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Professionals Talk Entrepreneurship--What Makes A Small Business Work
Written by: Candice ClemArticle Overview: Establishing the best business practices to help your small business grow and succeed is difficult, even in franchising. Here are some thoughts from businessmen who have been there and learned a thing or two.
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Professionals Talk Entrepreneurship--What Makes A Small Business Work
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.
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Related Forum Posts
My entry
- 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read
- this is a fascinating book about the history of Business theory, and I'd recommend it to anybody.
2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto.
3. PADI: The Business of Diving Book
Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Books for Women Entrepreneurs
- There's a thread for good books in the Resources folder, but it doesn't target books for businesswomen particularly, so I figured I'd start such a thread here.
It doesn't matter how successful you are in your business - it's always possible to learn something new.
In subsequent posts I give Table of Contents and brief descriptions for various titles - most of them devoted to the businesswoman - and sometimes a review. If anyone else has read a review, or has read the book and found it useful, please comment!
1. The Old Girl's Network
2. Mother's Work
3. The 7 Greatest Truths About Successful Women
4. Pitch Like A Girl
5. Workplace Warrior
6. Treasure Hunt: Inside the Mind of the Modern Consumer
7. Contingency Planning & Disaster Recovery
8. She Wins, You Win
9. Napoleon On Project Management
10. Why Good Girls Dont' Get Ahead, But Gutsy Girls Do
11. Comeback Moms: How to Leave Work, Raise Children, and Restart your Career even If you Haven't Had a Job in Years
12. The One Minute Millionaire
13. Talking From 9 to 5
14. Soloing: Realizing Your Life's Ambitions
15. 101 Best Home Based Businesses for Women: Everything You Need to Know About Getting Started on the Road To Success
16. Work With Passion: How to Do What You Love for a Living. Revised and Expanded
17. Fail-Proof Your Business: Beat the Odds and be Successful
18. Confidence: How Winning Streaks and Losing Streaks Begin and End
19. Women Don't Ask: Negotiation and the Gender Divide
20. Millionaire Women Next Door: The Many Journeys of Successful American Businesswomen
21. Start Small, Finish Big: Fifteen Key Lessons to Start - and Run - Your Own Successful Business
22. Rewired, Rehired or Retired: A Global Guide for the Experienced Worker
23. The Martha Rules: 10 essentials for achieving success as you start, build or manage a business
24. The Essentials of Entrepreneurship: What it takes to create Successful Enterprises
25. Net Ready: Strategies for Success in the E-conomy
26. The Promotable Woman
27. Leave The Office Earlier: The Productivity Pro shows you how to do more in less time and feel great about it
28. The Work At Home Balancing Act: The professional resource guide for managing yourself, your work, and your family at home
29. Secrets of Six-Figure Women
These maybe the coldest franchises out there:
- Here are the worst 15 performing franchises in regards to having the highest Small Business Administration (SBA) loan failure rates. The list is dotted with sub sandwich shops, fitness centers and car shops.
WORST FRANCHISE LOAN FAILURES Failure %
1 OBEE'S SOUP SALAD SUBS 55.56%
2 LADY OF AMERICA 41.94%
3 COUNTRY CLUTTER (BED & BREAKFAST) 41.18%
4 COPY CLUB 36.36%
5 ALL TUNE AND LUBE 35.71%
6 PICKERMAN'S 35.71%
7 PHILLY CONNECTION 35.59%
8 ROLY POLY ROLLED SANDWICHES 34.78%
9 COTTMAN TRANSMISSION 34.48%
10 HAIR COLOR EXPRESS 33.33%
11 LEE MYLES AUTOMOTIVE TRANSMISSIONS 33.33%
12 GODFATHER'S PIZZA 33.33%
13 SMOOTHIE FACTORY 33.33%
14 BLIMPIE 31.39%
15 GOLF U.S.A. (RETAIL GOLF EQUIP.) 30.77%
Source: Small Business Administration, SBA Loan Performance Within Franchise Code for the Period of FY 2001 - 2005
Exclusive: Interview with Results
- Hi Forum Members,
I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles).
As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business.
This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business.
I am looking to interview about 30 businesses across North America over the span of 3 months.
At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews.
I would like to extend this opportunity to members of the Forum.
If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM.
Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
Re: Biz Plan Competition
- i just wanted to say that posting Small Business Events on CanadaOne is a great resource. Thanks Julie!
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