The Seven Pillars of Business Success
I’ve identified Seven Pillars of Business Success that I use to diagnose where businesses are succeeding or failing. It’s my measuring stick for assessing their strengths and weaknesses. With these Seven Pillars in mind, I can usually tell if a business is going to succeed or fail within a few minutes of talking to the owners.
There’s a statistic that’s been circulating for the last several years, keeping thousands of businesses owners awake at night.
The statement goes that 90 percent of all businesses fail within the first year after launch, and of those that survive the first year, 90% will fail within five years.
It’s a sobering thought, but is it true? If my experience is any indicator, then yes, it’s pretty accurate.
P.S. Are you one of those people who would rather listen than read? You’re in luck! Alongside this blog I’ve started a podcast: Messes To Successes, where we cover the exact same topic (in this case, the 7 Pillars) each week. You can find us everywhere you search for podcasts. And if you’re not already following us on Facebook or LinkedIn, make that correction now.
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It’s Easy To Fail
After starting and exiting over 50 businesses and consulting dozens more, I’ve seen first-hand how easy it is to take a great idea to the marketplace with lots of enthusiasm…and then fail spectacularly.
Is it a matter of luck? Do people just stumble on winning ideas and ride them all the way to the bank? Fortunately, no. There are some simple rules and metrics for operating a successful business, and anyone can learn them. The problem is that most people don’t.
Every day, another wannabe entrepreneur launches out with a great idea and hopes for the best, but they don’t know what they don’t know and it eventually ruins them. They don’t realize they are usually missing at least one of the fundamentals to business success.
How Will We Define Success?
Before we go any further, it would be helpful for us to establish some ground rules for how we will define success. Like any good lawyer, I will give you my standard all-purpose answer: it depends. Success is only measurable by the person succeeding. You might think success is a million dollars a month and a corner offer overlooking the city. Fine. The guy sitting next to you on the train next into the city measures success by how much time he can spend with his kids.
The measure of success is as individual as your fingerprint, so I like to take a fair amount of time at the beginning of any new client relationship to identify the goalposts. I encourage you to take out a clean sheet of paper and explore what success means to you. It can be a paragraph or a brainstorming splatter chart of random words. Get a clear picture in your mind of where you want to go or you will never get there. Never. Even if you make a million dollars a month. You will never enjoy the satisfaction of success unless you know how you define it.
Meet Steve
A few years ago, I sat with a couple who owned a small construction company. Steve was working crazy hours every week, carving out just enough time after the kids were in bed to bid another project. He wanted to grow his business so that he could free himself to take some time off, but he never knew who was going to show up for work from day to day. Plus, he was taking a hit on almost every project to keep his prices competitive with other contractors in town. By the time he was done with payroll, there wasn’t much for him to take home.
But perhaps the biggest problem was that he was the face of the company. He got all the contracts and maintained all the relationships, and it was his friendly demeanor that won him all the business. People genuinely liked him and his wife.
You’re probably wondering how that could possibly be a problem. I’ll show you in just a little bit.
By the time he was done telling me everything he had in mind for this company and where he was struggling, I had to drop a bucket of bad news on him. He wasn’t going to make it in business unless he was willing to make a couple of major corrections to align with the Seven Pillars.
How Does Your Business Measure Up To The Pillars?
So, let’s dive into the Seven Pillars. You will probably identify where our friend’s company was failing as we go through them. But more importantly, I want you to use the Seven Pillars of Business Success to triage your own business (or business idea, if you haven’t officially launched yet). Hold your business up to the mirror I’m about to show you and let’s see where it needs some work.
I’ll be brutally honest with you: 100% of the businesses operating today are coming up short in at least one of the pillars right now. The ones that survive to this date next year are the ones that recognize where they are coming up short and reinforce that pillar.
Let’s get started.
Pillar #1: Faith
Before we don anything else, I want to pull the religious overtones off of this word. Let’s define faith this way: Faith in your business is that gut-level determination in your head and heart that what are you doing – whether it’s a product, service, non-profit, or other venture – is worth it. Because if it’s not worth it, you’re going to quit the first time things get difficult. And trust me, things will get difficult. Business is hard and you will always go through seasons of increasing difficulty. If you don’t have a burning desire to succeed that causes you to persist through the difficult times, you will quit, and then you won’t be in business anymore.
I’ve met entrepreneurs who were weak to moderate in all of the other pillars, but this drive to succeed carried them through to success. How did they overcome all the other weaknesses? That’s the flip side of faith: teachability.
The Flip-side of Faith: Teachability
A driven entrepreneur who has the humility to accept what he doesn’t know and get professional coaching is going to succeed eventually. He will find out what he doesn’t know and either learn the skill himself or partner up with someone who is already good at it. Someone who believes in their dream enough will accept constructive correction as a growth tool, not an attack.
It’s pretty simple:
- without faith a person will give up when he hits a wall.
- faith and no teachability, the person will hit the wall and grind himself into an early grave trying to press through on his own.
- with faith and teachability will gather a team from different areas of expertise and develop a plan to remove the wall together.
