How to do business?

October 10, 2007 6:38 PM

What is the one thing that you do that makes the most positive impact on your business?

Every businessman discovers the secret of making money after some years of experience.

Assuming you are this businessman, and you lost your entire fortune and had to restart, what step would you surely do right away this time?

posted by markovich to Work & Money (16 answers total)

Find a way not to associate my success in business with my self-worth. Harder than it looks, I assure you.
posted by Ironmouth at 6:48 PM on October 10, 2007

For us it's simple. We meet for coffee in the morning. Discuss ideas, goals, projects, etc. Write that info out into a list. And then check each task or aim 'off' once it's completed through the day (or week). I know it sounds lame, but it's made the difference between meandering and accomplishment.
posted by zenpop at 7:13 PM on October 10, 2007

1. Cash flow problems are corrected by generating more sales/revenue, not by borrowing to cover cash flow problems. Plan accordingly. It's taking years to dig out from this mistake.

2. Have short meetings/conversations with your crew regularly and keep everyone on track. zenpop is right, it's easy to wander off track.

3. Watch the money. See how it flows through your business to your pocket, and understand that process.

4. Make sure you are oriented on making MONEY, not fulfilling some life dream. The company has to PAY for the dream, not BE the dream.
posted by disclaimer at 7:33 PM on October 10, 2007

Trust your intuition. At the end of the day it is going to be the one thing that makes you move forward.

Watch the competition closely, see what is working for them and blend it into your business plan daily. Reward accomplishment even if it might impact your pocket- recognizing the good in the others will pay for years to come. Put a damper on negative attitudes quickly, never let the morale slip and keep an open work environment- you will never know all the problems unless you are willing to take criticism be it good or bad. Invest in innovation- being the first to try can make the difference between success and failure. Plus, make damn sure you never lose sight of remembering that your job needs to be fun- for you and those that choose to work with you.

I don't really need to go back- these things worked very, very well for me in the past.
posted by bkeene12 at 7:33 PM on October 10, 2007

Spend the time it takes to hire the right people. And once you have hired them, remember how important they are to you and treat them accordingly. Be quick to apologize when you've done something offensive out of fear, speed or ignorance. Respect their opinions, even if you don't follow their advice. Educate them about the business, even if they go off and start their own someday. Pay them as much as you can, even if it hurts. Take a personal interest in their wellbeing, both mentally and physically.
posted by workinggringa at 7:36 PM on October 10, 2007

Sell something that customers want, at a price they're willing to pay, which is acceptably profitable for you. I know that sounds prosaic, but it is the key to business success. All other things are secondary.

The reason I point it out is that a surprisingly large number of new businesses botch this, and die as a result. The most common way to botch this is to try to sell something you think others should be buying, which they don't actually want.

Missionaries make lousy businessmen.
posted by Steven C. Den Beste at 7:54 PM on October 10, 2007

If I had lost my entire fortune I would go the complete opposite route I had gone before. The following is a high level, rough draft. Please do not analyze every detail as it is not constructed to be read in such a way.

To elaborate on my position, I consider there to be two main types of business:

1.) Small Biz = Start up / home biz / local biz...

2.) Large Biz = Corporation

And there are two flavors of business:

a.) Private

b.) Public

---

What does this mean? If you were 1a (small private) aim for 2b (large public) or vice versa.
-1a can tend to cost you more money upfront: not as robust of a benefits package, no free office equipment (laptop, printer, cell phone... or even printer ink) but can have more of a realization of profit (less distance and people to pay between the head of the company and you!).
-2b can be cheaper for you (corporate laptop, reimbursement for cell phone bill each month) but you may feel like your actions don't directly drive the company (10,000+ employees), like you're unable to climb the corporate ladder (slower promotions)...

