The Facts of Business Life (7 page)

Marketing and customers go hand in hand, but the overall purpose of attracting customers is to get them to buy from you, then come back and buy again, and then tell their friends and relatives what a great business you have. Most customers are decent, law-abiding, moral people, and if you want to attract and keep the majority of them, your business has to operate in accordance with their values. What this means is that everything about the way your business is run has to reflect those values, including how honest your advertising is, how a customer is greeted, how well employees are trained to respond to customers' requests or questions, and literally hundreds of other aspects of your operation.

Creating your company's DNA begins at Level 2 but is actually an ongoing activity. Because the market and your customers are always changing, as your company moves through its life cycle you will have to periodically come back to Level 2 to create or recreate processes that reflect those changes. That's one of the reasons it's so important for you to think through and develop the kind of processes that your company will need to operate successfully at Levels 3, 4, and 5.

The third level, From Survival to Success, is the point at which all the planning and preparations that were done at Levels 1 and 2 are implemented. It's here that you must be relentless in your pursuit of putting those day-by-day processes into effect by measuring the results to make sure they're accomplishing what's expected, modifying them if necessary, and continuously working with your employees until those processes become second nature to them. The goal at this level is to move the business from the survival to the success end of the spectrum. That may sound simple enough, but the reality is that the majority of businesses that start Level 3 don't make it past the survival end of the spectrum, and only 3 out of 10 survive more than 10 years. This means that Level 3 is not only where businesses begin, it's also where most entrepreneurial dreams die.

Although most of the failures at Level 3 can be traced to a lack of preparation in identifying appropriate opportunities and/or in designing how the business will operate, the fact is that some of those businesses could have been saved if their owners knew what to do, that is, revisit Levels 1 and 2 and make corrections. When problems arise at Level 3, failure is by no means inevitable, and owners have to understand that they have to fight to be successful. In fact, most owners become successful because of how they handle adversity. Things seldom go as planned, and Level 3 is more about working hard, being smart, and focusing on building a successful business one step at a time—sometimes by trial and error—than it is about being an overnight success.

If, for example, you should find that your Level 3 business has stalled, or is not delivering the desired profits, you can go back to Level 1, look again at the information you gathered at that point, and determine if the opportunity you thought was there still exists. If it doesn't, you can research the market again, find out where the opportunities are, and then change your company's direction. However, if you find the opportunity does still exist but the company is not operating the way it should in order to take advantage of the market, you can return to Level 2, find the operational problems, and then create or recreate processes and procedures to enable the company to operate the way it should.

Level 3 puts an owner through more turmoil and change than any of the other levels of the business life cycle, and accordingly requires him or her to exhibit a variety of leadership skills. There are, however, three of those skills that are particularly important at this level: (1) defining reality, that is, making sure you have a good understanding of where the business stands right now; (2) determining what has to be accomplished and in what time frame; and (3) motivating employees to buy in to the owner's vision and continue working to help move the company forward. Doing this is no easy task, and it doesn't get any easier. In addition, the leadership that's required at the survival end of the spectrum is different than what's needed at the success end, which means the owner's leadership qualities and skills have to grow and improve as the business moves along the spectrum.

As you move your company along the survival–success spectrum, you will probably find that one of the most difficult battles is the one you have with yourself. Effective leadership means staying calm in the face of adversity, remaining consistent in your ethics and discipline, having the patience to see the plan through, maintaining the courage it takes to make decisions, and being continuously enthusiastic about the future. And that's not easy, especially when your knees are knocking, you have to reinvest profits time and time again to feed the growing beast, you're constantly faced with self-doubt, and you have to deal with all the other issues that ownership brings with it. Moreover, these battles erupt frequently and rarely let up, and it takes time before you become comfortable in the knowledge that the business can meet its goals and objectives.

There is, however, one more important aspect of leadership that begins at Level 3 and continues through the end of the business life cycle. Although when you first start a business you cannot delegate leadership, as you become more skilled at it, it is essential that you begin—and continue to—develop as many leaders as possible among your employees. Doing so makes the company stronger because the more people you can develop as leaders, the more horsepower your business will have to pull it forward. And more horsepower means you will get to your destination faster and have a healthier business when you arrive there.

Because at Level 3 the business is “live,” that is, it's become active, and its destination has been defined, it becomes management's job to implement the processes created at Level 2 so the company can achieve its objectives and goals for sales and gross profit. In other words, at this level, management is about the day-to-day blocking and tackling of managing sales and profits, keeping on top of expenses, watching for changes in the market, managing the customer base, creating more customers, and improving processes, among many other tasks. However, important as all these functions are, the most important thing to remember is that results matter, and if the company is not achieving the results you intended it to, it's essential you find out why and fix the problem. That's because in the end results are what it's all about, so results have to be your main focus from the time you open the doors in the morning until you close them at night.

