All business successes and failures are grounded in either their development or neglect of these 7 P’s. These extremely simple yet powerfully effective points will guide you through what works to get small businesses up and running on the best foundation, reducing the risks and accelerating the rewards.
The 7 P’s to Small Business Success
The seven P’s are…
Preparation
Getting the ground work in place and building a strong foundation both for the business and your personal mindset
Planning
Where are you now? Where do you want to be? How are you going to achieve it? Preparing your unique business plan and putting it into practice.
Presentation
Taking your product/service and presenting to potential clients by marketing it effectively
Production
What’s involved in supplying to your customers what you are offering through producing and delivering your goods/services
Processes
Developing systems for your operations to streamline your business and reduce lost or wasted work hours. Establishing Key Performance Indicators (KPIs) for each stage of each task.
People
Treating them the wrong way can be a fatal small business mistake. Without them your business goes nowhere.
Profit
Implementing sensible financial controls and management.
Preparation
“Before everything else, getting ready is the secret of success.” – Henry Ford
It’s not only us who feel that preparation is vital to your success. Climbers of Mount Everest have repeatedly commented that it takes months (even years) of preparation for a climb that only takes days to complete and delivers a lifetime of memories. However they wouldn’t have it any other way! Why? Because without preparation, the chance of failure is very high.
Failure is not what we want. Success is our goal.
Preparation for your small business startup is the Primary step in your journey. It comes before any of the other steps and will ultimately lead into Planning and all the others.
It’s great that you have the desire to startup your small business. As Michael Gerber, author of the book “The E-Myth” calls it “Entrepreneurial Fervour”. This occurs when somebody, often technically very proficient in some skill or other, thinks they are so good that they should “start their own business”.
Off they go. Register a business name, get some business cards printed, leave their job (if they were in one) and suddenly they are self employed. However, how much preparation did they do for this new small business startup? Sadly, this is how too many businesses start and it may be one of the main contributing factors to the high rate of small business failure. Don’t let this be you.
Planning
“Planning is bringing the future into the present so that you can do something about it now”
Small business owners very often try to skip this step. Many of them have a problem with writing out a business plan. A plan will help in so many ways so don’t skip it.
So what should be in a Business Plan? In a nutshell it should be WHERE YOU WANT TO BE? and HOW ARE YOU GOING TO GET THERE? Simple.
In a full business plan, the typical areas covered include:
Business Profile
Vision and mission statement
Communications
Organisation
Licenses, Permits, business names
Insurance
Premises
Accounting and Cash Flow
Finance
Acquisitions
Marketing
Growth Program
Staff
It can look overwhelming, however people are available to help and the effort now will pay huge dividends down the line.
Presentation and Promotion
“If your readers don’t relate your words to your brand then you don’t stand a chance”.
“Make it simple. Make it memorable. Make it inviting to look at. Make it fun to read.”
Presentation is how you deliver your message to the marketplace, your potential clients. Presentation is Marketing your business.
Marketing and Business Presentation is an enormous subject however there are 3 key elements to remember when preparing presentation/marketing material
Write as you would speak
Appeal to the emotions of the buyers
Provide proof of any claims
Gone are the days of high pressure sales people. People are just too smart now to be hammered by a fast or smooth talking professional. Marketing today is built around relationships. Get to know your customers, show them you are human, and treat them the way you would like to be treated.
Target – who are you trying to sell to, and I mean really sell to. In a computer repair business you could say “anyone with a computer” however you need to be more specific than that. Like “small business owners with 2 or more computers within 50 kilometres of my office” That narrows it down and helps tailor your message.
Issues – What issues are they facing in your area of the market. Again, with the computer example, it could be “computer crashes, loss of data, viruses and networking problems” Be as specific as you can to build the picture of your market and hit them where they are hurting. Your there to help and they want help, whatever it is you sell or supply.
Emotions – what are the emotions associated with those issues? This is your secret weapon in getting your marketing across. You want to appeal to those emotions and provide answers.
Solutions – what are your solutions to their problems as discovered in the above process?
Present Information – now that you have the answers to the above, you must effectively communicate this. This is an area where designers, marketing experts etc can help so long as you can tell them what to say. Don’t let them decide because they don’t know your clients as well as you do!
Explain Difference – why should they choose you over the other guys? Hint here – Don’t’ just say you are cheaper. Businesses who live by price, die by price. Explaining your difference is also referred to as your USP or Unique Sales Proposition. What is it that makes you the better choice from all the others?
Also you need to set a Budget for marketing. Marketing and presentation is not considered an expense. It should be seen as either an investment or one of your Tools-of-Trade. During the recent Global Financial Crisis, one multi-million dollar businessman I know of, was asked what he intended to do, how was he going to handle it? His response? “Double my marketing budget!”
He knows full well the true value of getting the businesses message out to the buying public. Too often, when things get a bit tight, marketing is one of the first things to be cut from spending. That’s because it’s seen as an expense. Don’t get me wrong, done incorrectly and it can be very expensive, however done properly it brings customers to your door. Get marketing wrong and your business can die a slow and painful death. Get it right and it will thrive.
