‘What Makes a Good Business Person?’ is a question we get asked a lot, and there’s no perfect recipe, and there’s always a bit of luck [good and bad] that can help or knock you off the rails. However, there are things that every business owner should do if they want to succeed. There are no guarantees but these things improve your chances.
What Makes a Good Business Person?
In the army, they say ‘proper planning prevents p**s poor performance’ and we agree. If you know what you’re trying to achieve then you know what you need to do, and if you know what you need to do you can measure if you’re on target and make corrections. So what makes a good plan?
- Budgets and forecasts of what you want to achieve.
- Specific tasks that need to be completed to give you what you want.
There doesn’t have to be large business plan – it can be as simple as a budgeted profit and loss and a list of tasks.
If you’ve got yourself a good plan and you do everything that you set out to then you will end up where you wanted to go. But when you go on a journey you don’t head off in the right direction never look at the map again. You check your progress on the map and make course corrections en route. It’s the same with a business plan. Put mechanisms in place to check that you’re completing your agreed tasks and that you’re achieving the financial goals. If you’re not, make the course corrections to bring you back on track.
Work ‘On’ The Business
When you start out this is harder, generally, you’re the one doing everything – selling, manufacture, finance etc. But the trick to generating value in a business is setting up systems that mean that when you expand the work done by others is done the same way that you would do it. So try to systemise the work that you do so that someone else can do the same quality work that you do.
This is how the biggest businesses work, but it’s a good idea for any business.
Many small improvements added together bring about a large improvement in performance. This is the approach the Sky cycling team took but it is very common in elite sport. If you knock off 1/4 of second here and 1/2 a second there, lots of small improvements get you a personal best. Apply this to your business, think about your processes and how they can be sped up without reducing quality.
How about an example in a manufacturing process. A simple hook for a commonly used tool can save time because the operative doesn’t have to waste time finding where he left it. Not a huge saving for one person but if you have 100’s of people doing the same job and another 25 small improvements that the 100’s of people can do, you have a huge productivity gain.
You might not have all the answers either – schemes, where staff are asked to make suggestions about improvements, are always a great source of inspiration.
So have a close look at your production and other business processes to identify where small-time savings can be made that add up to a big one.
One of the main similarities in our clients that are the most profitable is that they control costs very well, particularly overheads. Conversely, the businesses that have extravagant overheads tend to be the least profitable. So have a look at overheads and see what you can sensibly cut back on or find a cheaper equivalent. And when it comes to taking on new costs make sure that the additional cost is adding value or making some other essential improvement.
One good method is zero-based budgeting. Have a look at all your overheads and only continue with those that you can give a convincing argument to still incur. This is a great way to reduce discretionary expenditure.
Remember that your gross profit is what pays these costs and so if you have a low gross profit percentage of 25% for every £100 of expenditure you have to sell £400 of product or service. So ask is it worth selling £5,000 of services per year to pay for that fresh flower arrangement in reception.
What Makes a Good Business Person Summary
So that’s a quick summary – there are loads more, but we can help you with those if you’re a client by using our included business transformation program.