For someone who is likely to actively resist the word ‘rules,’ the one place they need to apply is in business. I am not of course talking about specific legal and financial rules.
I was recently listening to a business podcast with a relatively well-known entrepreneur who has experienced both success and failure in their business endeavours.
One of their unsuccessful ventures was to start an upmarket version of the traditional British greasy spoon café with a friend. The cafe had expensive prices to match in a location that turned out not to be conducive to this concept. The business did not work out as they quickly realised that they could not turn a profit.
Every day prospective customers walked past their café to one nearby where they could get a bacon sandwich and mug of tea for a more affordable price plus an experience, they were familiar with. The result was this entrepreneur losing their home as they poured more money into a business idea that was never likely to succeed.
The podcast host went on to ask the entrepreneur to describe their business’s golden rules in terms of learning from this experience.
In summary, they responded:
- Do not go into business with family and friends.
- Do not put your personal assets (i.e. your home) up as collateral when you need financing for your business and/or are having financial issues.
- Do not pursue an idea just because you are wedded to it and let pride get in the way of reality.
This made me think about the golden rules we put in place when starting and running a business.
On a side note, I happen to agree with the one about not going into business with family and friends through personal experience however that is a subject for a future column.
Golden Rules
For me personally, the most golden of all the business rules is:
‘Control the money in your business and don’t let it get out of control’
If you do not get the financials right and ensure these are well managed you can have all the brilliant customer-focused service, ethical practice, talented team, and entrepreneurial spirit in the world but not a viable, sustainable business model.
If this is not your area of expertise, then ensure you employ someone who is an expert and can explain the financial picture in language and data that you and others in the business understand.
Keep an eye on your cash flow and ensure there is more than regular monitoring of business spending with control mechanisms agreed from the beginning.
Other ‘golden’ thoughts
The following may be useful if you are thinking about business ‘rules’:
- Listen to your gut instincts when making complex decisions – you know your customers, team, marketplace, environment, and more importantly, trust your judgment.
- Treat others as you want to be treated – this may sound self-explanatory but from experience, I know businesses and business leaders who still do not practice this. Nurture and cherish your relationships.
- Think about your timing – Is it the right time/place to create a new business and/or product or service? Be honest about your motivations and risks – how will these be mitigated against?
- Ask yourself ‘Can the business afford this?’ If you do not have the resources or are having to over-finance/borrow money, then think hard about the realities of this. Of course, you may need to speculate to accumulate but always consider the necessity to make a financial outlay before you decide.
- Reflect and reflect some more before you react – try not to put yourself in the position of reacting even when you are under time pressure. Create a space to think (even if this is in the bathroom) to consider your options and course of action
What are your golden business rules? What have I missed? I’d be interested to hear from you.
Sarah Taylor Hawke Coaching, Mentoring, Advice and Guidance for Business and Personal Development.
linkedin.com/in/sarah-hawke