By David Ley
WORKING hard in your business is not enough to ensure that it will be profitable.
In the modern economy, hard work is not a competitive advantage anymore; everyone works hard. “Become a Key Person of Influence” is a book written by Daniel Priestly.
He points out that if you were to gather up all the hardest working people in the world, you would not find the top CEO’s and Entrepreneurs, you would find the people who are struggling to make it up the ladder or struggling to survive it all.
The competitive advantage is in thinking expansively, connecting with the right people and spotting fresh opportunities.
Michael Gerber who has been described as the world’s #1 Small Business Guru tells the story of Sarah who owns a bakery.
She started the business because she was a great pie baker, and all her best friends told her to open a pie shop because she was so damn good at it.
Now she starts work at 3.00 in the morning, works hard baking, selling, cleaning up, ordering, paying invoices, banking and then preparing for the next day.
She finishes work at 9.00pm then starts to figure out how she is going to pay the rent next month. She has been at it for three years and now hates pies, and hates the business. So the business is not about pies……. its about hard work.
The fatal assumption says Michael Gerber is that “if you understand the technical work of a business, you understand a business that does the technical work.”
The facts are that this is just not true. I f you are a carpenter, or an electrician or a hair dresses, or even a lawyer that does not necessarily mean that you have all the skills and knowledge to run a successful business.
So what advise would Michael Gerber give Sarah to turn her business around and make it both profitable and a delight to turn up to work every day.
For the answer, Gerber turns to the most successful small business in the world-McDonalds. The average McDonalds restaurant produces more than $2m in annual sales, and is more profitable than almost any other retail business in the world, with an average 17% pretax net profit.
The key is that McDonalds not only lends its name to the smaller enterprise but it also provides the franchisee with an entire system of doing business.
When he first established the McDonalds business, Ray Croc spent a considerable amount of time working on the business. He took an expansive entrepreneurial approach, establishing tested and proven systems to run the business, as distinct from the limited technicians approach of just doing the work. To explain a little further, lets look at what an Entrepreneur does.
The Entrepreneur asks the questions:
• How must the business work? Rather than what work has to be done?
• What systems must be in place? Rather than a business in which people work to produce inside results?
• What is our vision of the future and what do we have to do to change the present to meet our vision of the future? Rather than what is going on in the business now and how do I keep it going?
• The Entrepreneur also sees the business as a whole, totally integrated and they work towards shaping the business as they see it in their vision of the future. On the other hand the technician sees the business in parts modeled on the present day.
The success of McDonalds is obvious to us all.
As a further example of an Australian business that has done a fantastic job of establishing clear and well thought out systems we need look no further than ”Jims Group”.
Jim has successfully established systems and franchised 35 small businesses, with everything from mowing, to building, finance, glass, dog wash, security etc etc.
In the 25 years since Jim Penman turned his mowing round into Jim’s Mowing, and started expanding, he has created a network of 20 divisions and 2700 franchisees in Australia, New Zealand, Canada and Britain, and now has a turnover of $200 million. Just go to Jims web site to read more about his philosophy.
Now franchising is not for everyone, but the message is very clear. If you are like Sarah then its time to start working on your business, establishing clear well thought out systems that put the customer first, and start thinking like an Entrepreneur.
If this seems like a daunting task, and you are unsure how to get started and would like to know more, then get some help from a professional.
David Ley is a Director with Thexton Armstrong Ley. Contact at him at david.ley@thextonarmstrong.com.au
