Business Owner Thinking – A New Way of Training Your Employees

It is now clear that to create a company which your customers rave about, and repeat buy from, requires you to have employees who operate at a higher-level un-experienced by most of your competitors. The highest level of performance you can expect from any individual is the same level of performance and commitment you would expect from a business owner – the very founder of the company.

There is without question a distinct way of thinking which is business-owner-thinking. Business-owner-thinking has been around as long as there have been business owners.

What many people forget is that all businesses were once started by a business owner, an entrepreneur. Even the great multi-national brands which exist today were once started by a business owner.

Ford Motor Company, was started by Henry Ford in 1903. IBM was started by Tom Watson Snr in 1914. Coca Cola was started by Asa Griggs Candler in 1892 after buying the formula from John Pemberton. Nike was started by Philip Knight in 1972. McDonalds (as we know it today) was started by Ray Croc, and before that by Dick and Mac, the McDonald brothers who started the company in 1940. Tesco was founded by Jack Cohen in 1919. Sony by Masaru Ibuka and Akio Moritain 1946. Honda by SMichirM Honda in 1948, and Wal-Mart, one of the largest retail corporations in the world, was created by Sam Walton in 1962.

The original founders of most large multi-nationals can be traced, even though many of them started their companies more than 100 years ago. But always when you look back in time, you’ll find the founding business owner who had the idea, vision, ambition, and love for their customers to create something really remarkable.

These entrepreneurs understood the basic rule for success – that the easiest way to grow a business is through repeat, happy, customers who do your marketing for you.

Think of any multi-national brands today and you’ll see that they each have loyal customers who repeat buy from them time and time again. The brand itself has become trusted, so that just the logo and the name stands for something that we believe in. Often we trust the brand just as much as we trust a recommendation from our friends or family.

These mega brands have spent many years and many millions of pounds to imprint their image in our minds so we know what they represent, and what they stand for.

You may not have the multi-million pound marketing budgets these multi-national companies have, but you can create happy, repeat customers who spread the good word of your company and what you stand for in the same way.

The entrepreneurial spirit behind the brand

Always behind the spirit of the brand stands the founding entrepreneur who is the purest employee any company will ever have. In some organisations, the number of employees who have been and gone since the founder first started the company runs into hundreds of thousands, if not a million plus for large established companies such as the Ford Motor Company or Wal-Mart.

But the importance of filling employee number 239,331 with the same spirit and energy as somebody like Henry Ford or Sam Walton remains essential to the success of any business.

If employee number 239,331 doesn’t embody the very essence of the entrepreneur, but is closer to the Barman or the 50% of Middlemen who neither over or under perform, then how can the company be true to its brand values?

Developing, maintaining, and keeping alive the entrepreneurial spirit of business-owner-thinking in your company is essential to your continued and ongoing growth and success.

In this chapter I’d like to introduce you to seven core principles of business-owner-thinking.

When you look at any high-performing business owner, you’ll find that these core principles run through their bones and are non-negotiable. They are the same principles that everybody in your company needs to live and breathe by.

1. The only standard to aim for in business is excellence!

The only standard in business for you and your employees to strive for is excellence. It is the only standard your paying customers demand and expect from you, and is the same standard you would expect if you were a customer of your own company.

Excellence is a way of life, it’s an inner ambition that everything you do, and everything you create and sell is at the highest level. Paolo the Barber knows this, just as all business owners know it.

To illustrate excellence in practice, let me use the example of the famous UK Chef Gordon Ramsay to show how he constantly strives for excellence. His outstanding quest for excellence and quality has been officially recognised by his ever growing number of Michelin stars.

Gordon Ramsay has himself become the brand, with his logo simply being his signature. When you see that logo, you have a high expectation of what you will receive, and you know it will be of an exceptional standard.

Ramsay’s employees have also become famous in the culinary world with his chefs becoming revered themselves and sought after, as they too constantly demand the same impeccable levels of excellence.

Ramsay does not only have a full order book for paying diners who must book months in advance to get a table at one of his restaurants, but he also has a queue of trainee chefs who want to work for him, and who to want learn the secrets from a true master.

If you in your own organisation set ‘excellence and above’ as the only standard, so that everybody in your company is committed to this goal, your customers and marketplace will very quickly recognise you for the true leader and innovator you are.

They will reward you by repeat buying from you, and doing your marketing for you through their multiple word-of-mouth recommendations.

