The Up and to the Right | Small Business | Practical, Actionable, Sustainable Improvements

When I started Beyond 50 Percent my aspiration was to connect business owners with ‘proven principles and practical action’. It made then, and still makes, perfect sense in my head but I’ve found that when someone asks for an example of a proven business principle I was suddenly less clear on what it meant in practical terms and left with something banal like ‘buy low sell high’.

Since ‘practical’ and ‘actionable’ are features that I feel strongly about I felt compelled to arrive at some clarity.

So, I went in search of business principles and here is what I discovered through both reflection and research.

Here’s what happened when I sought the Principles of Small Business Success!

Complete Show Notes

Searching for The Answer

The first thing I did… as I think we all do these days when we have a question… was to ‘Google it’.

As soon as I saw the results on the page I realized that I am not the only one that has a difficult time articulating what a ‘business principle’ is. 

There were over 318,000,000 results to the simple search for ‘business principles’ and the highest ranking ones were full of good tips and advice but were they ‘principles’?

Does it even matter if we make the distinction between a good business idea or tactic and a business principle?

That’s when I realized the first flaw in my search. I had to get clear on what a principle really was.

Back to Google…

According to https://www.merriam-webster.com/dictionary/principle a principle is a “a comprehensive and fundamental law, doctrine, or assumption”. 

Principles matter because they are the fundamental structures upon which a business is built.

If advice is good then why should you care if it’s a ‘principle’ or a tactic?

Once I thought a bit about the meaning of the term principle I realized that in order to be a principle of business, a concept would have to be comprehensive and fundamental.

A business principle then is a concept that works for all businesses (comprehensive) and is part of a foundation upon which a successful business is built… and that’s why the distinction matters. In order to effectively use good tactics, it’s important to understand that we’re using them to build and strengthen the very foundation of our business.

Here are six principles for small business owners that I think are universal for all business models.

Vision - Have a Vision That Exceeds Your Planning Horizon

Planning - Plan to the Visible Horizon and Stop

Communicate - Communicate Effectively Internally & Externally

Value - Create Value for Others

Cash - Understand Transactional Economics

Profit - Draw Value to Grow, Benefit and Give

The Principles of Small Business Success

Why these six? That’s a great question and, to be honest, it took some doing. There are quite a number of great business tactics that are passed off as principles and when I measured each one against the yardstick of being applicable to all businesses and foundational these were the six still standing.

I want to be clear. Tactics are important but they also become more situational and have specific relevance where these ideas are timeless and fundamental to the nature of business.

Let’s briefly review each of these six principles.

Vision

I realize that vision or mission can fall into that trendy place of c-level retreats that result in lofty lobby signs. That’s not what I’m talking about. This is about understanding your place in the social & economical environment today and into the future even beyond what you can reliably see.

Planning

In order to organize and perform work at the appropriate time for your business situation you have to do some level of planning. Small business owners are faced with constraints, labor (yours or others), working capital, time in a day, pool of expertise, equipment available etc. This creates a horizon beyond which we can’t effectively plan… and that’s a good thing!

Communication

The ability to communicate effectively is important in connecting with your potential customers, your team and other stakeholders. The disciplines of marketing, advertising, public relations, human resources, leadership and management all hinge on your ability to communicate effectively.

Value

When it comes to value, the low hanging value buzzword is to define your value proposition. This term has become cliche and overused. Another phrase you’ll hear is ‘what problem does your product or service solve?”. Let’s go just a little further… how is solving that problem valuable in improving the lives of your customers?

Cash

It’s hard to overstate the importance of understanding the flow of cash in your business. How and when it comes in, where it’s kept and how and when it goes out can make or break a small business that is otherwise successful.

Profit

Is ‘profit’ a four letter word? It sure seems like it gets categorized that way sometimes. In order to survive, prosper and continue to serve others you must draw more value from the product or service you offer than you invest in it. 

Practical Action

So now that we know a few business principles what do we do with that?

