The Facts of Business Life (3 page)

And, finally, a special thanks to Lynnda and Scott McBean, and Shauna Butts, and the soon-to-be newest arrival, “Keiki” Butts, for giving me the time and space to write this book.

Introduction

Business ownership is a seductive magnet. It promises success, wealth, and a life full of rewards for you and your family. The fact is, though, that the reality is very different from the dream, even when you are successful. That's because most would-be owners don't have a very clear picture of what it actually takes to be successful.
The Facts of Business Life
is designed to remedy that. It is accordingly a unique business book that focuses on what needs to be done to create success, how to do it, and when to do it. And I know these business concepts will work for you because they've done so not only for me but for hundreds—if not thousands—of other successful business owners.

One of the reasons it's unique is that it provides a series of seven facts without which no entrepreneur's business can succeed. These facts are:

As you can see, some of these facts cover traditional areas like leadership and control or management, while others are less conventional, like those concerning the war zone and the importance of protecting business assets. As the book explains, each of these facts is important, but as important as each one is, their real strength lies in how they are interrelated and how they work together. That is, in addition to their individual value as guidelines for entrepreneurs, they demonstrate that being a successful owner isn't about being good in one or two business disciplines but in all seven of them, as well as about understanding how they depend on each other.

You may understandably ask why I've chosen these seven facts out of the many disciplines of business. When you own a business, and I have owned several successful ones, you learn that you must be able to prioritize, and these seven facts, or concepts, represent the priorities I believe every owner, new or experienced, should never lose sight of. In addition, these particular concepts benefit both would-be and experienced owners in several different ways: (1) they are easy to implement; (2) they are easy for employees to understand and work with; (3) the more you understand them, the better chance you have for success; (4) they work in unison and form a solid foundation on which to build a business; and (5) they will produce the desired results.

The other important point to bear in mind regarding the seven facts is that they are organized strategically. That is, the first fact concerns leadership because without leadership and vision you cannot define success. In other words, it's leadership that determines the company's eventual destination and what it will look like when it gets there. Leadership is always followed by control, or management, which essentially outlines the day-to-day blocking and tackling that must be accomplished in order to achieve success as you have defined it. The third fact concerns protecting assets, because if your assets aren't protected, you are essentially leaving your investment at the mercy of your employees and forces in the marketplace over which you have little or no control. After protecting assets comes planning, because planning creates the road map, based on objectives and goals, that determines how your business will attain success, as well as maintain it. The fifth fact covers marketing, because very little can happen without customers and the sales revenue they provide, and marketing and advertising focus on attracting customers and creating a market presence. The fact that the market is a war zone comes next because, while it's one thing to attract customers, it's another to sell them and keep them as customers, and it's important that you understand this distinction. And, finally, the seventh and last fact—the importance of having a good general understanding of business—makes it clear that implementing all the previous facts can be done most effectively only when they are used together and backed up by a broad understanding of all the various facets of business.

The other reason
The Facts of Business Life
is unique is that it introduces the concept of a business life cycle, and the five levels every successful business goes through as it starts, grows, and matures. These five levels are divided into two groups. The first, which represents planning levels, includes “Ownership and Opportunity” and “Creating Your Company's DNA.” The second, which represents the action levels, includes “From Survival to Success,” “Maintaining Success,” and, finally, “Moving On When It's Time to Go.” Understanding this life cycle enables owners to pinpoint where they are at any given time, what has been done, and what has yet to be accomplished. The levels are progressive in nature, and owners carry their experiences with them from one level to the next.

It is important to note, however, that these levels are not quite as linear as they appear to be. As planning levels, Levels 1 and 2 are about deciding if you want to own your own business and, if so, what kind of business you want; and, having decided to become an owner, creating the processes and procedures under which your company will operate. Level 3, the first of the action levels, is where you implement the plans you made at the earlier levels and actually begin operating the business. Level 4 occurs when, having achieved success, you look for ways to maintain that success, and Level 5 is when you begin thinking about selling the business, passing it along to a successor, or closing it down. However, nothing is ever that straightforward in business. For example, it is possible for a successful business at Level 3 to slip back along the survival–success spectrum, in which case the owner has to return to Levels 1 and 2 to remedy the situation. In fact, it's necessary at all the action levels for owners to occasionally revisit the first two levels in order to review opportunities and evaluate threats, keep up with changes in the market, and make changes in their own processes.

Finally, the book explains how the application of the Facts of Business Life changes over the five levels. For example, “leadership” is always a business constant, but how an owner leads a business is significantly different when he or she is just starting to become successful than when the business has had years of back-to-back success. Similarly, the way an owner attacks the war zone is totally different when the business is working to maintain success than it is when the company is relatively new. This is, of course, common sense, but no business book has ever identified or addressed these issues as this one does.

