The Facts of Business Life (11 page)

Since at Level 1 your business is still in the preparation stage and doesn't actually exist yet, you obviously won't have a staff to work with. But that doesn't mean you don't have to put together a good team of mentors and advisers. You will need a group to help you determine whether you want to become an owner and, if so, which opportunity you should pursue. Since, again, there are two aspects of Level 1, the team you put together to help you achieve the first objective may not be the same as the one you build to attain the second.

Among the people who can help you make the ownership decision—or an expansion decision—are current business owners in your market or owners of similar businesses in different markets, as well as bankers and accountants who know the specifics of your industry. Once you've decided you do want to be an owner—or to expand your business—you begin analyzing the opportunities available to you. You can gather information from local business associations; owners outside your market area; people who are experienced in buying and selling businesses; owners who have already been involved in expanding businesses; suppliers within your industry, who know the cost of products and sales histories; and members of state, provincial, or national industry associations.

Regardless of which objective you are trying to attain, in selecting the people you ask to provide assistance, you should be looking for those who have certain characteristics, including experience in doing what you want to do, the ability to assess markets, knowledge of your specific industry, a history of success in their fields, an understanding of the important role owners play in a business's success, and a willingness to help you when your business becomes “live.”

At this level, the only employee you are likely to have is yourself. However, developing individuals starts with developing yourself. And if ownership is your goal, there are a number of abilities and/or skills that you should master in order to get your company up and running, and to keep it going in the future. Among these are:

• Understanding what being a leader entails.
  
• Becoming a great communicator, in both speaking and listening.
  
• Understanding your own core values and never compromising on them.
  
• Being able to clearly state, and stand by, your vision for the company as well as its operating goals and ethics.
  
• Understanding that setting a good example is the most valuable gift a leader/owner can give his or her company.
  
• Recognizing that at some point in the future you will have to switch from being a student of leadership to a teacher of leadership.
  

For the new owner, Level 2 is the point at which the business stops being purely theoretical and starts becoming real. Having made the decision to become an owner or expand your business, and chosen an opportunity, the owner begins to create the company's DNA. That is, he or she begins developing how the business will operate on a day-to-day basis, guided by the sales and profits forecasts and other information gathered at Level 1. This is an extraordinarily important step in the life of a business, not only because the preparation the owner does will be a major factor in how the company responds to his or her leadership, but also because it will be reflected in how successful the business will be, both in the beginning and in the long term.

Like Level 1, Level 2 begins with a mental image rather than a physical action, that is, in the mind's eye. As with anything an individual wants to accomplish, the dream comes before he or she actually goes out and does it. For example, people who decide they want to lose weight start by visualizing how much healthier they will be and how much better they will look and feel. Then they define their reality—that is, they recognize that they are, say, 30 pounds overweight, and decide this will be their weight-loss goal. Next, they determine how long it will take to achieve this goal, set up intermediate objectives and goals, and develop exercise and eating programs to fit the timetable. It's only then that they begin to take physical action.

Creating a company's DNA is a lot like choosing to lose weight. Owners also start with a mental image—in this case, one of how they want their companies to operate on a day-to-day basis, how their employees and customers will be treated, how their employees will treat each other, their performance expectations, what the company's objectives and goals will be, and who will be responsible for them. That is, they visualize what they want their companies to be, create the steps to get there, assign accountability, and determine oversight and controls. This is a key point for ownership success, because the result of leading in the mind's eye—thinking through how they want their company and all its moving parts to work, separately and in unison—enables owners to create their own destiny.

Of course, unless you have a one-man or one-woman operation, you can't operate a business entirely on your own. And that means you and your employees must operate as a team. There, however, is the rub. Most people believe teamwork and success go hand in hand, but that's not necessarily correct. In fact, a lot of teamwork isn't productive at all. Teamwork is productive only when there is a strong leader who establishes clear goals, orchestrates behavior, demands performance with accountability, and can put a little fear into his or her employees so they will consistently do what they need to do. This, ultimately, is how to establish a successful company—a business that operates as a team and is led by an owner/leader who isn't afraid to make the tough decisions, and who knows the goal is not popularity but winning the market war and being a long-term success.

It is important to note, however, that while creating a company's DNA is an essential part of getting a company up and running, there are also times when the owner of an existing company might find it necessary to come back to this level. This happens when he or she feels it is necessary to change the company's operating systems for any one of several reasons. It may be because the existing systems are not operating as they should, or because the owner is planning to grow the company, and recognizes that its current systems have to change to accommodate that growth. It may also be because there have been changes in the market that must be addressed, or because the owner wants to lead a change in the market. In other words, while DNA creation is something that must be done early on in a company's life, it's also something that may occur many times over the course of the business's existence.

