Posts Tagged ‘A great life’

Over the last three years, I’ve asked hundreds of business owners this question:

What’s Been Harder in Your Business Than You Expected?

More than 95% of the time, the answer was immediate and unequivocal:

The People!

Jason Colleen owns Colleen Concrete and when I interviewed him he employed about 50 people.  Jason’s response to the question captured the essence of what I heard over and over again.  He said,

“I didn’t expect so many headaches to come from the employees.  Every little problem they have somehow becomes my problem.  People are just so high maintenance.”

Dealing with employees seems to be a universal challenge.  The truth is, people have issues and the more employees you have, the more issues you have.  But there’s another truth as well, and that is:

Great Companies Grow One Person at a Time

Or more precisely, great companies grow one great person at a time.  One of the things I’ve discovered in my own business and in the experience of the owners I’ve interviewed is that you can’t stack enough good people up to make a great one.  Good simply isn’t good enough.  Great people are far more likely than good people to do three things on a consistent basis:

  1. Initiate: Fundamentally, initiative is thought or action that is not prompted by others.  It’s the ability to assess independently and the willingness to take charge before others do.  The soul of initiative is an intensely active engagement – engagement with the company, client, problem or opportunity.  Initiative requires thought, which as Henry Ford said, is probably the hardest work we do.
  2. Stretch: Stretch is about setting your sights higher, much higher, than what seems reasonably achievable. Unless there is a critical mass of people in your company that are willing to reach for incredible, you’ll never achieve incredible.  When you stretch, even if you fall a bit short of incredible, you will inevitably wind up doing better than you would have if you didn’t stretch.
  3. Grow: Employees usually have an expectation that you’ll pay them more next year than you paid them this year.  But why would you?  The only logical reason would be that they contribute more next year than they did this year.  Great employees get that.  They’re always looking for ways to make themselves more valuable.  They improve their skills; they learn how to use new tools; they take classes to expand their knowledge.

That’s what great people look like.  Now, I’m not saying these great people won’t also have some issues.  But if I have to deal with people issues, I’d prefer to be dealing with the issues of highly productive contributors as opposed to the issues of the mediocre, uninspired or disengaged.

Many people assume that most any business can become a big business.  But if that’s true, why is it that 95% of all businesses in the United States never reach a million bucks in annual sales?

Surprising as it may be, most businesses simply don’t have what it takes to grow significantly.  In fact, only two or three businesses out of a hundred will ever grow past the Mom & Pop stage – past the owner’s immediate span of control.

If you’re a small business owner with visions of growth, these facts can be a little unnerving, and more than a little disheartening.  What these facts tell us is that if you want your business to grow into a substantial enterprise, you need to do something that roughly 25,000,000 other business owners have been unable to do!

So where do you start?  You start by confronting the brutal facts.  You start with perhaps the most important question a business owner can ask:

Is the market sufficient?

Two factors comprise the market, demand and attachment.

  • Demand is about quantity – how many people want what you’re trying to sell.
  • Attachment is about quality – how much do people want what you’re trying to sell.

For a business to grow significantly, there must be high demand or strong attachment, preferably both.  Although it’s a little unwieldy, here’s a question that gets to the core of market evaluation:

Do enough people care enough?

Sometimes, the answer is no.  Last year about this time our company released an online service called ReallyEasyHR.  The service provided a complete small company HR program for $30 a month.  It was a great service and a remarkable value.  But guess what?  Nobody cared.  It turns out that small business owners have virtually no interest in spending even a few dollars a month on HR.

I believed ReallyEasyHR was going to be successful.  And I suppose I could berate myself about how wrong I was.  But here’s the thing:  You don’t know how the market will respond until you start trying to make sales.  The hard truth is, until you ask a prospect to fork over some cash, it’s all just guesswork and speculation.

That’s true in small companies like ours and it’s also true in huge, wildly successful organizations.  Not so long ago the brain trust at McDonald’s looked at emerging demographic trends and saw what they thought was an opportunity.  People were living longer and the older adult population was burgeoning.  In response, McDonald’s spent $300 million to develop and launch the Arch Deluxe, a sandwich positioned as “a more sophisticated burger for the adult palate”.  The Arch Deluxe was a complete flop. As it turned out, people didn’t want a sophisticated burger from McDonald’s.  Which just goes to show you that some of the smartest people on the planet can be flat-out wrong when projecting demand.

Demand is one thing your company can’t grow without.  Unless enough people care about the product or service you’re trying to sell – and care enough to go out of their way to buy it – survival is unlikely and growth is impossible.  So here are two important reminders for owners who want to grow their businesses:

  1. You won’t know if there’s enough market for your product until you offer that product for sale.
  2. There’s a chance you’ve overestimated demand, so don’t go all in.  Make sure you live to fight another day.

In my next article, I’ll offer some thoughts on the other factor of market potential, attachment.