The Wimp at Work
Research conducted by The CEO Project suggests that the individuals who lead companies should spend their time very differently than how most are currently spending it.
If you want to understand why your business is not as successful as you would like it to be, or want to know why you struggle, consider this: very few owners know what specific actions are required for their company to grow.
Many owners become trapped by the seeming mirage of growing revenue; or deal constantly with poor cash flow, struggle to maintain or increase profits or, build a business around the idea of just paying minimal taxes.
For the sake of argument let me define success as building a more valuable company.
Successful owners don’t spend their time growing revenue, minimizing taxes or improving cash flow. What they do is focus on one thing to increase the value of the company: picking the right business and profit model.
The marketplace decides the costly lessons about who will win and who will not, but some influence is possible by designing (or redesigning) a business correctly and modifying it as conditions change.
What are the elements of a great business?
The first is that demand exists or can be created. The demand must consistently exceed supply. Without a steady stream of customers, the enterprise will likely fail.
Second, it helps to sell something that customers love.
Third, the business needs to have recurring revenue and fourth, that it is a non discretionary service.
It is possible to have a successful business that does not rely on always chasing new customers to grow revenue, but instead by focusing on turning a transaction into a relationship (or a customer into a client) that provides recurring revenue is more appealing because this improves cash flow and provides business stability.
Fifth, the business must develop a sustainable competitive advantage that is difficult to duplicate. This is a basic of marketing that many owners have never learned. Not understanding this essential item is the root cause of many unstable businesses.
Sixth, the economic characteristics of the business have to be right; positive cash flow; products priced profitably and a favorable return on investment (ROI).
The common element through these six items is that the owner is required to work on, and not in, their business.
But rather than focus on these critical issues that will help the business succeed, how do some owners chose to spend their time and energy?
You might think that owners who don’t work on their business would rather work in their business, but you might be wrong.
Most owners avoid the tough things in their own businesses until they are forced to take action. Even then, some keep their heads stuck in the sand.
Instead they choose to deal with the mundane, the trivial, those things of little or no consequence. The decisions that are made are easy ones, rather than the hard ones that really need to be made for the continued success of the company.
In December 2014, the Wimp at Work is alive and doing well. The business they own, maybe not.