There is never not going to be a wall. A successful business owner knows this and uses faith and teachability to break through it. Teachability is a key principle of the Seven Pillars of Business Success, without it all else will fail.
Want to grow your faith?
Take action. There’s something about seeing your logo on a business card or setting up your first website that makes your idea more concrete in your own mind. Make a sales call. Prototype your product. Get a booth at a business expo. Taking small steps toward your goal builds your faith that your idea is real.
Pillar #2: Clients
It’s probably worth mentioning that the order of these Seven Pillars is not critical. Depending on your business model, you may have different priorities than a business in a different field. Brick and mortar businesses have different priorities than online businesses, and so on. So I don’t want to get hung up on the order.
If you don’t have clients, you are not a business. Simple. I prefer the word “client” over “customer” because customer has the connotation of “one-and-done.” To me, I want clients that want to do business with me again and again, to build brand loyalty.
I’ve heard of businesses that survive with only one client, but I don’t recommend it. The risk is unbelievable, even if the reward is good for awhile. I’ve herd of one contractor who only worked with one big box retailer, building their buildings. How many big box retailers have gone bankrupt or simply gone under in the last five years? If anything happens to that one client, you are toast, plain and simple.
The Power of A Diversified Portfolio…of Clients
It’s important to keep a strong pipeline or new business and a diversified spread of clients. My friends who work in personal services, graphic design, web development, and other creative fields need to know that not every client is going to give you consistent work every single month, and you need to mitigate for that by keeping a portfolio of open contacts to even out your cash flow.
The strength and stability of your Clients Pillar is measured by how many clients you have that will do business with you every week, every month, every quarter, or every year. The key is to keep relationships open so that, when a slower-moving client is ready to send out work again, they come to you first. The less you are dependent on one client, one industry, or one sector, the more adaptable your business will be when changes comes. And it always comes. If you provide a service to surgeons, and suddenly the FDA announces a change in their compliance model, will you lose everything?
Look for ways to diversify your offerings through strategic partnerships, package deals, or offering the same product or service in a similar industry. And always keep the pipeline full of new leads, even if you have to create a waiting list.
That leads me directly to Pillar 3.
Pillar #3: Lead Generation
If there is one pillar where I see more businesses failing, it’s this one. It is closely tied to Pillar 2, because if your lead generation is failing, you will eventually run out of clients.
Lead generation covers a lot of ground, including advertising, marketing, and the tactics that you might employ to bring people to your door. Businesses will use “loss leaders,” where they provide a free or deeply discounted product to attract new customers and win them over. Some pour a ton of money into social media ads, radio ads, TV ads, or other media. Others publish in trade magazines. It really depends on who your target market is.
It Sounds Much Harder Than It Is
This is where I see people’s eyes gloss over first. One of the crucial activities of this pillar is getting laser-focused on who your target client is. Most business owners (and nonprofits!) think “everyone needs my product or service.” So they scatter shot marketing messages out into the air and hope that it hits something. That’s a great way to go broke! As the old marketing maxim goes: if your product is for everybody, then it’s for nobody.
Instead, take some time to draw a precise picture (sometimes called an “avatar”) of who you want to focus on first. If it’s a woman
- how old is she?
- income range?
- her job or work?
- family type?
- typical pressures she face every day?
- what problem can you solve for her?
- why does she care about it?
- why is it important for her to have you solve that problem for her?
That is the heartbeat of your marketing.
Get Laser-Focused On Who Your Core Customer Is
I suggest you and your team take a day in an off-site meeting and get laser-specific about who your target market is and what problem you solve for them. once you have that nailed down, all of your marketing slogans, advertising images, headlines, web pages, colors, branding, and sales messages must point exactly to solving that problem for that person. Yes, you will find there is a bell-shaped curve in every direction that includes other ages groups, other income groups, and even other genders. There is plenty of business out there.
When all of your marketing language is aligned, you will see your target market flooding in to try out your product. If you don’t see that, that’s an indicator that your lead generation pillar is unstable.
The One-Man Show
Another mistake I see small businesses making every day is that the owner is the one with all the contacts. If he isn’t out selling, there is no new business. But that means he can’t be in the office making decisions and overseeing the business. Remember Steve? This is was his key problem. You can’t scale that. If the lead generation process is based on your personality and something happens to you, you don’t have a business. Not a scalable one, anyway.
That leads us directly to the fourth pillar.
Pillar #4: Sales and Negotiation
If you are getting 1,000 hits a day on your website and no-one is adding your product to their cart, then you are lacking in sales and negotiation.
This is where you bring the new lead through the decision cycle from “I wonder what this is” to “I think I could use that” to “I must have that now” to “this is the company I trust to give me that item” to “here’s my credit card.”
Your ability to lead a new prospect from first introduction to a signed contract is the strength of this pillar. If you are not a good closer, your next hire should be a salesperson who is totally on board with your vision for the product.