---

If the above explanation is not what you're looking for, try switching job focuses from vertical to horizontal (this generally exists independent of the small/large and public/private aspect). Again I'll elaborate...
-Vertical = moving withing the same industry. If you were in a the financial industry (worked for the commercial loan segment of a national bank) you might only apply for new jobs at financial companies, most likely in the com. loan dept., regardless of what types of computers the loans were processed on (this computer part will make sense in a minute)
-Horizontal = moving withing the same skill set. If you worked as a system administrator for a Windows/UNIX environment you would look for a new job as a Win/UNIX system admin, regardless of what the company owning the computers produced (com. loans or widgets).

Make sense? Vertical applies to the industry specific end product. Horizontal applies to skills that enable companies to produce their product (com. loans or widgets). Not all companies have com. loans, but most companies in the "vertical" financial segment do. Not every financial company has a Win/UNIX environment (for the sake of the argument) but most companies "horizontally" across the board do.

I don't know if this sums it up but it's kinda like a carpenter (horiz.) versus a clergyman (vert). They can both benefit each other but most likely can't survive without the other (pending a large debate on religion versus architecture which I hope does not ensue after this post).

Good luck. And remember what Dean Kamen said:

"Most of the time you will fail, but you will also occasionally succeed. Those occasional successes make all the hard work and sacrifice worthwhile."

His Failure - The Segway (rather than a failure, this product suffered the lack of wide adoption by the public).
His Occasional Success - The first insulin pump for diabetics.
posted by thankyoumuchly at 8:03 PM on October 10, 2007

If you're a service firm, always be in a position where you can turn down work - money in the bank, low overhead, and a clear sense of what your goals are. Being stuck on a job you don't want keeps you from the jobs you do and saps your energy.
posted by migurski at 9:17 PM on October 10, 2007

I think not concentrating on just one thing right away, when starting over in business, is key. You've really got to do, in the first year, a number of things, all with the right balance, to get back in the game:

• Margins make a difference. For some kinds of businesses, within reason, putting your customers through an ABC or pareto analysis, at least semi-annually, or better, quarterly, is key. It's eye opening to discover how much low profit "B" and "C" class customers can actually cost you, because their demands are actually very one sided. In other words, whatever it means for your business, don't get WalMarted to death.
• You've got to understand your business' sensitivity, in terms of growth and durability. Volume for volume's sake isn't always a good idea, but sometimes you need to forgo short term gains, for longer term benefits. Breakeven points may be important indicators for new strategies, or disruptive technologies that can rapidly change your market. Stay on top of your numbers!
• Good customers can be fickle. A good customer respects your abilities, but doesn't let you become complacent. Never let a forward thinking, profitable customer, who knows and talks to your competition, get away, if you can avoid it and remain profitable. They're reading tomorrow's newspaper to you, today.
• Hiring smart isn't easy, but it may not be as complicated as it seems, either. Firing smart can be a little harder. Just as you'd put your customers, or your suppliers through periodic pareto analysis, so, perhaps, may it be a good idea to do so with employees, and part gracefully with the bottom 10 or 20%.
• If you're starting from scratch, or starting over, you may not need a national strategy, right away. I don't know how many business plans I've read for ventures with less than $100,000 net worth, that had a 2 or 3 page national marketing strategy. Conquer your block, your city, your state, before you take on the world. You'll learn things doing that, that will inevitably change your approach to larger regional, national and international markets.
• Hang on to your equity.
• "Insure" your risks, if not through actual insurance in the usual forms (of which you should always maintain appropriate amounts), then through defensive strategy.

posted by paulsc at 10:18 PM on October 10, 2007

This is something I read in a Paul Edwards book. I remind myself of it all the time, and it's the first thing I tell my friends and clients about starting a business.

"People will gladly pay me well for work I love to do."

This counters the myths about money that most of us have: that people only pay grudgingly; that people don't like to pay well; that any work that pays well has to be miserable to do in order to have value.

