This was first posted here on LinkedIn. Have a look at the comments.
I’m talking about the lies we tell small business owners that keep them struggling and keep them small. This advice sets impossible expectations that erode their confidence. The business methodologies and advice we give comes from research done on large corporations in the middle of last century. Most of this advice was good advice for large business, but it’s debatable whether it is still good advice for big business.
It was never good advice for small business.
The most successful small business owners I know, ignore most of this advice. They focus on sales and on delivering the best they can to make their customers, not just happy, but ecstatic.
Meaning, mastery and money are all essential in today’s business environment. Meaning and mastery will lead to more money. Many small business owners instinctively do these things, but we as business advisers only focus on the money. We tell them to make the money first, then they can invest in mastering their business and making meaning in their community and life. Unfortunately that sets up a cycle that never gets them there. We need to encourage them to invest in meaning and mastery from the beginning.
Most small business owners are very good at the work of their business. As Michael Gerber says, they are technicians who get an entrepreneurial twitch. Usually in response to working for another technician who had an entrepreneurial twitch. Which means they are not clear on what it means to run a business.
In reality, most small business owners are freelancers, not owners of businesses. Why are we pushing them to act like a business?
Let’s have a look at these pervasive lies.
You have to wear many hats
This perpetuates the myth that business owners have to do it all. Even worse is the myth that they have to know and understand it all. Who can possibly know all that? This is the single worst bit of advice and it is what makes small business owners feel inadequate.
The most important hat a small business owner needs to wear is the sales hat. Making sales is what defines a business. Making sales will pull a struggling business into the black. Making sales is the crucial first step to everything else that follows. The best advice we can give our business owners is to go make sales.
After they are making sales, we should teach them the strategy of business and how to lead a team, not how to do everything in business. Offering ‘101 workshops’ on how to do bookkeeping and how to market, lull our business owners into thinking that all they have to do is execute on the tactics properly in order to succeed. We should be telling our business owners to get help as often and as early as possible.
The worst ways a beginning business owner can be spending their days is in designing their business cards or a poster or trying to set up their bookkeeping.
Starting business owners don’t have enough money to invest in themselves or their business
So we give them yet another free ( or cheap with lunch!) 101 workshop. The most successful small business owners I meet are the ones who invest in themselves early and often. They understand their strengths and they outsource the rest. They know the highest and best use of their time is in talking to customers.
And we tell them, by the way your time isn’t worth very much. When I owned my bookkeeping business, I would tell people I can do your bookkeeping faster than you can worry about it. It was true. Business owners were given 3 hour workshops on how to do their bookkeeping, then they were expected to take a couple of Sunday afternoons a month to do it. I could do their bookkeeping once a month for $200. And it would be right. And they got advice from a professional. They told that their 2 Sundays of stress a month were worth more to them than $200. That’s assuming they need bookkeeping done on a regular basis, which most didn’t.
We don’t teach them how to engage a professional. We tell them that when they get big enough they can hire a marketing expert to take care of their marketing. What they really need is to hire a professional to help them refine their message. A professional has the experience to tease out the words and message that matters. Never mind about flyers, radio or newspaper. Get the message right first.
Marketing, finance, operations and HR are the fundamentals of business
Maybe. If you have a big business with a division of people with expertise to take on each functional area. Again, no one person can master all of these. These are functional areas of business, the understanding and management of which makes the running of the company work better. but they come after, much after the customer is clearly defined, the problem your offer is solving is nailed and you are ready to scale up in a big way. Having all of these perfectly in place will give you a well-run company, not necessarily a successful one.
Business development takes several years of talking to customers, testing offers and making sales. Until then, the focus is on doing the work of the business, not managing a company.
During the first couple of years, bookkeeping and financial information is only needed to file taxes. It’s more important for our business owners to be nimble, to experiment and to always be testing. Financial Statements are backwards looking documents and they only track money. For instance, it’s not enough to know the impact on revenue of changing prices. It’s more important to know who the new pricing attracts and repels, the cost of delivering on the new pricing and the change in expectations.
The message, loud and clear is, you have to learn all this stuff and do it yourself. It’s good for you, because then you get to understand your business from the ground up. The truth is that struggling to do a bad job at a task you are not suited to is not good for you. Doing a bad job at copy writing doesn’t help you understand your marketing message. We should encourage our business owners to hire professional help, so they get a professional result.