Take some time to consider your own situation in the context of these six concepts.

How strong is your business in each of them?

Do all of the tactics and actions you take support these principles in the most effective way?

Over the next six weeks I will cover each of these fundamentals.

In each episode we’ll talk about ways small business owners can identify how these principles are handled in your business. 

Check out the live stream recording: https://b50p.info/uattr041

In the meantime drop a comment with your thoughts. Connect with me to keep in touch and share ideas!

If you’re running a business or thinking about it you would be forgiven for feeling completely overwhelmed. 

It’s true, there is a lot to do and never enough time to do it. What is a business owner to do? 

Read, learn, get a consultant or coach? Yes… those are all good things but at the end of the day when you’ve read “Eat that Frog” and you’re ready to hunker down how do you know which frog is the biggest, ugliest and least appealing? Which frog do you eat?

How do we decide what’s important when? I think there’s a way of structuring our business plan that steals a bit from the world of software development.

Instead of ‘building’ our business… let’s develop it.

Complete Show Notes

The Concept

I’m going to make an assumption if you’re reading this you’ve been exposed to the system software companies use to identify one revision of software from the next. “Software 1.0” versus “Software 1.3” versus “Software 4.0” and so on.

Major releases are usually identified with a change in the first number (before the decimal point) where minor updates are identified by incremental changes behind the decimal point.

I apologize to anyone who works in the software industry if I have oversimplified this but for our purposes this is all we need.

Generally Accepted Business Phases

1. Concept
2. Startup
3. Growth
4. Expansion
5. Maturity

If there are already standard phases of a company… why not just use those?

It’s a good question and if you have a relatively simple business model that might work fine. My experience has been that we spend quite a bit of time in every phase and so there are iterations of our business within each phase resulting in what we might call updates (or patches if something is broken) versus a full revision.

By using this model we can identify where a specific part of our business process needs to be implemented or updated.

More importantly, when we identify where something is applicable we have also identified where and when it is not applicable leaving us to focus our energy on what needs to be done at this moment rather than what might need to be done someday in the future or ‘what might be cool if…’.

You can find the following phases of business with some variations published around the web. If you prefer models with additional or fewer phases the concepts here will still apply.

Phases of Business as Revisions

1. Version 0.0 to .9 | Concept
2. Version 1.0 to 1.9 | Startup
3. Version 2.0 to 2.9 | Growth
4. Version 3.0 to 3.9 | Expansion
5. Version 4.0 to 4.9 | Maturity

As we enter YourBusiness 0.0 we focus on activities and ideas that are focused around the Concept phase of the business. Let’s say that during that time we come up with a concept for our long term production or someone mentions we should have a customer relationship management system (CRM). Since neither of those functions belong in the concept stage we drop the production idea in the growth stage and the CRM idea into the Startup stage on our plan and focus our efforts in areas that add value to the stage that we’re in.

It is better for me to keep things as simple as possible and there’s no need to complicate this more than you need it to be for your situation.

In keeping with simplicity you just add things to the category where they belong and move them as necessary when your information changes.

You might use Version 1.1 to define a specific implementation step to be completed in the early phases of startup like your early stage marketing efforts. By the time you arrive at this point you want your basic web page launched and initial social media handles acquired.

Version 1.2 might include implementing early stage business processes for production, material sourcing guidelines etc.

You can use the same concepts across each of the business stages.

Keeping Focus

I want to be clear here. It’s important to think about your vision for your company five or more years down the road. When ideas come to mind for that time frame I encourage you to make notes in the appropriate part of your plan.

It’s equally important to keep in mind that what we see five years from now may look very different when we get there.

So by documenting the ‘features’ we would like of our business at the various revision levels we free ourselves to plan for the horizon but keep our hands on the wheel.

Practical Action

There’s nothing new here… not really. I get that. When it occurred to me it just felt like a fresh way to look at an age old problem when it comes to planning and implementing the features and characteristics in our businesses.

