Small Business Articles
Professionals Talk Entrepreneurship--What Makes A Small Business Work
November 21, 2008
In small business, there is a small handful of core inquiries always in circulation, asked and answered again and again. The questions asked are so profound, so multifaceted, that they need to be constantly re-asked, re-analyzed, and re-answered.
CNN recently brought an old favorite to the surface in an article titled "Want to Start a Biz? Here’s What Matters" by writer Ian Mount. Mount takes a relatively brief space to ask two business-leader-turned-writers (Ken Blanchard and Scott Shane) what, in their professional opinions, are the most important factors to small business success. The perspectives of these two businessmen pose some interesting ideas to help paint a fuller picture of what a small business franchise needs in order to thrive.
Staying Power and Passion
Some people are under the impression that increasing the number of business opportunities in America is a key step toward strengthening our economy. When asked how small business impacts the national economy, Shane agreed in part but went a little deeper. He says, "for job creation you should be less concerned with how many new businesses there are than with how many good ones are being started."
In the course of the same discussion point, Ken Blanchard, who calls himself "much more in the dream-making business" than the pragmatic Shane, agreed with his colleague and added that "the great competitive edge of America is free enterprise and the opportunity to be your best and to seek a living that excites you." And the average business leader would probably agree with him: passion matters in business as much as a successful model.
Together, the two ideas that these two men bring work well together. It’s important for a Right at Home home business owner to be a good businessman who can stand the test of time, but if he has no excitement for offering in-home aid to elderly clients, his business will only be a lifeless shell. Likewise, a Flicko’s franchisee with a heavy passion for video production will be able to work from home for long hours, but if he can’t manage a business well, there will be no work for him to do and the business will fail. Success, and thus economic stimulus, relies heavily upon having a heart and mind for the franchise business.
An Inadequate Reason for Business
The two also briefly discussed reasons for starting businesses: both the good reasons and the bad. "Starting a business for the reason most people do - because they don't want to have a boss - is a bad reason," Says Shane. "Often people don't want a boss because they don't want to be told what to do. But your customers often tell you what to do, and if you don't want to listen to anyone, you probably won't listen to your customers."
He’s right. A completely independent (aka rebellious) spirit is a problem in business. The One Hour Parties franchisee who refuses to accept client requests when planning short corporate parties is not likely to keep his home based business in operation for long.
Were Shane specifically speaking to the world of franchise business on this issue, he could have easily added that taking "being your own boss" to mean not having to listen to your franchisor is also disastrous. Though owning a franchised small business does involve some business freedom, it is not complete autonomy, and anyone who doesn’t want to play by proven franchisor rules is not cut out for the business.
How do You Set a Small Business Apart?
When trying to set their businesses apart from the crowd, some small business owners make the mistake of trying to offer the cheapest prices. Scott Shane says that "pricing competition is not the most successful way to compete. In fact it's one of the worst ways. You can't compete on price if you can't compete on cost. And if you're starting small, you're rarely going to have a cost advantage."
In agreement with Shane, Blanchard went on to reference the words of entrepreneur Jan Carlzon of Scandinavian Airlines, who said, "We're not going to beat the competition on price, because we don't want to get into a price war with bigger competitors. Instead we're going to beat them on 'moments of truth,' which happen anytime a customer comes into contact with an employee."
The point that both of these business wizards make is simple and true: it takes size to have the best prices, and size is something that smaller franchises simply don’t have. The only way to make a little Computer Troubleshooters IT support and repair business stand out is by providing the best service every time, because that can be accomplished without size or huge financial resources. And ultimately, good service is what clients want the most.
How Much Do Start-up Funds Matter?
Toward the end of the interview, the men were asked how important outside financing was to a business’ success. Blanchard responded by recounting a time in business when he and his associates had done things rightly: "We were self-financed, but we brought five prominent entrepreneurs onto our advisory board who said they would get us work. We didn't ask them for money. Instead they sent us customers, who were money."
It’s often tempting to believe that throwing money at a problem will make it go away, but as Blanchard clearly points out, the success of a business opportunity rides not on how much money it begins with, but how much cash flow it has. Money is a constant need, and even if a well built home inspection business for sale like Pillar to Post doesn’t have a continuous financial influx, no amount of initial capital will be able to make up for it.
Continuing Discussion
These two men are not just business leaders, but authors of books addressing the very same issues they discussed with CNN. After over two centuries of free market business in the US, the discussion on the best small business practices continues, and it’s not likely to end soon.