But for that to happen, every employee in your company has to understand the need for excellence in everything they do. In a software company for example, excellence must be achieved at every step – from designing the software, selling it to a customer, installing it, or answering a technical question on the phone.

In a motorway service station, excellence must be shown in the cleanliness of the toilets, the quality and freshness of the food, shelves being well stocked, the absence of litter, and paint work not being chipped. This is not just the responsibility of one person, it is the responsibility of every member of staff in the company to reach for a higher standard.

At all levels across your organisation your employees must look at their own role and ask themselves, ‘Am I doing this to the standard my customers expect of me, and am I doing it to the standard I would expect if I was a paying customer?’

2. Business is not about what you want, but is about what your customer wants!

All great business owners know that the success of their business has very little to do with what they personally want, but everything to do with what their customers want.

However, when you deal with a company as a paying customer, you could often be mistaken into thinking that it is the other way round; that the needs of the employees come first, ahead of your own.

How often have you stood in a shop, waiting for the shop assistant to finish their conversation with a colleague before they serve you? How often have you made contact with a company with an enquiry about a product or service, and left a message which they never responded to, simply because the employee wanted to leave early, or couldn’t be bothered to deal with it?

As is often said, the customer is king. Or in Japan, it is said that the customer is God, the highest deity. They recognise the basic fact that if you haven’t got a customer, you haven’t got a business.

It appears that too few employees make the obvious connection between revenue coming through the door, and the payment of their salary, bonus or benefits. But business always has been and always will be about customers.

Most organisations however are structured in the wrong way to be able to serve their customers at the highest level.

Let me explain this a little more.

If you think of your own organisation and draw it out in an organisation chart, I’m sure you’d put the CEO at the top, the directors, Vice Presidents and managers below, and then below them, the rest of your employees.

By definition, customers come underneath employees, because it is the employees who deal with customers.

If you draw the same shape and think of it as a pyramid, you will have the leadership at the top, the team in the middle and customers at the bottom. More often than not, the leadership at the top is unaligned with the rest of the team and customers.

What great companies do (who are truly customer focused and understand the life-time value of customers, and the power of word of mouth recommendations) is to invert the pyramid and put their customers at the top.

They understand that the whole purpose of a business is to serve customers, and that everybody throughout their organisation is responsible for keeping customers happy – whether they are customer-facing, behind the scenes in back-office, fulfilment or any other unseen area of the business.

The retail company Nordstom, started in America in 1901, is legendary for its customer service and if you go to the Nordstrom website you’ll see this very same inverted pyramid which is at the centre of their company’s values.

The Nordstom employee handbook is one paragraph long and encourages staff to think like business owners and to do the right thing at all times for their customers.

3. The growth of your business is dependent on these two factors: maximising the life time value of your customers, and harnessing their word of mouth referrals.

This is a subject we have already spoken about, but it is important to recognise that the success of your business is not about a one-off transaction with a customer. It is all about the life-time value of a customer, and the power of customers recommending you to others, and doing your marketing for you.

Let me give you an example using Tesco, the supermarket.

I could go to my local store and spend £100 there. Tesco would be very grateful and say, ‘Thank you very much for spending your money with us’.

However, spending only £100 once with Tesco would not make them the multi-billion pound mega-brand they are today.

The success of Tesco comes from repeat buying from loyal customers who spend £100 per week, every week, for 52 weeks of the year. That is £5,200 over the course of the year.

It comes from customers spending £5,200 every year for the next 5, 10, 15 or 20 years, because they have loyalty and a connection to Tesco.

But that would only ever happen if the customer continued to have an extraordinary and exceptional experience with Tesco and if Tesco continued to give them reasons to keep coming back and spending their £100 per month with them.

If, as a customer, you started to have a negative experience; if Tesco started to become complacent and take you for granted, it would become all too easy for you to switch your allegiance and start shopping at Waitrose, Sainsburys or Asda.

The cardinal sin in business is to lose a customer through lack of care and attention.

If your company is filled with people like the Barman, they give your customers no reason to continue to buy from you.

If your company is filled with Middlemen, you will give your customers no reason to recommend you.

But if your company is filled with people who think and act like business owners, who are passionate and in love with their work, who are engaged and alive, and put the needs of your customers first, then your customers will want to share their remarkable, memorable, experience with their friends, family and business associates.

