As a consultant I interact with business owners every day. And I’m insatiably curious about the businesses I buy from, so I end up in interesting conversations with their owners, too. Needless to say, I get to see behind the scenes of businesses of every type and size.
The most fascinating thing to me about business owners is the drastically different reasons they started them, as well as what they’re actually getting from it.
Unfortunately, I find so often that their results don’t match their intended goals. Many end up getting tossed about like a rudderless ship at sea, even if they have a mission statement plastered in their lobby.
Over the years I’ve developed a few core philosophies that drive all my work with clients, and on my own businesses. My hope is that they help you get refocused and reaping more benefits from your business.
The purpose of a business is to make a customer. – Peter Drucker
First off, I’m a massive fan of Peter Drucker. And he said the purpose of a business is to make a customer.
From that foundation, here are the 4 anchor principles I’ve found to be most useful.
1) Cash Flow + Profit Win The Day: I operate in the world of self-funded businesses. So the Facebooks and Amazons of the world that operate for years without any revenue source or profit are off the table. In fact, meeting payroll every two weeks and paying the lease every month are usually pretty top-of-mind for many clients.
When cash flow and profits aren’t priority, bad things happen. And when they’re maximized, all your options are free to choose from.
2) Build Assets: An asset is simply something that either increases in value over time, or puts more cash in your pocket than it consumes, or both. Micro-assets are pieces that combine to create a bigger asset.
So things like documented systems that employees can follow without your oversight, or strategic partnerships that keep sending you business are both micro-assets. They build your business into a greater asset that increases in value and puts cash in your pocket every month.
Too many business owners I know end up owning a job that gives them less freedom and income than the job they left. The business should become an asset that serves all your lifestyle dreams. Time off, less stress, money to live where you want, and to explore the world as you see fit.
If you’re not getting these things, that’s a big red flag. And I’d bet that you have a limiting belief (or ten) blocking you from getting them.
3) Reduce All Risk As Fast As Possible: Risk in any business is visible every day in the assumptions that we make decisions upon. We assume that investing $40,000 in a new website will bring us more business. We assume that hiring an assistant will give us more free time.
The way to remove the risk in business is to simply convert assumptions to facts. And if we can do this with small tests, we reduce the downside of being wrong.
For example, instead of doing a $40,000 website redesign, let’s do a split test on a couple key pages on the site. We’ll design just those pages and let Google serve them up to half of our website visitors to see what happens. Then we’re only putting up $1,500 to design the pages to implement as a test. If it works, we get that money back out of the improved results.
If it doesn’t, we’re only out $1,500, but get a lot of insight during the process to refine the next experiment.
*Be sure to not confuse reducing risk with not taking big swings. You can make a massive proposal for a new project with very little risk if you don’t get it. Heck, getting it would be a bigger risk for most businesses.
Keep taking swings. Just do them in a way to limit your downside of losing time and money.
4) Never Stop Growing: I’ve already admitted my infatuation with Peter Drucker. I’ve yet to find something he said that I disagree with. I swiped this one from him, and from my brilliant grandfather who always told me the same thing.
If you ever stop growing, you’re dying. This works in business, and in every part of your life.
This doesn’t mean you need to create the next Apple or Exxon. It just means to keep optimizing, refining, and polishing your business.
Already making all the money you want? That’s awesome!
Now focus on fortifying that position. Upgrade your staff so your clients fall in love with every one of them. Improve your client communications so they never leave. Keep improving your product or service so competitors could never beat you on it.
What other key principles drive your business? I’d love to see them in the comments below.
Disagree with any I’ve listed? Make a case for it in the comments, too. I’m sure it will be enlightening for both of us.
Finally, if you’re ready to speed up #4 , I’d love to help make that happen, so apply to work with me here.
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