Invest In Yourself FIRST
A better solution would be to invest in some good sales and negotiation training for yourself. After all, nobody in the world is as sold on your idea as you are. The ability to close deals and negotiate terms is critical for any entrepreneur. Whether you are bringing in new clients, making deals with vendors, buying equipment, leasing an office, hiring new employees, or any of a thousand transactions every business owner makes. Don’t leave money on the table, and don’t lose easy sales because you lack the skill of closing. It’s not hard, once you overcome the intimidation factor.
Eventually, you will have to delegate sales to someone else, but this is an important skill for any entrepreneur to have.
Pillar #5: Operations
I talk to young “wannabe” entrepreneurs all the time who have big ideas about a product or service they want to bring to the market. They’ve got their marketing messages and web taglines all figure out, but they usually don’t have a clue about how to fulfill orders once they come in. Operations basically covers everything from when the order gets placed to when it gets delivered and paid for. Do you know every step in that process for your product or service?
How do new orders get processed for fulfillment? Do you have to buy parts? Who assembles them? How do you manage inventory? How much do the parts cost? Do you have to ship or deliver a product? Who manages how long it takes to take the product from order to shipment? How much time should it take, and how much do you pay the people doing the work? What software do you use for all this?
Did I Lose You?
This is what operations is, in a nutshell, and you can’t do business without it. If it sounds like a bunch of mumbo-jumbo details, that should be your first red flag that you are going to fail in business. If you don’t like details, I understand, but unless you can draw out on a piece of paper every step from “client places an order” to “client receives the order,” you will never make it. This is where the actual business takes place.
If you are the only person between “client places and order” and “client receives their order,” then you can never scale your business beyond yourself. You have to be able to replicate yourself, and that takes time. Time to find qualified help, time to train them, time to solve problems and answer questions, and so on.
If you’re “just an idea guy,” then you need to find someone who can map out all the steps from order to fulfillment and give them the authorization to run it, including hiring, firing, payroll, ordering, and all the other moving parts.
Is your head swimming yet? Hang on. It will get better.
Pillar #6: Cash Flow
Full disclosure: this is not my strong suit. I’ll never tell you how to manage the financial side of your business beyond this: someone MUST manage the financial side of your business or it will ruin you. Someone you trust must always know exactly where every penny is hiding indoor business. Otherwise, you will spend money in stupid, wasteful places, and you will have very little to show for your efforts.
The other major mistake small businesses make is that they mistake “revenue” for “cash flow.” Just because a lot of money is coming into your business does not mean your business is profitable. It might be leaking out of a thousands different holes and you would never know it unless someone is managing it constantly.
Life or death issue
This is such a massive failure point for so many businesses. Money is the life blood of your business. If it all drains out, you are out of business, no matter how good your ideas and intentions might be. I see this ruin so many small businesses (not to mention the owners’ health and relationships).
This is an area where I am always educating myself, even though it’s not a strong area for me. I have to know where my money is going. Sure, I always delegate the daily management to someone I trust who has expertise in accounting, but I am still responsible for every penny, so I need to know how to accurately interpret financial documents and terms. It’s my name on the checks and the tax forms, so I better know where the money is going.
Pillar #7: Fun
This one shocks people.
Have you ever seen bands like Rush or Van Halen live on stage? While they are putting on an amazing show, they are having a great time. How can they have the freedom to enjoy themselves while they are playing these incredibly complex parts? They have mastered the skills, so it’s easy for them.
When I see business owners (or their employees) struggling to do their jobs with a good attitude, I know that somewhere, someone is lacking a skill. Either their responsibility is over their head or their supervisor lacks people skills and is making their job miserable. Both are skills that can be learned.
Business owners who don’t enjoy what they are doing are more than likely struggling in one of the other pillars and don’t know how to fix it. You didn’t go into business to be miserable. You got into it because it was important to you and you believed that you could do it. The key if you are unhappy in your business is to identify the pain point, determine what skill you are lacking, and either learn it (there are unlimited books and tutorial videos available at the click of the mouse) or hire someone who is already having fun doing it.
How We Got Steve’s Seven Pillars of Business Success Working For Him
I told that young couple with the construction business to hire a part-time bookkeeper and a part-time project manager to keep projects on track. That took the pressure off of his weak spots (the Cash Flow and Operations Pillars) and allowed him to focus on writing new business. My next suggestion would be to work with a marketing team to develop a website and social media presence (the Lead Generation Pillar), and eventually hire a sales manager (the Sales Pillar). Ultimately, we want to move the business away from his strengths and weaknesses and build a team that is strong across the board – each with their own area of gifting.
You can scale that all day long. And he can take some well-earned family time.
What About you?
Did you see a pillar where your business could use some help? Most people do. Let’s talk about it. Visit venturestudio.com now and get on my personal calendar to discuss where your business is and where you want it to go.
P.S. Are you one of those people who would rather listen than read? You’re in luck! Alongside this blog I’ve started a podcast: Messes To Successes, where we cover the exact same topic (in this case, the 7 Pillars) each week. You can find us everywhere you search for podcasts. And if you’re not already following us on Facebook or LinkedIn, make that correction now.