4. If your team don’t believe, they won’t be able to make your customers believe. If your customers don’t believe in you, they won’t buy from you!

An essential trait of all great business owners and entrepreneurs like Steve Jobs, Bill Gates and Alan Sugar is self-belief and confidence. We’ll speak more about this in the following chapter.

But belief is an over-riding principle in the world of business-owner-thinking, because business is fundamentally all about belief. It’s about creating belief in the eyes of your customers, because when your customers believe, three things happen:

1. They buy
2. They buy again
3. They do your marketing for you.

The way to create belief in the eyes of your customers is to create teams of employees in your company who believe passionately in your products and services, and believe in themselves.

The way to create belief in your teams is to create leaders in your organisation who are inherently self-confident and believe not only in themselves, but have a rock solid belief in the products and services that your company offers.

If the leadership of your company (including leaders at all levels) don’t believe in themselves or in their products and services, they won’t be able to make your team believe. If your team don’t believe, they won’t be able to make your customers believe. Clearly, if your customers don’t believe in you, they won’t buy!

Understanding that so much of business is about confidence and belief is essential, and keeping belief high in your company (and doubt, fear and worry at bay) is one of your key roles as a business leader.

It is important that you use people like Paolo the Barber (who already share your passion and belief) to your advantage, and promote them as leaders throughout your enterprise. I’ll speak more about developing leaders at all levels in subsequent chapters.

5. Innovation and change are the only way forward. Standing still in business is not an option.

The fact of the matter is that business-owner-thinking and entrepreneurship go hand in hand, simply because all companies are entrepreneurial companies. After all, they were once started by an entrepreneur and for them to keep on growing they have to continue to innovate, and adapt and respond to the changing needs of their customers.

Many people are fearful of the word entrepreneur, believing that entrepreneurship is about risk. It isn’t, it’s about results. It’s about achieving results, more often than not, against all odds and with little or no resources, and who in business doesn’t suffer from a lack of resources at some time?

For you to have customers who want to keep buying from you, and keep recommending you, you must keep giving them reasons to come back and buy from you.

In some instances, customers will buy the same thing from you time and time again; a cup of coffee from Starbucks is a perfect example. But very few companies can get by, by standing still, and not innovating or changing. Indeed Starbucks constantly changes its pastry selections, its coffee of the month, and its music CDs. It doesn’t stand still; it is constantly innovating and changing its core offering.

Other companies, such as HP, the computer giant, would be out of business in months if it failed to continue to innovate and change, because it is in an industry which constantly requires new design and innovation.

It is hard to think of a company that doesn’t constantly change.

All businesses need to see themselves as entrepreneurial businesses, and therefore all businesses need to have employees who have an entrepreneurial spirit and business-owner way of thinking.

If you can keep this entrepreneurial spirit alive in your employees, and give customers reasons to keep buying from you and keep recommending you, then you will have transformed your workforce into your salesforce.

6. You must know your market and customers as well as you know yourself.

A consistent trait of all successful business owners is the depth of knowledge they have of their marketplace. They have the ability to passionately immerse themselves in their industry, and to know their customers and competitors almost as well as they know themselves.

However, this isn’t always the case when you deal with employees. I’m sure you have been in the situation more than once where you know more about a product or service than the person serving you in a shop, or on the end of a phone in a call centre.

But that would rarely be the case with business owners because they immerse themselves in their industry. Employees, on the other hand, are quite capable of immersing themselves in other areas of their lives, (if it is for their own benefit) even if they appear indifferent at work.

When buying a house for example, any employee becomes the ultimate example of an entrepreneur business owner, and soon knows every house available within their target area. They know the selling prices of all recently sold houses, and the pros and cons of each possible house they are considering. They know the finance rates for mortgages and the best deals available in the market, how much the removal company will charge, and how much legal fees and stamp duty will cost. These are all figures which are on the tip of their tongue, but ask them some basic information about your customers, industry and competitors, and they are stumped!

Only when your staff immerse themselves in your industry, and know your customers and competitors as well as they know their own local housing market, will you ever come close to turning your workforce into your salesforce.

7. The success of your business is 90%+ dependent on the mindset of your employees.

For many years now I have had the great fortune of meeting with some of the UK’s most successful entrepreneurs. I have taken a passionate personal interest in the mindset and thinking patterns of high-achieving entrepreneurs and business owners.