There are few guarantees in life, especially if you're a business owner. Markets change, government regulations make it harder to do business, customers want more for less, competitors force you to adapt and innovate, and on and on. With all the changes that engulf owners in today's business climate, it's more important than ever to build a stable platform of business concepts on which they can operate their businesses.
The Facts of Business Life
provides that platform.

—Bill McBean

Corpus Christi,

Texas April 17, 2012

Just as there are facts of life that affect us on a personal level, there are facts of life that affect us as businesspeople, and business owners who ignore them are essentially setting their businesses up for failure rather than success. These Facts of Business Life apply to every aspect of owning and managing a successful business—from maintaining control to strategic planning, from protecting assets to marketing, and from leadership to establishing and managing appropriate policies and procedures. And when these facts are recognized, understood, and acted on appropriately, they can literally make the difference between success and failure.

The sad truth is that less than 30 percent of businesses last more than 10 years, and most failures occur in the first few years of operation. Some of those businesses are doomed from the start because they are ill-conceived, poorly planned, or lack the working capital to attain success. Still others fail because their owners sabotage their chances to succeed through arrogance, lack of ethics, or misunderstanding what the role of an owner actually is. There are, though, other businesses—which I believe to be the majority—that could be successful but aren't, simply because their owners don't understood these Facts of Business Life.

And what are these facts? They represent the seven business concepts that every entrepreneur or business owner who hopes to succeed must have in his or her toolbox, including exhibiting leadership, maintaining control, protecting the company's assets, planning, marketing effectively, having a warrior mentality, and understanding business. There are, of course, other important business concepts, but after many years of running a number of successful businesses and studying successful businesses managed by others, I have come to the conclusion that these are the seven essential concepts without which no entrepreneur can succeed or reach his or her potential.

But it's not enough for you, as a business owner, to just understand these seven facts. It is equally important that you recognize how these facts are interrelated. Very few things in life work in isolation, and that's true of managing a business as well. If, for example, you are very adept at planning or marketing, that's a good start. But being able to develop strategic plans or market your product or service well will mean little if you don't have a good understanding of business in general. Similarly, while possessing leadership skills or knowing how to maintain control in an organization will be of enormous help in enabling you to manage your company, unless you're equally good at protecting the company's assets and have a warrior mentality, it's unlikely that you will ultimately be successful. In other words, you have to be good at all these things if you want to make sure your company will still be here 10, 20, or even 30 years from now.

Finally, although understanding the facts and recognizing their interrelationship are essential, there is one other concept you must understand if you hope to attain success. And that's the concept of the business life cycle—that is, there are various levels through which every successful business must progress over the course of its lifetime. Businesses, like people, go through various stages of life, and it's important to understand both what these stages are and how they affect the implementation of the Facts of Business Life. In this chapter, I provide an overview of the seven facts, and in the next I discuss what the business life cycle is and how it impacts making use of the facts.

As I've already mentioned, there are many things an owner needs to know if he or she wants to start, build, maintain, and eventually sell a successful business. And because there are so many, no book—or, for that matter, series of books—could possibly teach you all of them at once. As with the facts of everyday life, some of them have to be learned at the beginning, and some can be learned as you go along. The following seven facts are the ones you need to understand right from the start if you want to build a strong foundation for your business.

Good business leadership begins with defining both the direction and the destination of your company. But it doesn't stop there. It also requires you to quickly develop a set of skills and to continuously improve on them as your company moves forward. These skills include being calm under pressure, disciplined, motivational, realistic, and able to effectively communicate your vision of success, among others. In other words, as with all the other Facts of Business Life, leadership is something that must be recognized, understood, and acted on every day.

One aspect of leadership is developing a culture in a company that's based on expectations, and rewarding those who meet or exceed these expectations. A good leader makes sure that such employees are not only recognized but also financially rewarded, as this kind of positive reinforcement helps focus the entire company on the things that really matter. Another is developing a culture that enables employees to deal constructively with the kind of problems that inevitably come up in any business. For example, imagine a patron in a restaurant who complains to the waiter that he is not satisfied with his meal. If the owner has developed an appropriate culture, the waiter will apologize without hesitation and do whatever is necessary to satisfy the disgruntled customer. As a result, the customer is not only satisfied, but because he was treated so well he is considerably more likely to come back. The owner who has developed this kind of culture has made it possible to turn a negative situation into a positive one, in the process strengthening the entire company.

Some people argue that leaders are born, not made, and there is probably at least a bit of truth in this. However, there are a great many aspects of leadership that can be learned, and if you are intent on making your business a success, it is imperative that you develop them.

If you don't control your business by defining the key tasks that must be handled every day, and dictating how those tasks will be handled, you don't control anything, you don't own anything, and you probably won't be in business for long. The concept of ownership control is this simple. This kind of control, however, can be achieved only through teamwork, which occurs in successful companies when people (employees), products (or services), and processes (internal procedures) work in unison. Essentially, people deliver the products by following the company's internal procedures, and it's these processes that operate the business.