No Excuses! - The Power of Self-Discipline Part 13

If the first law of economics is scarcity, then the first law of business is compet.i.tion. It requires tremendous focus and discipline to do the things necessary to attract the scarce money of customers toward purchasing your product or service.

To not only survive but also thrive, you must compete continually against all other uses of the same amount of money that you want to charge for what you sell.

The first discipline of business success is that you offer a product or service that people want, need, and will pay for at a price they will accept-a price that is compet.i.tive with every other business that wants the same customer dollar.

You must be completely honest with your product/ service mix to ensure that it is well suited to the current market. This is an area where false a.s.sumptions or incorrect conclusions can lead to business failure. This answer is continually changing as compet.i.tion and customer tastes also change.

The Customer Is Always Right.

Every week, I speak to business people who are unhappy with their level of sales and profitability. They insist that their product or service is excellent and that people should be buying from them in much larger quant.i.ties. In each case, I have to gently point out to them that the only proof that their product or service is truly attractive or valuable is that people buy it willingly-and then buy it again and tell their friends to buy it as well.

According to the experts, fully 70 percent of your business decisions will turn out to be wrong in the fullness of time. This is the average. When you are a new business - person or starting a new business, you will be wrong even more often than this. It is not unusual for an entrepreneur to be wrong 90 percent of the time in the beginning of his career.

It requires tremendous self-discipline and character to face the possibility that you could be wrong in your most cherished a.s.sumptions and beliefs. Nonetheless, this discipline is essential if you are going to minimize your mistakes, cut your losses, and redirect your resources toward offering customers more of the things that they really want, need, and are willing to pay for today.

All business investment and business start-ups require a high level of optimism. You must believe in the future possibilities of your business along with your new products and services. You must have so much confidence in their marketability that you are willing to undertake financial risk and invest many hours, weeks, and even years to achieve your business goals, and you must do all this with no real guarantee of success.

At the same time, you need discipline to curb your confidence, to remain objective and realistic. Overconfidence in business can lead to business mistakes, financial losses, and even bankruptcy.

You Must Be Better.

Because of the aggressive and determined nature of your compet.i.tion, in order to simply survive, you must discipline yourself to be equal to or better than your compet.i.tors. After all, your compet.i.tors get out of bed every morning thinking about how they can put you out of business. They want to take away your customers and your sales. They want to get your profits. They want as much of your business as they can possibly get. To increase your probabilities of success against such compet.i.tion, you must make every effort to out-think them.

When you start a business or a new venture within a business, you require the discipline to do your homework thoroughly, in advance. You create a complete business plan before you start operations, and you continue to update it and revise it every year thereafter. The discipline of advanced planning can spell the difference between success and failure.

Challenge Your a.s.sumptions.

Most business ideas do not work, at least in their original form. As Peter Drucker said, "Errant a.s.sumptions lie at the root of every failure." A major reason for business failure is that business owners or executives rely on a.s.sumptions that are not tested. They a.s.sume that the product or service is excellent in comparison with others. They a.s.sume that they can sell a sufficient number of those products or services-and do so at a profit. They further a.s.sume that those profits will be substantial enough to make this investment of time and money more attractive than any other use of the same amount of time or funds. All of these a.s.sumptions must be tested carefully before any irrevocable commitment is made.

According to the Kaufman Foundation on Entrepreneurs.h.i.+p, 95 percent of entrepreneurs and small business owners in America earn less than $50,000 per year. Why is this? It is not because they lack the energy, intelligence, or ability to earn more. The very fact that a person has the courage and resourcefulness to start a new business means that he or she has above-average levels of natural talent.

The reason why so many entrepreneurs underachieve and fail is that they lack discipline. They lack the discipline to carefully study every aspect of the business before committing to it. They lack the discipline to test their a.s.sumptions rather than jumping to conclusions and hoping for the best. Don't let this happen to you.

Identify Your Ideal Customer.