There’s no doubt in my mind that somewhere between 90% to 98% of their success comes down to their mindset and an inner-confidence and certainty that they will achieve the goals they have set out to achieve.

It’s often said that we become what we think about most of the time, and how we think does determine our results. Quite literally, what we think about we say, what we say we do, and what we do leads directly to the results we achieve.

If you have people in your organisation who do not have the mindset of a business owner, are disconnected like the Barman, or are underperforming ‘Middlemen’, then the chances of you achieving high levels of business growth and turning your workforce into your salesforce are slim.

The fastest and most profitable road to success in your business is to train and develop the mindset and attitude of the staff in your employment.

Most companies however, train only for skills, giving people the technical abilities to do their job. For the person who works in the coffee shop, this is how to make a cappuccino, how to infuse a cup of tea, or to take cash.

What they fail to teach is how to do the right thing for customers, how to let the personality of the employee shine through, how to live up to the customer’s expectation of the brand and how to give them a remarkable experience, so that they leave the coffee shop talking about you in a positive, rather than negative way.

We’ll take a closer look at mindset in the following chapter.

Right now, you can see that by developing your staff to think, act and make decisions like business owners, you put yourself on a path as a company to become a leader in your field, and stand out from your competitors.

By following these principles you will be known as an excellent company which is remarkable and memorable, rather than blurring into the background as just another company or, worst still, being known as that company who doesn’t care. You will give your customers reasons to come back and buy from you, and go on and tell their friends about you.

What to Do When Setting Up Small Business

Setting up a small business involves a number of formalities and steps to be followed. Prior to setting a business, you need to have a business idea followed by a marketing plan to execute that idea. These both aspects lay the foundation of a small business. A business idea should be selected on the basis of the specialization area of the owner as well as on the degree of investment into the business.

Essentials for Setting up a Small Business

There are certain resources that are essential while setting up a small business. These include-

Planning:

The base of any small business is a well-crafted plan. A good plan helps you in well executing the other functions such as management, organizing, and controlling. The promotion and advertisement of the products should be well planned and then implemented.

Arranging Funds:

Small businesses require low investment than big scale business. A big share for the funds for a small-scale business is usually gathered from personal savings. Many banks and financial institutions also give loans on a certain amount of interest and collateral security as a back up.

Naming the Business:

Naming your small business is very important. The name gives recognition to the business and makes it stand unique in the market that is full of other such businesses. Moreover, the name also represents the type of services offered by the franchise.

Registration:

Registration to a small business gives a formal entity to a business. It requires some paper work and procedures. The Secretary of State formally recognizes your business as corporation or a limited liability company. You also need to have an employer identification number while setting up a business.

Accounting and Book Keeping:

It is always recommended to have a separate banking account for the business. This will help you in keeping the track of the income and expenses. You can also use accounting system or software that also helps in maintaining the record books.

Licensing:

To acquire a license for your small business, you need to consult the local authority where the business will be set up. Licensing procedure requires certain fees and rules to be followed.

Tax Implications:

The tax implications depend on the entity of the small business. A sole proprietorship business needs to pay quarterly payment at the end of a quarter year. In case the small business is S-Corp, C-Corp, or LLC, you need to contact the attorney for your tax implications.

Client Contract for Service:

While setting up the business, a client contract for the services should be made. This helps in making a mutual agreement and understanding a plan to work together.

Setting up a small business requires certain essential aspects as mentioned above. These aspects help you in well setting up the business in the market. Aftermath, its your responsibility to its take it further. A good businessman always looks out for more options and resources to expand his business. Always seek advice and suggestions from your experienced and senior businessmen to attain success with your small business.

Why Traditional Businesses Fail? – 5 Vital Reasons

1. Wearing too many hats

This is a huge overlooked problem in the world of traditional business and can single-handedly destroy a business overnight. If you are the person handling 2-5 positions within the company, and the business could not operate one or two days without you on its own; it is a matter of time before you harm yourself and ultimately the business.

A. If you get hurt or sick, your business stops. This is when the business is completely reliant on you.

B. If you are not qualified to perform certain aspects of the company (business functions): you are damaging the business structure or outside client perception.

C. Too many hours of work: you will inevitably cause yourself physical exhaustion and have a burn out rate of just a few years.

D. You may think that you are saving yourself money by not hiring the needed amount of people to perform a proper business structure, but in the end you could be hurting your growth and even preventing a higher price on the sale of your business.

