue when it comes to financial management and so ends up under-pricing or not capturing variation costs because they don’t have the systems in place to do so, and losing money despite doing an outstanding job. You might have built a large database of contacts, but unless you know what e-mail marketing software to use and how to use it then you’re leaving money on the table by not using the available systems to sell to an already captive and hot audience.
There’s a reason why 95% of businesses fail in the first 5 years, yet conversely 80% of franchise businesses succeed in the same period – it’s because so many people, generally, don’t take the time to build valuable business skills alongside the skills of delivering their product or service. The difference with franchise businesses is that you buy a tried and tested business in a box, complete with all the business knowledge and systems you need to make it a success. You literally read the manual, and follow it to the letter and you have yourself a successful business! Most business owners outside the franchise model don’t have this, and don’t really know where to start (which is my area of speciality as an Elite Business Coach), and so often fail as a result of lack of cash due to poor business management rather than not being profitable.
Another interesting fact is that of those businesses that do succeed, 80% of the directors who run those businesses have prior experience working in the corporate world at director level BEFORE they go and start their own venture. This gives them valuable insights into how a business is operated at a higher level and they invariably take that knowledge with them and apply it in their business when they decide to start one.
Having experience and business skills is key for success in business, and if you don’t come from that background I highly recommend you consider employing the help of a Business Coach to help build out those skills as soon as possible – it will pay you handsomely in the long run.