You need discipline to identify and determine your ideal customer: the exact person who can and will buy your product or service in sufficient quant.i.ties and at the price you need to charge in order to justify going into this area of business in the first place.

You need the discipline-based on trial, error, and persistence-to develop a marketing plan that generates a steady and predictable stream of new leads for your business. To market effectively, you must be clear about your compet.i.tive advantage and your unique selling proposition: What is it about your product or service that makes it superior and more valuable for a customer than any other similar product or service being offered today?

You need the discipline to develop a complete sales system, from beginning to end, that converts qualified leads into solid customers. It is amazing how many businesses just a.s.sume that the product or service will sell itself-whether they have a superior sales system or not!

Know Your True Costs.

You need the discipline to determine accurate costs and the proper pricing of your products and services. Wal-Mart has become the biggest retailer in history largely because of its expertise in this area. It's amazing how many businesses are selling products and services at a loss because they have never accurately totaled all the costs of bringing that product or service to market in the first place. You've heard the old saying, "We lose money on every item we sell, but we try to make it up on the volume." Obviously, that's not possible!

You need a quality control system in order to ensure that every product or service that you sell is of such high quality that your customers are so satisfied that they happily buy from you again-and tell their friends.

You need the discipline to develop a customer service policy, one in which you treat your customers so well that they become loyal to you and choose you over any of your compet.i.tors.

The Purpose of a Business Is to Please Its Customers.

What is the purpose of a business? The purpose of a business is to create and keep a customer in a cost-effective manner. Profits are not the purpose of a business. Profits are the result of creating and keeping a sufficient number of customers who yield a sufficient number of profits after all costs.

What is the key measure of business success? The answer is customer satisfaction. Every effort and activity of your business must be aimed at satisfying customers in a manner that is better than any other compet.i.tor.

What is the measure of customer satisfaction? The answer is repeat business. It is only when customers buy from you again that you demonstrate that you have fulfilled the promise you made to them when you got them to purchase the first time. A resale to a satisfied customer requires one tenth of the time and expense as a sale to a brand new customer. All successful businesses rely on repeat business, which is possible only with high levels of customer satisfaction. This is a real discipline.

What is the key to long-term profitability? The answer is recommendations and referrals.

The ultimate question that determines the long-term success or failure of your business is, "Based on your experience with us, would you recommend us to others?"

You can survive and thrive only when the majority of your customers are so happy with your products and services that they will encourage their friends and a.s.sociates to buy from you as well. Since a referral from a satisfied customer is fifteen times easier to sell to than a cold call (which means it costs only one fifteenth as much), referral business is the key to your future. You require tremendous focus and discipline to develop and maintain customer service policies that cause people to buy from you, then buy again, and then recommend you to their friends.

Set High Standards.

You require the discipline to set standards of excellent performance in every area of your business and then to continually strive to get even better. You need to practice the CANEI Formula, which stands for, "Continuous and Never-Ending Improvement." No matter how high your level of quality is today, you can never be satisfied. You must continually be raising the bar on yourself-and on everyone within your area of responsibility.

You require the self-discipline to work long, hard hours for many months and even years to get to the top in your business. The average entrepreneur, business owner, or self-made millionaire in American works fifty-nine hours per week. Some entrepreneurs even work seventy to eighty hours per week in the first few years of building their businesses. You must be prepared to discipline yourself to put in this amount of time and level of hard work if you want to be the best and get to the top of your field.

Think About the Solution.

To succeed in business, you need the self-discipline to be proactive rather than reactive. You need to focus on solutions rather than problems. You need to concentrate on the most important thing you could possibly be doing every hour of every day rather than getting sidetracked by low-value or no-value tasks and activities.

Above all, you need the self-discipline to settle in for the long term, to develop a long-time perspective in your business life. Because of the intensity of compet.i.tion, it takes many years of disciplined effort for you to become a business success, whether this is in your own business or working for someone else. There are no shortcuts. There are no easy ways to get to the top. There is only one way, and that is through hard work, discipline, and willpower.