Wearing to many hats is a real burden and will cause more problems within a company than you can fathom. I would suggest that if you want to move forward and have a thriving company that you budget and prepare all job duties to be delegated to someone qualified when your cash flow will sustain the expense.

2. Lack of Working Capital

This is a vital necessity in a traditional business, working capital is a word to describe a large amount of on hand cash that is set aside to handle unexpected expenses and company growth. If you are not capable of having at least one or two full months of company expenses covered by your working capital, then you could be at risk of losing everything in a blink of an eye.

A. Many businesses work on a NET 30 (payment is due within 30 days of work), but do you really get paid on time? And what happens if you don’t get paid at all?

B. There are many fixed expenses on a day to day basis called fixed overhead. These expenses do not depend on the work that you do. Many people do not understand this concept until they have to pay bills and employees from a bank account that does not have enough money in it. This causes a cash crunch and is a real problem if you do not have extra money put aside to float your business along until you receive payment from your clients.

C. Extra unexpected costs may prevent you from performing your services until fixed or corrected, if you do not have enough on hand cash you may have to borrow or shut your doors.

Working capital is prudent to any successful business and will allow you to grow and be comfortable. If you have a large reserve of on hand cash, you will never have to pass up an opportunity to expand your business while preventing cash flow problems.

3. Cash Flow problems

This is when you are not able to pay for bills, taxes, and make payroll for your employees or yourself on time. Understanding the timing of when you receive cash in your business is critical. When cash flow problems occur it can be detrimental to your company and you may not be able to recover or collect funds fast enough to keep your business from closing.

A. When you are spending or withdrawing too much from the company prematurely before you have received the payments due to you. This is a problem especially when you do not have a secondary source of emergency funds.

B. Many times cash flow problems can stem from fast growth, theft, too much overhead, taxes, not properly job costing (more money going out to employees than the job takes in or charges), accounting errors, etc.

My advice is do not deplete your bank account with credit cards, get in a habit of only taking money out one time a month after all expenses or even six times per year. This habit will give you plenty of extra money in the account and acts as working capital until you have made sure that all of your bills have been paid.

4. Rapid Growth

Rapid growth is a silent and unexpected business failure waiting to happen if not done properly. Many people do not understand the proper way to grow a business that promotes a healthy and strong business structure while increasing the revenue. The common phrase used amongst other business owner to describe a Rapid Growth failure is “too big, too fast, too soon.”

A. Before you grow you must dive deep into research on how much it will cost you to expand the area or provide a service new to your company. This will ensure that you know your real cost behind the growth, putting you in a position to decide weather you can handle the cost associated with the new growth.

B. Determine how fast you can grow with your new perspective on cost of the new growth, then make a growth plan that will walk you through each step required to make the business ready for the new growth. This can include new employees, new job descriptions, new machinery or equipment, extra inventory, transportation, signs or logo, sales material or marketing strategy, time frames, extra cash on hand to cover upfront expenses and overhead, payroll increases and website updates.

C. When getting ready to sell a business many buyers will look at a fast growth as a possible source of structural problems and may shy away from buying that business without great research. Use the 15-20% rule of growth per year unless you have professional business growth help or bring in seasoned investors. This will ensure that there are no Cash flow problems or structural problems within the business.

When I grow I always research and document every step needed to make sure nothing goes wrong and I am fully aware of all extra cost associated with the growth.

5. Poor management

This problem is one of the most common amongst all businesses including those that have already failed. A business can still grow and not be forced to close the doors like the previous problems that I have explained even when the management is poor. A business is only as good as its management and poor management will stunt the businesses growth, structural stability, hire unqualified employees and waste your profits like its going out of style.

A. Poor management has no control over the business and makes you vulnerable to collapsing of the managerial system creating BIG issues for you to deal with.

B. Many people know that the manager that they have hired isn’t qualified to do the job, but if it means that they don’t have to be the manager than it is now plausible. This thinking will turn out to be a nightmare, when the management decides to harm the business through careless actions and possibly destroying your local reputation. Then they leave you hanging with a dysfunctional system, fewer employees and possibly many unknown thefts.

My advice to you is when you know they are not cutting the mustard it is easier work getting rid of them now before they damage anything too bad, but far harder to let them stay and to correct and repair all of their irreversible damages they may have cost you money and future clientele.