I grew up in a family of entrepreneurs. Most of my uncles were some form of contractor: General, electrical, and plumbing. Prior to becoming a CPA, I learned a little about these trades from them which helped me when I built my own house. They were (and are) masters at their trades and deserve the greatest of respect.
Yet, as a CPA, I have learned that a great tradesman does not necessarily translate into a successful entrepreneur. In fact, they can be completely opposite. A tradesman may focus on detail and create a great product, where an entrepreneur would focus on the vision and produce products to fulfill it. I always joke that a small business person usually wants to know two things: 1) What are my sales? and 2) Do I have enough cash to make payroll?
CPAs run into this issue, too. Many of us tend to focus on the minutia of getting a job done and not on the big picture of running the business towards its long-term vision.
If this sounds familiar to you, here are some pointers and sources:
- Be a hedgehog. The hedgehog is not as cunning as the fox, but does something that makes it the world’s best defender against the fox. It rolls up into a little ball and sticks out its spikes. According to Jim Collins in Good to Great, you can be a hedgehog if you do three things: 1) Be deeply passionate about what you are doing, 2) Do something that makes money, and 3) Be the world’s best at what you do. The intersection of these three requirements will brand you into a specialized business in which others will struggle to compete.
- Focus on your customer needs, not the industry. The Blue Ocean Strategy by Kim and Maugorgne shows you how to extrapolate unnecessary services that the industry provides, but the customer doesn’t need. The strategy book also describes companies that have transformed their businesses to a level to make competition irrelevant.
- Manage the business, don’t let the business manage you. Michael Gerber’s E Myth describes entrepreneurs that let their businesses run them into the ground, and destroy their quality of life. This is the most common problem with trades people.
- Know where in the cycle your business is at all times.Les McKeown’s Predictable Success discusses the cycles as: Early struggle, fun, whitewater, predictable success(balance), treadmill, the big rut, and death rattle. Predictable success stage has the right amount of systems and processes to tame a company.
Though we are CPAs, we look at out client’s businesses through the lenses of strategy and planning. Small business entrepreneurs must be measuring their businesses in light of their visions and short-term objectives in order to accomplish their goals and desires.