You can indulge in soft skills after you get the hard skills down
Every tricky business situation I’ve been in has been solved by focusing on the virtues of courage, wisdom, truth and beauty, not marketing, finance, HR and operations. The reality of business is that there will always be pitfalls, problems and setbacks. You cannot manage your way around those. They take finesse, people-skills, courage, wisdom, truth and beauty.
The real fundamentals of business are trust, love, respect and vulnerability. With those, you have empathy with your customers, you develop a deep relationship and your customers feel heard and valued – which is how we all want to feel. When coming from a place like that, it’s easy to develop an offer that resonates and provides exceptional value.
All the hard core business skills will not get you to that place.
Business tactics, strategies and best practices help with managing a business, but they will not help you develop a business with which people want to engage.
Profit is the most important number
Big business uses many metrics, not just profit, to run their business and yet we tell small business people that as long as they do their bookkeeping, they have their numbers covered. The most important metrics to track may not be on the Financial statements.
For the first couple of years spending is going to be skewed towards startup costs. Every available penny is put back into the business to help it grow. A true picture of the financial health of the company won’t emerge for a few years, yet. Our job is to help the business owner manage their money and their cash flow and in giving them tools to evaluate the opportunities that will help them grow their business.
The business won’t settle enough to show trends emerging out of the noise until several years in. How much effort needs to be put in to make the information granular? Does the phone expense need to be separate from the office expense? Does the mobile phone need to be broken out? Focus on what’s really important like landing another $5000 a year customer, not saving $20 a month on the phone.
A business plan is crucial in starting a business
We’ve all said it “Fail to plan and you plan to fail.” What about “No plan survives first contact with customers”?
Creating a business plan is premature before a single sale is made. It can’t be done until customers are identified, what they want and how they want it. These questions can’t be answered at a desk. They can only be answered by talking to customers. When that step is done properly, the business is up and running and the business owner’s time is best spent in making sales, delivering and testing.
For instance, Brad comes to you wanting to open a pet store. The first task you set him should be to send him out to find his first 5 customers to find out what they really need and want. If Brad can’t do that or isn’t willing to do that, then all the ‘entrepreneurial traits’ tests won’t help and the best laid business plans won’t make the business a success.
That goes double for marketing plans. The first year should be devoted to sales and not marketing. We all know 100 people, who know 100 people, etc. Fifty pet owners spending $50/ month will give Brad a base upon which to build. That takes sales, not marketing. Those sales should be well under way before signing a lease and paying for inventory.
The business plan focuses on financial projections, market analysis and demographic customer analysis. That’s great if you know who your customers are, which you can’t know if you don’t have any. The best way to do a market analysis is to spend a week selling into that marketplace, not a week spent searching statistics and playing with spreadsheets.
We should encourage focus on business models, feedback loops, iterations and pivots. Then on customer engagement, automation rollouts or scaling. When our business owner is ready for scaling up, hiring and financing, then that’s when an executable business plan can be written.
We give workshops on how to be more productive and on time management, but not on courage. Any person having procrastination issues is dealing with fear, not the wrong method for managing to do’s. The greatest service we can give our business owners is to name it and help them deal with fear and courage..
We teach our business owners how to do all the work of running a business instead of teaching them:
What are my clear objectives?
What are the fewest tasks to help me meet those objectives?
How can I get those tasks done? (Instead of how should I do it?)
We should be helping them focus on what not to do as much as what to do. On causing things to get done rather than doing them. The “Really busy” answer to the question, “How are you doing?” has become a badge of honour. We let them get away with that. We tell them we appreciate them taking time away from their busy day to meet with us.
We should demand, not just encourage our business owners to take time away, time to think every day. We should make it clear that they are the most important piece of their starting business and therefore looking after themselves is vital to business success. We should encourage them to meet together for coffee and masterminding every week.
Working harder on the wrong things won’t get better results, it will only get our business owners to burn out.
The sooner we encourage our business owners to ‘get out of the building’, talk to customers and make sales, the sooner they will get over the fear. Yes, it’s hard and they will push back, but that’s our job. They will be stronger, more capable and more resilient because of it.
Set up small business owners into cohorts that can help each other. They can trade off services. They will encourage, hold accountable and support each other.
We need a new paradigm for small business support. We all know business is changing – the way customers engage, the way it’s delivered, even the way people pay. Shouldn’t the support we give change too?