In small business, there is a small handful of core inquiries always in circulation, asked and answered again and again. The questions asked are so profound, so multifaceted, that they need to be constantly re-asked, re-analyzed, and re-answered.
CNN recently brought an old favorite to the surface in an article titled "Want to Start a Biz? Here’s What Matters" by writer Ian Mount. Mount takes a relatively brief space to ask two business-leader-turned-writers (Ken Blanchard and Scott Shane) what, in their professional opinions, are the most important factors to small business success. The perspectives of these two businessmen pose some interesting ideas to help paint a fuller picture of what a small business franchise needs in order to thrive.
Staying Power and Passion
Some people are under the impression that increasing the number of business opportunities in America is a key step toward strengthening our economy. When asked how small business impacts the national economy, Shane agreed in part but went a little deeper. He says, "for job creation you should be less concerned with how many new businesses there are than with how many good ones are being started."
In the course of the same discussion point, Ken Blanchard, who calls himself "much more in the dream-making business" than the pragmatic Shane, agreed with his colleague and added that "the great competitive edge of America is free enterprise and the opportunity to be your best and to seek a living that excites you." And the average business leader would probably agree with him: passion matters in business as much as a successful model.
Together, the two ideas that these two men bring work well together. It’s important for a Right at Home home business owner to be a good businessman who can stand the test of time, but if he has no excitement for offering in-home aid to elderly clients, his business will only be a lifeless shell. Likewise, a Flicko’s franchisee with a heavy passion for video production will be able to work from home for long hours, but if he can’t manage a business well, there will be no work for him to do and the business will fail. Success, and thus economic stimulus, relies heavily upon having a heart and mind for the franchise business.
An Inadequate Reason for Business
The two also briefly discussed reasons for starting businesses: both the good reasons and the bad. "Starting a business for the reason most people do - because they don't want to have a boss - is a bad reason," Says Shane. "Often people don't want a boss because they don't want to be told what to do. But your customers often tell you what to do, and if you don't want to listen to anyone, you probably won't listen to your customers."
He’s right. A completely independent (aka rebellious) spirit is a problem in business. The One Hour Parties franchisee who refuses to accept client requests when planning short corporate parties is not likely to keep his home based business in operation for long.
Were Shane specifically speaking to the world of franchise business on this issue, he could have easily added that taking "being your own boss" to mean not having to listen to your franchisor is also disastrous. Though owning a franchised small business does involve some business freedom, it is not complete autonomy, and anyone who doesn’t want to play by proven franchisor rules is not cut out for the business.
How do You Set a Small Business Apart?
When trying to set their businesses apart from the crowd, some small business owners make the mistake of trying to offer the cheapest prices. Scott Shane says that "pricing competition is not the most successful way to compete. In fact it's one of the worst ways. You can't compete on price if you can't compete on cost. And if you're starting small, you're rarely going to have a cost advantage."
In agreement with Shane, Blanchard went on to reference the words of entrepreneur Jan Carlzon of Scandinavian Airlines, who said, "We're not going to beat the competition on price, because we don't want to get into a price war with bigger competitors. Instead we're going to beat them on 'moments of truth,' which happen anytime a customer comes into contact with an employee."
The point that both of these business wizards make is simple and true: it takes size to have the best prices, and size is something that smaller franchises simply don’t have. The only way to make a little Computer Troubleshooters IT support and repair business stand out is by providing the best service every time, because that can be accomplished without size or huge financial resources. And ultimately, good service is what clients want the most.
How Much Do Start-up Funds Matter?
Toward the end of the interview, the men were asked how important outside financing was to a business’ success. Blanchard responded by recounting a time in business when he and his associates had done things rightly: "We were self-financed, but we brought five prominent entrepreneurs onto our advisory board who said they would get us work. We didn't ask them for money. Instead they sent us customers, who were money."
It’s often tempting to believe that throwing money at a problem will make it go away, but as Blanchard clearly points out, the success of a business opportunity rides not on how much money it begins with, but how much cash flow it has. Money is a constant need, and even if a well built home inspection business for sale like Pillar to Post doesn’t have a continuous financial influx, no amount of initial capital will be able to make up for it.
Continuing Discussion
These two men are not just business leaders, but authors of books addressing the very same issues they discussed with CNN. After over two centuries of free market business in the US, the discussion on the best small business practices continues, and it’s not likely to end soon.
