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When I started Beyond 50 Percent my aspiration was to connect business owners with ‘proven principles and practical action’. It made then, and still makes, perfect sense in my head but I’ve found that when someone asks for an example of a proven business principle I was suddenly less clear on what it meant in practical terms and left with something banal like ‘buy low sell high’.
Since ‘practical’ and ‘actionable’ are features that I feel strongly about I felt compelled to arrive at some clarity.
So, I went in search of business principles and here is what I discovered through both reflection and research.
Here’s what happened when I sought the Principles of Small Business Success!
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- Let's find out!
Searching for the Answer
The first thing I did… as I think we all do these days when we have a question… was to ‘Google it’.
As soon as I saw the results on the page I realized that I am not the only one that has a difficult time articulating what a ‘business principle’ is.
There were over 318,000,000 results to the simple search for ‘business principles’ and the highest ranking ones were full of good tips and advice but were they ‘principles’?
Does it even matter if we make the distinction between a good business idea or tactic and a business principle?
That’s when I realized the first flaw in my search. I had to get clear on what a principle really was.
Back to Google…
According to https://www.merriam-webster.com/dictionary/principle a principle is a “a comprehensive and fundamental law, doctrine, or assumption”.
Principles matter because they are the fundamental structures upon which a business is built.
If advice is good then why should you care if it’s a ‘principle’ or a tactic?
Once I thought a bit about the meaning of the term principle I realized that in order to be a principle of business, a concept would have to be comprehensive and fundamental.
A business principle then is a concept that works for all businesses (comprehensive) and is part of a foundation upon which a successful business is built… and that’s why the distinction matters. In order to effectively use good tactics, it’s important to understand that we’re using them to build and strengthen the very foundation of our business.
Here are six principles for small business owners that I think are universal for all business models.
- Vision - Have a Vision That Exceeds Your Planning Horizon
- Planning - Plan to the Visible Horizon and Stop
- Communicate - Communicate Effectively Internally & Externally
- Value - Create Value for Others
- Cash - Understand Transactional Economics
- Profit - Draw Value to Grow, Benefit and Give
The Principles of Small Business Success
Why these six? That’s a great question and, to be honest, it took some doing. There are quite a number of great business tactics that are passed off as principles and when I measured each one against the yardstick of being applicable to all businesses and foundational these were the six still standing.
I want to be clear. Tactics are important but they also become more situational and have specific relevance where these ideas are timeless and fundamental to the nature of business.
Let’s briefly review each of these six principles.
I realize that vision or mission can fall into that trendy place of c-level retreats that result in lofty lobby signs. That’s not what I’m talking about. This is about understanding your place in the social & economical environment today and into the future even beyond what you can reliably see.
In order to organize and perform work at the appropriate time for your business situation you have to do some level of planning. Small business owners are faced with constraints, labor (yours or others), working capital, time in a day, pool of expertise, equipment available etc. This creates a horizon beyond which we can’t effectively plan… and that’s a good thing!
The ability to communicate effectively is important in connecting with your potential customers, your team and other stakeholders. The disciplines of marketing, advertising, public relations, human resources, leadership and management all hinge on your ability to communicate effectively.
When it comes to value, the low hanging value buzzword is to define your value proposition. This term has become cliche and overused. Another phrase you’ll hear is ‘what problem does your product or service solve?”. Let’s go just a little further… how is solving that problem valuable in improving the lives of your customers?
It’s hard to overstate the importance of understanding the flow of cash in your business. How and when it comes in, where it’s kept and how and when it goes out can make or break a small business that is otherwise successful.
Is ‘profit’ a four letter word? It sure seems like it gets categorized that way sometimes. In order to survive, prosper and continue to serve others you must draw more value from the product or service you offer than you invest in it.
So now that we know a few business principles what do we do with that?
- Take some time to consider your own situation in the context of these six concepts.
- How strong is your business in each of them?
- Do all of the tactics and actions you take support these principles in the most effective way?
Over the next six weeks I will cover each of these fundamentals.
In each episode we’ll talk about ways small business owners can identify how these principles are handled in your business.
What are your thoughts on business principles can you think of any I missed? Share your own business principle! Send an email to email@example.com and I'll read some on the show!
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