That’s My Opinion By Ron Sturgeon
rons@rdsinvestments.com
The Three Legs of A Business Success Stool I
have 25 tactics known to increase your business success. I have used all of these tactics in my business career. I start- ed with nothing and did not go to col- lege, so I know you can achieve maxi- mum success, regardless of your level of education or circumstances. Recently, I spent some time talking to a bright entre- preneur. We discussed our business suc- cesses and failures and tried to think about why some ventures worked and others didn’t, as he told me more about his current endeavor.
Sometimes, we, as entrepreneurs, “breathe our own exhaust” and become overconfident about what we know. One of the best books for diagnosing business failure and correcting it is The E-Myth: Why Most Businesses Don’t Work and What to Do about It by Michael Gerber. What about the ingredients of business success? What did the ventures that real- ly worked have? My friend and I con- cluded that business success is a three-legged stool: Capital and Finance – Most entrepre- neurs gripe about the first leg of the stool. Entrepreneurs often say they don’t have any money and can’t raise any. When I talk to bankers and VCs, they gripe about entrepreneurs asking to be funded without a record of accomplish- ment of executing a plan and managing a venture. Here’s the truth: If you have a good business plan and someone with the proven ability to execute and lead, you will not have any trouble finding money. Unfortunately, some entrepreneurs can’t see their blind spots and are not willing to get outside help. In most cases, flying solo is a strategic mistake.
When I did a private stock offering and raised $1 million for my salvage yard, I learned that 100% of a company worth almost nothing is less desirable than 90% of a company worth $10 million (the val- uation of the offering). Also, to build a
Even a little informal research can give you valuable insights. When I was starting an exotic auto rental business, I ran potential company names past business friends. One of my professional friends said he would never rent from a compa- ny that had exotic in the name. HA! I had not considered that!
business, you simply must be able to read and understand financial statements and cash flows. If you can’t, get someone to help and advise you so you can focus on the areas where you excel. Strategy and Execution – You don’t know what you don’t know. After I sold to Ford and went to work for them, I became part of a powerful team of strate- gic thinkers who understood how to exe- cute. Some entrepreneurs believe that a great idea is all it takes. That’s rarely true. To succeed, you need to think strategi- cally, build a plan, and execute against it. Marketing – Marketing is so crucial that it gets its own leg. Marketing is not rock- et science, but you have to be militant about getting it right. Many business own- ers don’t even take the time to investigate who their most valuable clients and prospects are because they believe they already know. They claim that market research is too tedious, too time con- suming, and too expensive to bother with. Do the analysis. Know you are right about who your most valuable customers are. Building a marketing plan without doing the research is like building a house without a blueprint. Invest a little at the beginning to save a lot of wasted effort.
So much valuable information is avail- able to entrepreneurs who want to get better at marketing. Read Seth Godin’s Purple Cow and Markus Buckingham’s First Break All the Rules. Be alert to the ways that companies outside your industry market and whether you can use those techniques in your business. If you are not a marketer, do not be afraid to hire a good one or seek a partner with the marketing chops to make the marketing leg of your stool strong.
Successful business owners prosper by collaborating with people who have the skills to ensure all three legs of the stool work well. Although you can hire experts, I have always preferred having partners because they have more skin in the game. When I do hire, I generally use pay for performance because employees who can write their own check work harder. My bright entrepreneur friend and I agreed that we reached our highest lev- els of business success when we were open to collaborating to cover all three legs of the success stool: capital and finance; strategy and execution; and marketing.
If you are anxious to learn more, and
can’t wait for the next column, please e- mail me to get the first article (or any of the other articles) in the series.
Ron Sturgeon, an author and founder of Mr. Mission Possible small business consulting,
www.autosalvageconsultant.com, combines over 35 years of entrepreneurship with exten- sive experience in consulting, speaking, and
business writing. Ron shares his expertise in strategic plan- ning, capitalization, compensation, growing market share providing field-proven, high-profit best practices.
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