Ten Observations on Running a Small Business

I was talking to a young man starting a business the other day. He was very excited to be in business and ready to charge forward and make his mark. He has a service, a plan and is clearly willing to work hard to achieve his goals.

That conversation got me thinking about what would be the bullet points for running a successful business. That is, what ten things if mastered, would give a business the best chances for success? I know there are hundreds, but here would be my top ten:

  1. Everything has a cost.
  2. Figuring out the true costs of your goods and services should be the #1 goal of your business.
  3. Figuring out what you will charge people for your goods or services is the #2 goal of your business. Get #1 or #2 wrong for a long period of time, and you’ll be out of business quickly.
  4. Cost + percentage pricing for most businesses is inevitably less profitable than pricing based on the value to your customers.
  5. Make sure your business has some moats around key products. These might be exclusive distribution contracts, high-specialized skills (heart surgeon, artist, BMW-trained mechanic, ect.), extremely high barriers to entry for the competition, customization, etc.
  6. A one-person business is seldom going to provide exceptional earnings.
  7. Finding, training and motivating employees are the keys to growing a business. Money alone is seldom the top way to attract and retain excellent employees.
  8. You will be much more successful if you focus on bringing people up than putting them down.
  9. No business is an island, so treat your customers, suppliers, competitors, and community with respect and dignity. You’re all connected and need each other.
  10. When you own a business, you are responsible for everything. If you don’t want the responsibility for an amazing amount of issues-big and small-you’ll be happier working for someone instead of running your own business.