Production
“Quality in a service or product is not what you put into it. It is what the client or customer gets out of it.”
Production is either the creation of your product or delivery of your service.
You now wish to deliver to the client what you have said you would in all your presentation and marketing material. The key to getting this right is to constantly have the client in mind. You must deliver to them a product or service that goes beyond what they ever expected to receive.
Wallace Wattles in his book The Science Of Getting Rich says we should “deliver more in use value that we receive in dollar value.” Let’s say you sell coffee. You have a coffee shop that let’s people sit and relax whilst enjoying their drink. That’s good and most people expect to be served politely and get a drink that is pleasant to taste.
What if you then offered them the newspaper, or supplied and complimentary biscuit or cookie, or even (if in a holiday spot) gave them a postcard to fill out so they could mail it to their friends and tell them of the good time they are having in your cafe. You could even offer to post it for them.
Yes, you have delivered what they expected however have now gone beyond that and given so much more. What type of impression is that going to leave? Will they be back? Will their friend come and visit? Of course they will.
This is just a small example however you must be mindful of the underlying principle in all that you produce. We may not realise it, however we are all producers. Electricians produce the service of electrical repairs or installation. When onsite they should also clean up after themselves and replace any blown light bulbs that may need it.
Cleaning up is just plain polite, however contractors and tradespeople have the reputation of leaving a mess. The extra few minutes it takes to do those extra things will result in extra income from repeat and referral business. Be different and better than all the rest.
Along the way during production it is important to set Key Performance Indicators (or KPIs) to determine that you or your team are on target for the preferred results. KPI is a milestone that when you reach them in the right manner you can then move on to the next. over time these will come naturally however during the initial stages of business development, the KPIs will keep you focused and on track to best results.
By keeping our production and service delivery high quality and consistent, we won awards along the way. We don’t share this to boost however to clearly demonstrate that not only us and our customers thought we were doing a good job however independent judges and our business peers felt so as well.
By delivering an exception service or product you will make the best impression. There is a saying that says “the sweetness of a cheap price is long forgotten with the bitterness of poor service”.
We cannot possibly go into the production and delivery of every type of business. Each market has its own specialisations. Oftentimes it requires an extended discussion of the particular details of individual businesses (including site inspections to view production) to truly highlight all that is involved in Production. However what we can say is that to remember to deliver the highest quality of product or service for your market.
People
“It is said nowadays that whether one buys a cup of coffee, a holiday, a house or a car the decision of purchasing has to be emotional. More importantly it is a crucial factor in customer retention and loyalty.”
“Customer satisfaction is the underpinning factor in customer experience. Customers should feel good in doing business with the product or the service provider. ”
Without people, most small businesses would cease. Pretty much all small businesses are in existence to serve the needs of others. Be that for a trinket to put a shelf or someone to fix a bike, in many instances these needs were filled by small businesses.
Surprisingly, how to deal with people is often overlooked or ignored in many businesses. Sometimes they are seen as the enemy!
Customers are people, staff are people, suppliers are people, family and friends are people and you are people.
Treating any one of the above groups poorly can be fatal for small business.
Consider this statement; “If you don’t look after your customers, somebody else will.” Let that sink in. How true is that! However it applies equally to any group of people. If you don’t look after your staff, somebody else will. If you don’t look after your family, somebody else will.
So what’s the key? There is a rule that has been called the Golden Rule, and that is to “Treat Others The Way You Wish To Be Treated”. Some say it’s to “Go the extra mile” for the people in your business whilst others say to just deliver Outstanding Service. Ken Blanchard says we need to create “Raving Fans” of both our customers and staff.
However you approach it the same key principle applies to going “Above and Beyond Expectations”.
When dealing with people, it’s not so much what you do for them that makes them remember you however it is HOW YOU MAKE THEM FEEL that will be the longest lasting impression they will have of you and your business.
HOW YOU MAKE THEM FEEL. Emotions are the strongest anchor to experiences people have. Years can go by and we can recall something like they were just yesterday because of the strong emotions associated with that event. You MUST remember this when you deal with people.
You “piss somebody off” and what is going to be their lasting impression? Equally, you make someone very happy and what are they going to associate with you? It really is such a simple thing however so many small business owners get it so wrong. Which one of these is going to best serve you and your small business? Make the obvious choice.
But what about those really difficult customers? Yes there are clients that drive you to anger. The safest way to deal with that is to stop dealing with them. If they are an absolute vital client, then see if somebody else within the business can deal with them.
If they are such a problem, then politely stop working with them. Life is just way too short to put up with difficult customers! Some people just like being difficult. Sack them as a client and get a new one.
Staff can make or break a business. We learnt early in the piece that the important point in hiring staff is to look at their personality and attitude before you look at their ability. The reason being you can train and improve skills and ability however it is a lot harder to change personality and attitude. Hire For Attitude, Not Skill. This will save you grief down the line.