It's a powerful affirmation.
posted by The Deej at 12:04 AM on October 11, 2007

Be a frugal, but not a cheap, bastard. My business is able to thrive in no small part due to the fact my business partner and I learned what not to do when we worked for a company where the CEO wasn't smart with his money and spent a hell of a lot more than what he had, got into a great deal of debt and always assumed as long as he could get more and more sales in the door, the company would be fine. How so very wrong that was. After enlisting a big time investor, having that investor get rid of him and several other like-minded executives, that company will likely close by the end of the year.

We make sure that 99 times out of 100, if the company doesn't need it, we don't get it. For business critical things we've determined we need, we do our research and go with high quality and performance, the last thing we want to do is go cheap and then have to replace 6 months later.

We also take care of our employees and that doesn't always mean throwing money at them. Quality of life counts too. Most of them are parents and we allow most of them to work from home and we have an in-office day once a week where we have meetings, go over goals, etc. We make sure we communicate well and make it easy to communicate with each other, good or bad.

One last thing and I think this is from Maya Angelou: "when people show you who they are, believe them." When you've identified a "bad apple" in the company, get rid of 'em. A bad attitude can be a cancer, nip that shit in the bud.
posted by SoulOnIce at 2:31 AM on October 11, 2007

This counters the myths about money that most of us have: that people only pay grudgingly; that people don't like to pay well;

Bullshit! It is a dog eats dog world. If a corporation can get away in NOT paying you then they won't. And corporations have screwed out tremendous amounts of free work out of me.
posted by yoyo_nyc at 7:15 AM on October 11, 2007

But besides corporations that always try to scre you over in a "no-holds barred" world I can recommend:
ART OF MONEY GETTING or Golden Rules for Making Money
by P. T. Barnum 1880(!)


and

The Art of War
posted by yoyo_nyc at 7:32 AM on October 11, 2007

Do a little more work. You can make x dollars for y work, or x+50% dollars for y+10% work. I see so many businesses in my industry (bars and hostels) where the owners are just coasting along, happy with their 50% occupancy, when for 10% more work they could have 100% occupancy. And don't be afraid to spend money.
For example:
I'm staying in a hostel in Buenos Aires right now. It's fine. Clean, friendly staff, good space, great location. But it's only ever half full. Why? It's no different than any other hostel here. The breakfast is the same, the beds are the same, the amenities are the same. So they make $10 a night from about 20 people, with expenses of $3 a night (guessing). However, if they upgraded the services a little (cooked breakfast, movie library, better beds), they could be full. Better to have expenses of $5 a night but a full house - at the end of the day you've got $200 in your pocket rather than $140. Plus more money from more guests at the bar, buying trips, tours etc.
This is the basis for my businesses, and so far they've all been very successful.
posted by conifer at 8:15 AM on October 11, 2007

Focus on efficiency. This means you should *not* scrimp on the basic supplies your employees need to be efficient. (I have actually worked at some jobs where I wasn't equipped supplies like my own stapler, scissors and binder clips...I sure wasted a lot of time, and experienced a lot of frustration, just trying to complete simple paperwork. But what can I say, the owners were cheap and were trying to cut corners every which way. I don't think this paid off)
posted by mintchip at 7:43 PM on October 11, 2007

Put your price/fees up at least once every year.

I know we know this but I shall repeat anyway, remember that 80% of your revenue will come from 20% of your client base. Acknowledge the 20% and treat them accordingly (this is not to say you treat others different, just be aware of the important players in the business-life of 'you').

There is also the advertising rule which I am still struggling with but will throw out there nonetheless which is to spend 10% of your projected revenue on advertising. As I said, this is one I myself still have not fully embraced but will hope to by next year.

Lastly, in times of financial strain, instead of doing lots more, do less. No new leads, no risk, no chances. You need to be in a financially healthy space to take chances so go with sure things until things get better.

Also, keep abreast of new approaches and methods. Keep current and keep the goal in mind. Always keep the end goal in sight.
posted by mycapaciousbottega at 3:39 PM on October 14, 2007