The foundations of business success

David Ricardo believes that: “Nothing contributes so much to the happiness and prosperity of a country as high profits.”

The management guru Peter Drucker is of the opinion that there are seven key result areas in management. “All business success is a result of working regularly in these seven areas to achieve better results. These are all habitual ways of thinking for business success and profitability.”

The first key result area, or habit that you need to develop is the habit of thinking continually in terms of increasing productivity. The goal of strategic planning is to “increase return on equity.” It is to increase the financial results and outputs relative to the costs and inputs involved. It is to get more sales, revenues and profits out of the business than are currently being achieved. All successful businesspeople think continually in terms of increasing productivity. They look for ways to do more with less, to get more out, at a lower cost.

Look at what you are doing today. How could you increase the productivity, performance and output of yourself, and your business by changing the things you do? What could you do more of, or less of? What could you start doing that you are not doing today? What could you stop doing altogether? What is it that you are doing today that, knowing what you now know, you would not start up again today? The answers to these questions can lead you to productivity breakthroughs that will dramatically improve your financial results.

Satisfy your customers

The second key result area, or habit that you can develop, which we have already discussed, is the habit of thinking in terms of customer satisfaction all the time. The starting point of developing this habit is for you to be absolutely clear about how your customers define satisfaction. What has to happen for your customers to be so happy with you that they buy again and tell their friends?

Profits are the true measure

The third habit you need to develop is the habit of thinking in terms of profitability all the time. Many businesses focus too much on the top line, on gross sales, rather than on the bottom line, on net profits. As Baron de Rothschild, in his ‘Maxims For Success’ said, “Always concentrate on net profits.”

You should analyze each of your products, services, customers and markets to determine exactly how profitable they are. Many companies today are finding that their largest customers, because of high servicing costs and discounts, are not particularly profitable at all. Many companies are finding that certain products and services that they sell in large volume, because of many hidden costs involved, are not profitable. They are actually breaking even, or even losing money, on their best selling products or services.

What are your most profitable products/services? Who are your most profitable customers? What are your most profitable markets? What products, services, customers or markets should you emphasize or deemphasize? Always think in terms of the bottom-line, of the cash for cash profitability of each one of your business activities.

Excellence is the answer

The fourth key result area is the habit of thinking in terms of quality all the time. Customers only buy a product or service because they feel that it is of higher quality in some way than that of competitive offerings. How do your customers define quality? What qualities or attributes of what you sell cause them to buy from you in the first place? What quality elements do they see in your competitors?

How could you offset these elements to get them to buy from you? One of your most important activities should be regular customer interaction, where you ask your customers why it is they buy from you, and how you could improve your quality and service to them. Practice the CANEI method. These letters stand for, “Continuous And Never Ending Improvement.” Remember, whatever got you to where you are today is not enough to keep you there.

The most important goal you can set for yourself and your business is to “be the best” in some area that is important to your customers. This is not only the key to increased sales and profitability, but it is also the key to motivation and commitment among the people who work for the company. “Everyone likes to be part of an organisation that is committed to winning, to excellence, to serving customers better than anyone else.”

Your most valuable assets

The fifth key result area in business is the habit of thinking in terms of people building. Of all assets, only people can be made to appreciate in value by investing time and training in them. Your people are everything. All productivity comes from them; there is no other source. All profitability comes from your people. All sales and fulfillment comes from your people. Your ability to select them and then to motivate and inspire them is essential for your success.

Develop the habit of spending time with the most important people in your business. Ask them for their opinions. Compliment them on their accomplishments. Make them feel important and valuable. Remember, the very best companies have the very best people. And these people are invariably the ones who are the happiest because of the way they are treated by others, especially by their bosses.

Reorganize your business continually

The sixth habit you can develop to build your business is the habit of organisational development. This habit requires that you continually look for ways to organise and reorganise your business so that it functions more efficiently and effectively in getting the results you desire. You continually move people around to assure that the job gets done better, faster and with less friction or interruption.

Some years ago, if a company announced that it was going through a “major reorganisation,” it would be a sign that there were serious problems in that company. Today however, with the rate of rapid change in the business world around you, you and your company should be in a state of continuous reorganisation. Consistently, you should be thinking about how you can deploy and redeploy people and resources to assure the highest level of productivity, performance and output.

Within the context of organisational development, you should develop the habit of not only learning and growing continuously yourself, but also thinking in terms of training and learning experiences for the key members of your staff. Sometimes, one additional skill is all that a person needs to dramatically improve his or her productivity and contribution to the organisation.

Never be satisfied

The seventh habit you can develop is the habit of continuous innovation. You should encourage everyone to be thinking creatively all the time. The most important area for you to apply the habit of continuous innovation is to your products and services. You must be developing and producing product and service innovations as a regular part of your business activities. If you do not, your competitors will. One major innovation by a determined competitor can put you out of business. Be a leader, not a follower.

Think ahead and look at different ways that you can organize and reorganize your business to do things better, faster and cheaper for your customers. Think of new products and services that you can offer. Think of new markets that you can enter. Think of different ways that you can offset advantages enjoyed by your competitors.

The very fact that there are many hundreds of thousands of men and women who have started from nothing and become millionaires in business and entrepreneurship means that you can achieve these goals for yourself, if you just learn how. The only limits on your results are the limits that you place on yourself with your own thinking. By developing the thinking habits of successful entrepreneurs and businesspeople, you will eventually overcome all of your obstacles and difficulties, achieve all your financial goals, and become financially independent. Nothing can stop you.

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