Both Staff and Customer Service are areas that require a depth of examination to fully appreciate some of the complexities.
There are many such as this available on the web so have a look around. It would pay to consider asking prospective people whom you may be employing to take such a test and help see their true underlying character. It would be wonderful if we could give this test to potential clients! However sadly I think the majority of customers might object!
Processes
“A system -a way of doing things- is absolutely essential in order to compensate for the disparity between the skills your business has, and the skills your business needs if it is to produce consistent results.”
“The system becomes the tools your people use to increase their productivity, to get the job done in the way it needs to get done in order for your business to successfully differentiate itself from the competition”.
Processes and systems will keep your business going. Why put processes and systems into your business? Systems and Processes are the tools that will lead to consistency and reliability within any business and can be applied to almost all tasks needed to operate, no matter who performs the process.
When you have a process and procedure clearly defined, you can identify the support tools needed and have them easy to hand for use everyday. Things like checklists, forms, standard letters, labels, as well as tools and equipment. Having clear policies on how to apply the process and procedure, your small business can then work consistently and MUCH MORE EFFICIENTLY and with confidence and certainty.
Just look at McDonalds as the best example. Way back when Ray Crock bought McDonalds from the founding brothers, he wasn’t buying a hamburger joint, he was buying the SYSTEM. Look where it is today!
To start, consider the following key questions:
What is the task to be completed (or product produced)?
What is needed to complete the task? (What tools and materials will be needed?)
Why is this task being done?
Who are the people involved? (List every person, department or supplier involved)
What is the end result? (Product,service, action, etc.)
Where is the task to be done?
When is the task to be completed by?
Put it all in writing then streamline it into a simple to follow system that ANYONE can read and reproduce with the required skill set.
This is an area almost always overlooked because it may seem too hard. It is far simpler with some guidance. We have learnt important key elements that make small businesses fly. We look forward to sharing them with you.
Profit
“Entrepreneurial profit is the expression of the value of what the entrepreneur contributes to production.”
“Profit is not the legitimate purpose of business. The legitimate purpose of business is to provide a product or service that people need and do it so well that it’s profitable.”
Profit. That’s why we’re in business isn’t it? (Not really. We are all in business for the lifestyle small businesses can deliver however this is another topic on its own!)
Profit is seen by some as the measure of success of a business. It is in direct relation to the amount and quality of Time, Focus and Emotion invested in the business by the owner.
Profit IS a useful measure of a businesses health. Experience in business broking clearly demonstrated to us the PROFIT is the FIRST CONSIDERATION of anyone looking to purchase a business, so it is vital to get it as healthy as we possibly can.
According to the U.S. Chamber of Commerce website “Poor financial management is one of the leading reasons that businesses fail. In many cases, failure could have been avoided if the owners had applied sound financial principles to all their dealings and decisions.
Financial management is not something that you can leave to your banker, financial planner, or accountant — you need to understand the basic principles yourself and use them on a daily basis, even if you plan to leave the more complicated work to hired professionals.”
The top tips we found are:
Pay yourself FIRST! – from the beginning of your small business startup, take an amount or a percentage each week. A percentage is more likely the better option in the first stages of your small business startup as income can vary from week to week. Set as a minimum 10% OF ALL INCOME to be put aside for YOU.
The whole idea of starting a small business is to deliver to you the lifestyle you are picturing and most often that involves having some funds. It is a tragic reality that many small business owners are the last to get paid! They pay staff, they pay bills, they pay tax and eventually they pay themselves. Pay yourself first then pay all other things from the balance.
Put Tax aside – don’t fall into the trap of spending all the profit only to realise that tax must then be paid. You don’t want to start off with a tax burden. Your financial institution will help and you may wish to open an offset account so that the funds can be moved over to where you won’t be tempted to spend them.
Set a Financial Plan – don’t run a business with the idea just to “make money”. How much do you wish to make? How much do you wish to turn over each day? Know clearly how many of each item you need to sell to reach your target or how many billable hours a day do you need. Get up each morning knowing that to reach your financial target you need to bring in $X. Know this for the week, the month, the year. Having these figures in place gives your financial plan direction and meaning.
Know Your Break Even Point – time and again we have spoken with small business owners who have no idea how much they need to make each day just to keep the doors open. or keep trading. There are fixed costs like phone, insurance, car, rent, power, staff etc and there are variable costs like cost of goods, contractors etc. How much do these items cost you each month? Divide that by however many days you work in the month and that is how much at the barest minimum you need to make to keep trading..
Beware of Discounting – Pricing is in part determined from your costing. However it also depends on what the market will bear and what image you wish to portray. Many businesses make the mistake of trying to boost their sales by discounting. Sometimes this strategy may be successful because the price discount actually encourages people to buy. This may result in an increase in your sales volume to an extent that you actually improve your profits. In most cases however this can lead to a substantial deterioration in your profits.
In Summary
We have though found that these items are extremely important in success. We further discuss the way to value your service, set pricing, prepare for market influences as well as discussions with financial experts you do give further advice on how to control profit in your small business.