Although Level 3 is where the plan you developed for the business is put into action, the plan itself is not the main focus. As I've mentioned before, a lot of people can design a plan, but what's more important is how you implement it and how you react to both successes and failures. This is because while the plan you formulated at Level 1 is essentially the road map showing you how your business will get to its destination, it has to be changed and upgraded as new information is accumulated. That is, even though the destination remains the same, time frames may have to change. For example, if your business has been slow in attracting and training people to work for you and you're bringing in less revenue as a result, it will affect your financial forecast, and your plan will need to be revised to reflect the change. In fact, the key to planning at this stage of the business is recognizing the exceptions to the plan, both what is working better than expected and what isn't, taking advantage of those things that are, and improving those that are not. In other words, developing a workable plan is important, but plans are about results, good and bad, and the skill of the owner and the employees in adapting to the results is where the “rubber meets the road” and success is created.

Of course, in order for any plan to work, you need employees, and that's not only a challenge, it's frequently a problem as well. While some employees are likely to surprise you and others to disappoint you, both groups need constant attention. This is because at Level 3 the business goes through constant change as it moves along the survival–success spectrum, and employees tend to fight change because they don't understand that it's to their benefit, both in terms of pay and job security. If, however, you have designed processes within which your employees can work, those processes will keep them focused on their jobs rather than running around doing things they think are important or like doing, neither of which may have a great deal to do with the results you expect of them. In addition, processes give you a means of measuring what your employees are doing. For example, if your plan and supporting processes call for 100 items to be shipped per day, and your measurement shows you are shipping an average of only 80 per day, you have a problem that needs fixing. The great thing about processes is that they measure output, and they can be an early warning of things going wrong or of things going better than expected, both of which need management input.

Ultimately, particularly at this level, constant motivation, communication, and education are critical components for employees. This is because at Level 3 so much is happening it's hard for employee's not only to keep track of all the changes but to keep up with them. Making sure they are in the loop as far as information is concerned, and doing whatever you can to help motivate them, will go a long way toward keeping your company on an even keel.

At Level 3, marketing is aimed primarily at the market in which your research at Level 1 indicated there was an opportunity. The challenge at Level 3 as far as marketing is concerned is that marketing costs money, and cash is usually tight when you are still on the survival end of the survival–success spectrum. It takes ownership courage to spend money without being sure of a return on the money spent. And because of that, it's always a temptation to cut back on marketing at this level. However, the reality is that marketing is more critical at Level 3 than at any other point in your business's life cycle because it's marketing that leads to sales, and sales that supply the money you need to continue moving along the spectrum.

Targeting your customer base is critical, as is the message that explains to your customers why they should buy from you. That is, potential customers need to know why your business deserves their attention and consideration, and this has to be the focus of your marketing at Level 3. In other words, you have to be constantly aware of who the message is targeted to, how this market learns about your business, and what kind of advertising hook attracts them. And once you've attracted them, you have to focus on how your employees make the sale and how they follow up on it to make sure those customers will come back.

Of course, at the end of the day, everything a business does has to be done with the customer in mind. And although this is especially important at Level 3, it's also particularly difficult to do because the business goes through so many changes at this level that it's hard to keep the focus on the customer. This may sound crazy, but it's true. This is because as the business moves along the spectrum, the way it operates changes, and when things change, problems occur. The focus then is usually on fixing the problems so the business will operate more efficiently and the employees' jobs will be easier. But this is the wrong way to go about it. You obviously have to correct any problems that come up, but if there are any changes to be made, the first question you have to ask yourself is how those changes will affect the customers, not the company.

Your business will have attained success at Level 3 when it has a clear and unequivocal track record of consistent profits and success in reaching the goals and objectives you set for it. By the time it gets to the success end of the survival–success spectrum, the company will have developed a habit of continuously finding or creating new opportunities, defending itself against threats, and constantly making improvements in its processes and procedures. Success, however, is fleeting. Competitors will react to your improved market position, your customers' wants will change, new products will emerge, and old tried-and-true products will fade away. Keeping a business on top is not as easy as many people think, and it's at Level 4 that you will have to contend with these new challenges.

The fourth level, Maintaining Success, is the period during which owners build on what they learned at Levels 1, 2, and 3 in order to ensure their company's continued success. Achieving this requires the owner's constant vigilance in order to make sure that processes and procedures are adhered to and improved on, leaders are developed internally, and challenging goals and objectives are established and met. It also requires that employees be continuously held accountable for their results, performance expectations be achieved, and all of the company's departments move in the direction in which the owner wants the company to go. In other words, the owner and the company's employees have to do everything that was done at Level 3 to become successful in the first place, but do it at a higher level and a faster pace.

When your company attains Level 4, you will find that it presents you with many challenges. But there is one thing you can do to help overcome at least some of those challenges: develop a mentality, a drive, or a thirst to compete at every level of your business, and pass that mentality on to others. Competing at Level 4 doesn't mean being satisfied with being successful or average. It means putting unrelenting pressure on your competitors using the strength that only a strong, profitable, and well-run business possesses in order to compete in every market your business participates in, every day and all day. Competitiveness is like measles—they are both contagious—and if you want your company to be competitive then you have to lead the charge. In business there is no trophy for just showing up—the trophy goes to the business that understands and values the qualities competing brings with it. Competing aggressively becomes a way of life and a valuable tool in avoiding some of the traps you'll find at Level 4.