Let’s face it, business owners are busy and anything we can do to guide the way we spend our finite time in the most effective way is valuable.

In the show notes for episode 040 of the Up and to the Right podcast I’ll have an outline showing what this might look like in a real use case. (https://b50p.info/uattr040)

In the meantime drop a comment with your thoughts. Connect with me to keep in touch and share ideas!

Full show notes: https://b50p.info/uattr039 (link will be live a few hours after the show!)

We have an interesting relationship with luck. When something goes well we use it in a self effacing way like 'lucky break'.

When things go badly we use it to distance ourselves from the event 'just bad luck'.
When we're breaking outside norms… we're pushing our luck.

According to https://www.merriam-webster.com/dictionary/luck luck is a force that brings good fortune or adversity

So how do we deal with the 'force' of luck in business?

Let's get luc... oh... yeah sorry this is a family show!

Why Luck?
The concept of luck is so ingrained in our lives that we have common phrases that cover a broad spectrum of situations and concepts.

The Good
What a lucky break!
Beginner's luck.
You're in luck.
Luck of the draw.

The Neutral
As luck would have it.
Pushing your luck.

The Ugly
Better luck next time.
Just my luck.
Tough luck.
No such luck.

I’m certain you could add to this list yourself.

From popular culture we get quotes like “Luck is not a factor.” from 1989’s The Abyss or “We make our own luck.” from 2013’s The Hobbit: The Desolation of Smaug.

Words matter. They affect how we think, feel and process information. Luck, in the context of business is a word we need to leave at the door.
Getting Past Luck
Luck, as the force defined above, becomes an amorphous power over which we have no control and to which we are subordinate.

When I look at the definition of luck and the phrases we use to describe its impact in our lives I see it as a tool we use to distance ourselves from cause and consequence.

That use is where I think the term and concept of luck really becomes a problem for business owners.

Rather than considering luck a force in the business environment, I like to think of a collision of external factors that impact our businesses.

This gives me flexibility and control as a business owner in how I approach an unpredictable economic environment.

How can you or I plan for an unpredictable collision of external factors?

It would be difficult (some would say impossible) to accurately predict specific events. Luckily… (seriously I just wrote that… it’s SO ingrained!). As it turns out, we don’t have to. Rather than consider specific future events… we can identify and plan for, specific business impacts.
Practical Action
If Luck Exists, Let’s Take Its Power
Let’s agree to stop using the word luck and get comfortable with the constant stream of external factors and events that impact our business.
Qualitative P&L (Income Statement) Analysis
Here’s where we roll up our sleeves and get to work to take the power back from luck. Stay with me… it’s worth it.
This is actually a pretty easy hack to help you plan for adversity in your business. Print a copy of your Income Statement and just go through each line and ask yourself some questions.
What is the impact on my business if this number goes up? Down?
How would I respond if this number went up? Down?
What might cause this number to change? NOTE: we don’t look for specific events like “Oh… there could be a pandemic.” If you’re looking at reasons revenue might go down, think more along the lines of “Foot traffic could go down significantly.” The general statement will get you to the same place in your analysis.
Once you’ve gone through each line you can look at the items where #3 is a factor in more than one line item. Hey congratulations! You just created a scenario!

This analysis can give you a great starting point for business planning. You can use this to plan your cash management, inventory, capital expenditures, recruiting and possibly the most important consideration of all (at least right now)… how you deliver value to your customers.

The economic landscape has always been dynamic. Human population growth coupled with international travel has increased an economic risk that many of us haven't had to plan for if we weren’t doing business internationally. Add to that the uncertain impact of climate change through resource availability, changes in policy and/or customer behavior you find yourself in what could be argued to be the most complex and dynamic business environment in history.

It’s an exciting time to be a business owner. 

I’ve heard it said it’s better to be lucky than smart. Maybe that’s true but it’s better to be ready than lucky. Is your business ready? Gotta run… time to figure out how to print an Income Statement!

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