Enjoy Your Business
“Relent on your ego — never forget the people who helped you reach your goal”
Owning/operating a small business involves long hours and numerous responsibilities. To avoid becoming burned out by a busy schedule and overburdened by the endless responsibilities, enjoying the business is essential. Without enjoyment, an entrepreneur’s pride in his/her business diminishes. Sadly, the business itself soon follows. To avoid losing touch with the small business, three tips from a small business forum are:
- Small businesses are not 8 to 5 jobs,
- Separate family and business,
- The divorce rate is 5 times higher for owners of failing small businesses.
“Focus on things that are important rather than what’s urgent”
Time management is organization, “the ability to structure your life and keep tasks and information in order” (The Young Entrepreneur’s Guide to Starting and Running a Small Business by Steve Mariotti). The golden rule for full-time small business owners is the 3000/500 rule: no more than 3,000 and 500 hours per year should be spent working and taking part in community and other activities, respectively. Typically, if these hours are exceeded, both family life and health will suffer. The similar rule holds true for the part-time business owners (those who have a full-time job or are starting a new business) if they exceed the 1,000/750 rule: working more than 1,000 hours per year if under age 40, and 750 hours per year if over age 40. Timely planning is the key to balancing job tasks with community and extracurricular activities. According to several small business owners, here are the top three planning strategies:
- Set aside time each day for planning,
- Focus on tasks and activities that are important — in other words, focus on the $10,000 decision rather than the $10 decision,
- Delegate tasks to employees.
Give Back to Community
“It just feels good”
Contributing to your local community stimulates good public relations. In turn, good public relations stimulate a loyal customer base and a long-lasting relationship with the local community. Entrepreneurs have contributed to their communities in positive ways. The following are ideas on what worked for them:
- Regular advertisements in the local newspaper,
- Employing local citizens into their business,
- Learning how to say no. In his first year of ownership, one small business owner received a $20,000 donation request. For the good of his business, he had to say no. A smaller, more appropriate donation was given instead.
“Have fun on the way to the goal”
In order for a small business to be successful, the management must have goals with the following characteristics:
- Specific and timed: for example, increase sales by 20 percent in the next year.
- Measurable: comparing this year’s sales to last year’s sales is a good measuring tool.
- Attainable: “The ability to see the results of your goals while working to achieve them (Mariotti).
- Rewarding: if the goal is not rewarding to the owners or employees, then there is no incentive to reach it.
- Written down: goals that are written down are achieved nine times faster than those that are not.
Setting goals that meet these criteria is a helpful means of prioritization: it helps to distinguish the importance of the $10,000 goal versus the $10 goal.
“Goodwill — The Kiss of Stress”
In the small business world, money is a precious commodity. When investing in their small businesses, owners tend to focus their attention on the initial investment — rarely do they take into account the unexpected expenses that will occur over the next 12 to 48 months. To prevent headaches over unforeseen expenses, the “ripple effect” strategy is recommended. The ripple effect allows for unexpected expenses by simply overestimating time and capital needs by 25 percent. Not only does this method save the owner from worrying about unanticipated money needs, it saves valuable time that could be used for other tasks and activities. Some advice from entrepreneurs on key money and time matters is: ”
- Never purchase a business for more than the previous year’s sales,
- Be careful in investing too much into goodwill — reputations and markets can and do change.
Growth is the number one cause of failure in the small business world. However, if managed appropriately, growth can be positive for a small business. The key to positive growth is transitional management. A small business owner must be able to teach and share his/her wisdom and experiences with others or risk destroying the business. By teaching and sharing, the owner/manager is able to focus attention on the “big picture” and allow others to worry about the details. Another key is adapting to the new situation (being a manager as opposed to being a technician). initially, adaptation will be difficult. Entrepreneurs “have trouble making room for the creative ideas and strategies that others envision” (Tom Chappell-Association Management). They frequently spend time in production and the day-to-day activities. To manage growth of a business, the entrepreneurs suggest: ”
- Move a new partner or present employee into a management position within a six year period.
- Allow the new manager to make some mistakes — growth does not come without mistakes.
- Delegate responsibility with accountability.
Sell Service, Give Away Product
“Neighbors sell neighbors”
In today’s society, it is the entrepreneur’s job to “sell their service and give away their product.” This philosophy can be accomplished with honesty and by “going the extra mile.” Honesty is good customer service. It is the commitment to tell the truth about the products sold and services available and to deal fairly with the public (Mariotti). Being up front about the products’ drawbacks and benefits is good business. Another key to good business is “going the extra mile” making a genuine effort to meet customer needs. Meeting customers’ needs starts with understanding the cultures and groups of the local community. If their values, wants, and beliefs are understood, it is possible to better satisfy their needs. Some tips to remember when investing in customer service are:
- Most small business owners indicated that word-of-mouth advertising was the most important means of expanding the business.
- A small business owner must invest 15 percent of his/her net earnings and time into new products and services to stay on the cutting edge.
- In agricultural and rural communities, 70 percent of all marketing is “neighbors selling neighbors.”
Beware of Killer Toys and Side Show Ventures
“Feed the ego”
As mentioned before, growth is the number one cause of failure for a small business. Growth can cause failure in several ways. The most obvious being over expansion. However, during periods of rapid growth and increasing profits, “killer toys” (for instance, owning a race car or race horse) and “side show ventures” (such as an expensive hobby or another business) become very appealing. Nothing is wrong with having a little fun and enjoying the fruits of the labor. However, if the fun gets out of hand, disaster for the small business is near. Attention that should be focused on the continuing success of the business is now misdirected to spending money on “killer toys” and “side show ventures.” The money and time spent frivolously outside the business on these ventures drains the small business of funds and managerial focus and control. If these drains are not stopped, they will eventually lead to the demise of the small business. Entrepreneurs pass on an important message:
- Don’t let a short-run windfall in profit or cash flow influence and distract your way of thinking.
Praise in Public, Correct in Private
“Attract and keep good employees”
Human resource management is another major challenge for the small business. First, most small business people have never worked under another’s supervision. Secondly, the business firms are small, and, as a result, a professional personnel manager is not employed. To remedy this, entrepreneurs recommend the following:
- Allow the workers to prioritize and create their own schedules. As a manager, hold them to their agreements.
- Always look for an opportunity to praise an employee in public, but always correct him/her in private.
- Look for employees from Ronald McDonald’s University, those who show up for work on time, follow direction, and work well with people.
“People just need to talk to each other”
Small business owners suggest that networking with other owners and having a “professional team” are essential to the continuing success of a business. Having and utilizing fellow business people as contacts helps a manager to stay abreast of industry happenings and changes. A professional team composed of the banker, lawyer, insurance agent, and accountant is crucial to the continued profitability of the business. Some advice from fellow entrepreneurs on viable networking is as follows:
Choose a lender with the following criteria:
- Knowledge of the industry,
- Willingness to work with you during good and bad times,
- Visible and available.
Insurance is critical. Most of the small business people have more than $1 million in liability, health, and disability insurance. The cost of insurance for one small business even exceeded $7,000 annually.
Utilize the accountant’s report to analyze and monitor success and to identify adjustments that must be made within the business.
These suggestions and ideas are general rules of thumb that have stood the test of the real world.