On average, it takes about two years to break even in a new business venture. It takes another two years of positive cash flow to pay back the money you borrowed in the first two years. It then takes another three years before you become truly successful. In addition, everything costs twice as much and takes three times as long.

Based on these statistics, why should you start your own business or embark on a new business venture? Because the time is going to pa.s.s anyway! After all, five years from now you will be five years older, and ten years from now, you will be ten years older. At the end of that time, you will either be at the top of your field or still down among the 80 percent struggling for every dollar and worrying about money every day. The choice is yours. Discipline is the key.

In the next chapter, you learn the discipline that controls the lifeblood of your business: sales. In the final a.n.a.lysis, as Peter Drucker said, "The purpose of a business is to create and keep a customer."

Action Exercises:.

1. Stand back and look at every area of your business, as if you were an outside consultant. What changes would you recommend?

2. Imagine you were starting your business over again today. Are there any products or services that you would not bring to the current market?

3. Identify the 20 percent of your products and services that account for 80 percent of your sales and profits. How could you sell more of them?

4. Project forward one, two, and five years in your business. What are the trends? What will your customers be buying in the future?

5. List three ways you could improve your customer service to ensure that customers buy from you again and tell their friends.

6. List three ways that you could attract more and better qualified leads from your marketing and advertising activities.

7. List three ways that you could make more sales to the prospects you attract or that you could attract more and better prospects.

Chapter 11.

Self-Discipline and Sales.

"Nothing happens until a sale takes place."

-RED MOTLEY.

The most important element in business success is selling. Nothing happens until a sale takes place. All the factories, businesses, offices, and producers of goods and services leap into action only when someone, somewhere makes a sale to someone.

Selling is one of the hardest professions in America. It is also the only profession in which a person can start with limited skills to achieve one of the highest incomes in our economy. Moving onward and upward in sales is like driving on the Autobahn in Germany: There are no speed limits. You can go as far and as fast as you want by stepping on the accelerator of your own ambition and determination to excel in the profession of sales.

Business Success or Failure.

Thousands of bankrupt or insolvent companies have been a.n.a.lyzed over the years to determine why they failed. After all the data was sorted and studied, virtually every business failure came down to one reason: "low sales." In contrast, whenever a business was succeeding, growing, yielding profitability, increasing its share prices, and offering opportunity for more and more people, the reason boiled down to one factor: "high sales." Everything else was secondary.

Almost everything you do in a business either increases or decreases sales. Everything either helps or hurts. Everything either attracts and keeps more customers-or drives them away. Everything counts when it comes to sales.

The Discipline of Generating Sales.

Whether you are a salesperson or a business owner, you require the self-discipline to focus and concentrate on generating sales every hour of every business day.

A group of researchers interviewed several hundred senior executives and business owners and asked them, "How important are sales and marketing to your business?"

Without exception, they all replied, "Sales and marketing are absolutely essential to our survival and growth."

The researchers then conducted a time-and-motion study of these same business owners and executives, following them around and tracking their time usage over the course of a month. At the end of that time, they completed their calculations and determined that the average business owner or executive-who professed that sales were "absolutely essential" to survival and growth-was spending only 11 percent of his time on sales and marketing. The remaining time was spent on meetings, discussions, paperwork, administrative work, luncheons, and a variety of other activities that contributed nothing to sales generation.

If you are a sales manager or business owner, you must discipline yourself to focus most of your time and attention on getting your salespeople to generate the sales on which your company depends. You must spend 75 percent of your time working with your salespeople and accompanying them when they visit your customers to make presentations and sales. Do your paperwork before or after work, but during working hours, when customers are available to be seen, you should dedicate yourself entirely to sales generation.

HOW TO GO BROKE.

Some years ago, I started a new business. I developed the product and then began advertising via direct mail, radio, television, and newspaper. I allowed myself to become completely overwhelmed with planning, paperwork, and advertising activities. By the end of the year, I was out of money, and my business was almost broke.