I think you will agree with me that doing business in the current climate is different from the perception we used to have.
Words such as “recession”, “business failure”, “Insolvency” and so on seem to be recurring in many news articles and discussions.
However, to some extent, the ingredients needed to run a successful business have not changed. Whether we have a boom or a bust in the economy it is down to the skills of the business owner to steer his business away from danger into a more manageable and secure environment.
So is it possible to identify specific qualities needed to run a business which will stand the test of time? In my view the answer to that question is yes.
What Qualities do Success Business Owners Have in Common?
1. The Ability to Identify the Business Cycle
The economy tends to go in cycles, boom and bust. A business that follows the same cycle as the economy in which it operates is at risk. A successful business owner knows that a positive period will peak and then turn into a downhill run. Therefore, he looks for the signs ahead of time. On the other hand a negative period may last longer than expected such as the current recession.
It is interesting that even in ancient times mankind has experienced booms and busts. In ancient Egypt a 7 years boom was followed by 7 years bust. Joseph who administered the country’s resources made provisions so that Egypt had the necessary resources to cope with the 7 years of shortages.
Translating this into a business model for our time, it is important for a business to have consistency. If we were to represent this in a graph we would see a nearly straight line cutting through a boom and bust economy.
2. The Ability to use Technology
Many businesses don’t change with technology and yet technology changes our world. The risk of keeping things as they are cannot be underestimated.
For example in a dip recession like ours most businesses cannot afford to keep costs as they are. But cutting down without regard to the quality of the service provided can be really counterproductive.
Take for example the accountancy profession. Like many others, it has had to adapt to the changing times in which we are living. I realized ahead of time that for the vast majority of people getting good value for money became even more important. For this reason I felt compelled to review our policies, procedures and information system to ensure we could still provide a quality service at a price people can afford.
How can this be achieved? Today it is possible to email, phone, work without your clients (or for that matter your staff) actually knowing where you are in the world. This technology is changing the way thousands of businesses actually work. It enables staff to work at home (when this is acceptable of course) and respond to queries instantly wherever you are. Some businesses have powerful websites which capture a lot of traffic and leads and yet may only have a small office from which to operate. They are likely to use part-timers, which is a cost-effective way of using trained people. They take advantage of the fact that many individuals actually prefer to be part-timers and where possible work from home.
A good information system is key feature of a successful business and must be capable of adapting to the changing environment in which we live. Information must be freely found and shared by members of staff wherever they are. Efficiency is paramount in order to provide a cost-effective service and the “right” technology, not the most expensive, plays a big part in it.
3. The Ability to Identify Qualities in Others
No one will run your business for you, but you cannot succeed entirely on your own. The difficulty lies in the fact that there are thousands of people out there all wanting to give advice on how to run your business. Eventually you may shut out the world outside. This would be a mistake. A successful business owner needs to have trusted individuals he can call upon, who can give expert business advice in areas such as financial interpretation, tax planning, marketing, advertising and many more areas.
How do you find such people? By keeping clear in mind your business objectives. By this I mean that to run a successful business you need to know the direction your business is taking. The advice you receive must fit in with your objectives otherwise your business may take a different turn, which you may not be able to control. Therefore it is important to trust your instinct and your understanding of a situation. You may not be a financial guru, but you still need to understand your accounts. This applies to everything else and so the successful business owner keeps himself up to date with new ideas, he is likely going to be a good reader, he is interested in his professional development and he questions the advice he receives.
It is interesting that the best advisors I have used in my business have been individuals who have shown to have experience and creativity rather than qualifications. This may not work for everyone but in my view a practical approach has always been very important to the success of my business.
4. The Ability to Recognise Opportunities
Opportunities never end, but don’t look for them. It is strange how opportunities may come your way when you least expect them. You may be on the train, or watching the news, or interacting with someone. Then all of a sudden you see a gap in the market. This is when you must invest your valuable time into researching the opportunity. Is it really a good one?
You might have heard the term “opportunity cost”. This is the cost of any activity measured in terms of the value of the next best alternative forgone (that is not chosen). It is the sacrifice related to the second best choice available to someone, or group. So if you take an opportunity and let the other one go, the cost is the value of the one you let go. Therefore if the opportunity you let go is better than the one you have chosen, the real cost to you is not what you spend to achieve the opportunity you have chosen, but how much you have lost by not taking the better opportunity.
This means that a successful business owner always compares opportunities to determine the real cost to him.
5. The ability to Measure the Past Against the Future
Finally a successful business owner knows how to evaluate and measure past performance. You might have read that “past performance is not a measure of future performance and the value of your investment can go down as well as up”.
One of the most important things in business is to add value to it. In other words past performance is not a good indicator of future performance, but the value in the business is. By this I mean that the successful business owner knows where the value of his business really is. What are the customers that give real value? What are the product and service lines that give real value? What are the systems in his business which give real value? It is only by recognising where the value is that a successful future can be built.
I hope these few tips are useful. There is a lot more to it and we would welcome the opportunity to discuss your goals and objectives with you.
Being a successful business owner isn’t just a matter of luck. It’s about developing your qualities, anticipating the market around you, researching opportunities and making solid decisions.
Can you think of other qualities to add to the list? Please let me know in the comments.
Today’s Micro Action
Take a few moments to think about these five qualities. Can you work on some to develop and improve your business? If so, make a note of them and then put time in your diary to brainstorm and create an action plan.