The Benefits of Leadership at Level 2

• Being a leader enables you to determine the company's DNA, that is, how things get done.
  
• Being a leader helps you define why things are done this way.
  
• Being a leader forces you to determine the company's goals and objectives and when and how they are to be met.
  
• Being a leader enables you to make sure the company's rules are applied equally to everyone regardless of title or position.
  
• Being a leader helps you make individuals accountable for their actions.
  
• Being a leader creates and promotes teamwork.
  
• Being a leader enables you to easily see when something is going wrong and eliminate unpleasant surprises.
  
• Being a leader helps you define what is considered acceptable and unacceptable behavior toward customers and other employees.
  
• Being a leader helps you determine the types of employees you should hire and, as a result, reduces employee turnover.
  
• Being a leader enables you to demand that scorekeeping and personal responsibility be part of the company's culture, and puts a little fear into employees who are not doing their jobs appropriately.
  

The main leadership priority at Level 2 is creating the business's DNA by defining how all the moving parts of the company will work, both independently and together. DNA also defines what success will look like, the ethics under which the company will operate, and what is expected from employees in terms of their performance, attitude, and professionalism in dealing with each other and with customers. Creating a business's DNA—as well as re-creating it—requires the owner to exhibit certain leadership skills, that is, brains, resolve, and tenacity, if everything is going to be done the way it should be.

DNA and its creation can essentially be broken down into two parts. First, you have to visualize how the business will operate on a day-to-day level and remain consistently profitable. This means you have to think through all the functions that must be managed in the company and devise processes by which they can be. Second, you have to implement these processes. And that's not easy to do. In fact, to accomplish it you have to be both tough and courageous, that is, not afraid to use an iron fist and a hard shoe. But it is these kinds of skills that separate the good owner/leader from the bad, or, to put it another way, the ones who make money from those who don't.

If you are going into your first business, or have just taken over a business, you should be prepared, on the first day, to prioritize and implement how the business will operate and how financial forecasts will be met, know how to react if operations are going badly or if they're going better than expected, and know what will earn employees a pat on the back or a promotion, as well as what will be cause for a kick of reality or dismissal. Starting with the first day, you have to create a presence, and you do that by setting the tempo and the rules, determining the work ethic and attitude, and dictating the plaudits and punishment. Doing so enables you to earn your employees' respect and make them want to follow your lead so they don't disappoint you.

If you are already in business and re-creating your company's DNA, the leadership goal is the same—visualize how the company will operate, make it happen, and earn your employees' respect by the way you act and react in both adversity and success. In a situation like this, though, you have an additional challenge—your employees already know you and you know them, warts and all. Opinions will also have long since been formed, and everyone will have gotten comfortable in their jobs and their surroundings. DNA re-creation, though, means change, and it's some of those tenured employees who are most likely to put up the most resistance. That resistance can, of course, be overcome, but it's an uphill battle, and you can be sure that when you find yourself in this situation your leadership skills are going to be tested. Again, though, as the leader it is your responsibility to make whatever changes in the company and its DNA are necessary in order to keep up or get ahead of the market, and serve your customers.

Once a company has created its DNA and is maintaining it appropriately, the chances are that it will be performing relatively well and generating decent profits. And, in fact, a good number of businesspeople are satisfied at that point, and don't make any further efforts to build their companies. However, those who are willing to work on their businesses by building a team can take their companies to heights of profitability and performance that are experienced by only the most successful owners. Doing so, though, requires the owner to make sure that three important elements are present in the company: leadership, a sense of purpose, and chemistry.

Leadership plays a role in team building in several ways, perhaps the most important of which is making sure the business is running smoothly on all cylinders. Let's say, for example, that a Caterpillar franchise parts department is great at selling compressors and generators, but the repair side of the business is awful. Although good sales are clearly a plus, the poor performance of the repairs department is likely to have a negative effect on future sales. And since the parts department will get the heat for that, the two departments will have a rocky relationship, and it will do a lot of damage to the effort to establish team unity. In fact, if this problem is allowed to continue, it will be a drag on the rest of the company and make it even more difficult to create a cohesive team. However, if the owner demonstrates leadership and makes the tough choices needed to improve the repairs department, a team can be developed. This is very important to understand because it pinpoints why teamwork in business is so important and so rare. When the team does well, everyone does well, but the opposite is true as well.