Many of the small businesses and businesses do not survive beyond their first year, one might think that the cause is the lack of hard work on the part of the owner, but it is not so, the main problem is not the laziness of small entrepreneurs, in reality these the latter work incessantly but do it the wrong way.
In this book we will not talk about “how to” build a successful business but about the idea behind it, the idea that drives us to consider such work valid and worthy, in other words we must change ourselves first if we want the business to be successful.
Fundamental ideas for an activity to be successful
There are four fundamental ideas that underlie the creation of this activity:
1. The ‘ E-Myth, that is, the “entrepreneurial myth” is the basis of the failure of most of the activities. According to this myth, small businesses are started by entrepreneurs who risk capital to make a profit. This idea is absolutely wrong, understanding it is the first step towards a successful business.
2. Embrace the idea of the turnkey revolution, which is radically changing the way we start businesses around the world.
3. At the basis of this new revolution is the Business Development Process (as identified in E-Myth Worldwide: Business Development Process ), thanks to which any business can be made efficient.
4. The business development process can be integrated and applied in a systematic way, incorporating the concepts of the turnkey revolution, in any small business to produce predictable results.
The “entrepreneurial myth”
At the basis of the “entrepreneurial myth” there is a misunderstanding: it is believed that anyone who opens a small business is an entrepreneur, but in reality it is not so. Of course at the start of any business there is a vision, a dream that our entrepreneurial side tries to put into effect but the reality is that the entrepreneur exists only for a moment and survives precisely because of the misunderstanding that underlies the starting a business.
First of all we must understand that usually those who start a business start from the wrong assumption that if you understand the technical side of a service then you understand the business that offers it. Another problem is that whoever opens a business has three different personalities:
- the entrepreneur , our creative and visionary part, always ready for innovation;
- the manager , the one who creates order and without whom there would be no activity;
- the technician , the party who has the necessary skills to perform the job.
These three personalities work best if they do it in a symbiotic way but this rarely happens, most of the time the prevailing personality is that of the technician.
Over time, any small business grows and changes through three different phases which it is good to analyze to understand how to achieve success:
- childhood , during this phase the owner and the business are one. This period ends when the business reaches the point of being too large to be managed by a single person.
- adolescence, this phase begins when you realize that you need extra help in your business. At this point there are two possible results for the personality of the technician who has become an entrepreneur. The activity in the adolescent phase makes the technician uncomfortable because he cannot control the chaos resulting from the lack of the manager, therefore the owner himself decides to reverse the process of growth of the activity and return to the initial reduced size. Another possibility is self-destruction: the business grows so much that the technician and his helpers can no longer manage it. However, the most tragic possibility is survival. If an activity in the adolescent phase survives in the hands of the technician’s personality, the owner alone will make the consequences.
- Maturity , the last phase of the growth of an activity is not the result of the systematic and assured growth of the other two phases, many of the companies that have reached maturity have in fact faced the first two phases with a perspective that is not that of the technician but the entrepreneur. The business model is not the vision of the business to be created but of the customer to be satisfied, this is the concept behind a successful company. To create a model that balances the three personalities, it is necessary to analyze the revolution that has transformed the world of small businesses: the turnkey revolution.
The turnkey revolution
The turnkey revolution provides a balanced model to create an effective and successful business, it is the franchise business model that revolutionized the world of small businesses and businesses starting with McDonald’s in 1952.
This model provides an activity with the complete methodology of creating an effective and efficient work chain in which not a product is sold but the name of the activity itself. Ray Kroc, the creator of the McDonald’s franchise , has created a model that works independently of who uses it, a model that depends on a system and not on the people who manage it, a system based on predictable components and tested before the production of massa, the big secret of the franchise business model: the prototype of the franchise.
The franchise prototype is a system that provides the solution to all problems, its keywords are discipline, standardization and order, and it provides a balanced model in which the three personalities can coexist and thrive.
In the franchise game there are rules to follow:
- the model must provide constant and greater value than the expectations of customers, suppliers and employees;
- the model must depend on employees with low-level skills, so that it is easy to replicate;
- the model must stand out for its impeccable order;
- the execution of all the operations must be documented;
- the model must provide a predictable and uniform service to customers;
- the model must use a dress code, colors and uniform structure.
A successful business
The business development process is the basis for the creation of a prototype and is made up of three different activities:
Innovation must be carried out from the customer’s point of view and must make operations easier for employees, not complicate them.
How do you know if an innovation is successful? At this point, quantification enters the scene, through which the impact of any operation of an activity can be calculated with questions such as: how many customers are served per day? How many have made purchases? How many times has product X been purchased? And so on. Thanks to the quantification you can make a complete analysis of your business.
Once the innovation has been integrated and its impact quantified, we can move on to orchestration, eliminating chaos and defining the rules to follow to make the system work at an operational level.
At this point, you can use the business development program to transform your business into an organized model to be reproduced in thousands of other small businesses. In practice, the corporate development program is a system to be followed step by step to create your own franchise prototype.
There are seven stages to follow:
1. Identify the main objective, make an analysis of oneself, frame the primary vision of one’s life and put it into practice to give life to the activity.
2. Identify your strategic goal, what the business needs to achieve to help you achieve your main goal. It includes a series of rules that helps you keep track of your progress towards a specific goal, there is no defined number of rules to follow, but the ones you choose will shape your business, such as: fixing the profit you want to get , to understand if the idea of your business deserves to be developed, if you have enough customers for the product you want to offer, which customers you want to offer the product, etc.….
3. Create the organizational strategy, that is, write down the organization chart of your business. Prototype positions to replace yourself with the system.
4. Follow the managerial strategy. The system becomes the managerial strategy of the activity and the solution to all problems.
5. Create a strategy of people through which to communicate your idea of the world, your beliefs and the rules for performance that are defined at all levels and in all sectors of the prototype. Create an environment that makes it possible for employees to do what the business owner wants.
6. Start a marketing strategy. In this process everything revolves around the customer, it is necessary to understand who he is and why he buys to create a prototype capable of satisfying his unconscious needs.
7. Build a strategy to harmonize the three systems of an activity, that is, a systems strategy. The three systems are: the fixed system that indicates all the inanimate objects of an activity, such as the color of the walls; the non-binding system that indicates animated objects or ideas, such as the sales system (the interaction between the business and the customer transformed into a regular system that produces a predictable result); and finally the information system that provides information on the results of the interactions between the first two systems.
Innovation, quantification and orchestration
This book is a guide to creating an activity that can become a bridge between ourselves and the world, capable of making both universes functional and productive, because it is precisely that gap between the two that leads to failure.
We can modify our small business, a small universe in its own right that responds responsively to every change and in which we can train ourselves to implement ideas. Thanks to innovation, quantification and orchestration, our small business becomes more than just a job but a place in which to fully satisfy all the personalities that house us, the technician, the manager and the entrepreneur.
The business development process creates a change in those who implement it, the activity becomes the testament of their beliefs and their vision of the world, and this is precisely the key to its success.