Sadly, that’s a concept that’s been continually vilified by those that have a sophomoric understanding of real life economics. To these individuals profit making is an evil and exploitative burden placed on the working class by the privileged few.
As a reader of this blog, Friedman’s perspective that profit making is a good, honorable and socially responsible thing to do is likely to resonate with you. And, since you’re in favor of profits let’s take look at why it’s so difficult to have a consistently profitable business enterprise and how to maximize your business going forward.
Why so many businesses fail.
I’m certain you’re aware of the dismal success record of most businesses in most industries. Most studies indicate that upwards of 80% of new business startups have failed within the first five years. In certain industries this figure is much higher.
But it’s not simply confined to startups. Every year, most businesses in every industry don’t make the top tier. The vast majority perform at a mediocre level. And many, many more don’t make any profits to speak of.
The vast majority of businesses operate in a very casual style of dealing with things as they come up. This management technique sometimes works in economic booming times, but is not sustainable. And, it certainly does not work when times are tough.
Seven techniques that work all of the time.
- Thinking like an owner. That’s an odd thing to say you might be thinking, particularly if you’re already a business owner. But, that’s not the real point. Instead, we’re talking about the belief that you’re totally responsibility for the results. This is true regardless of how large or small your business may be. This is a single-minded focused approach that means doing whatever it takes on a continuous ongoing basis to be successful.
- Developing an annual business plan. This is not a plan that a company might use for raising capital or satisfying banking requirements. Instead, this is a plan that focuses on us the specifics of what the business is going to be doing over the following 12 months. Think of it is a long list of goals and action steps with goal owners identified and with due dates.
- Providing terrific products and services. When I talk about terrific in this case, I’m not talking about what you like. Instead, it’s about what your customers want. Additionally, it’s important that you forget about what they need or should have.
- Building a top-notch management team. While it’s important that you have high quality employees, vendors, outside contractors and so forth, it’s vital you have excellent managers. Plus, these managers need to be savvy at running a highly functioning business and not simply being business school theorists.
- Utilizing a thoughtful marketing program. We mentioned earlier that your products and services should be what customers want. This marketing plan needs to also focus totally and entirely on what your customers and prospects want. You’ll generally need to conduct periodic analysis to determine exactly what it is that they want. And, when you find out your marketing plan needs to spell out specifically how you’re going to be attracting and retaining your customers.
- Conducting a repeatable selling process. This process may or may not include sales representatives and customer service individuals. What’s required is having a step-by-step and repeatable pipeline oriented selling system.
- Maintaining exceptional customer relations. In this case this exceptionalism needs to come from every single one of your employees not just your sales and customer service personnel. You need a “customer facing” organization that assures that your customers will be so stunningly pleased they’ll be evangelical about doing business with you.
It’s essential you have all of the seven elements present in your business. Additionally, each of them should be at a very high level of continuous performance.
So, it’s your choice. Either play the game like the commoners. Or, make the decision to be excellent, booming and prosperous right now. Just like you learned in this lesson on leadership.