Last month I came across a statistic that astounded me. Here in the UK, we have 5.4 million businesses of which 95% of businesses have less than 10 employees. And less than 1% have more than 250 employees. This got me wondering whether this is a ‘UK thing’ or whether the same applies to other countries. So I crunched the numbers for the US. Of the 28 million businesses in the US, 0.3% employ between 100-499 people whilst 0.06% employ more than 500.
Now I know that a lot of business owners want ‘lifestyle businesses’ whilst others are happy with the small business they’ve built. But there has to be a significant chunk of people who want to create a profitable business and scale.
This got me thinking again! And wondering what are the specific traits, behaviours and skills of those business owners who start, grow and scale up a successful company? What do they all share in common?
Which Factors Influence Business Success?
Intrigued by these same questions, Gallup studied 2,500 entrepreneurs. During the course of their research consisting of many hundreds of interviews, Gallup identified 10 specific behaviours that are seen consistently in highly successful business owners. These are:
- Confidence: You accurately know yourself and understand others.
- Delegator: You recognize that you cannot do everything and are willing to contemplate a shift in style and control.
- Determination: You persevere through difficult, even seemingly insurmountable, obstacles.
- Disruptor: You exhibit creativity in taking an existing idea or product and turning it into something better.
- Independent: You are prepared to do whatever needs to be done to build a successful venture.
- Knowledge: You constantly search for information that is relevant to growing your business.
- Profitability: You make decisions based on observed or anticipated effect on profit.
- Relationship: You have high social awareness and an ability to build relationships that are beneficial for the firm’s survival and growth.
- Risk: You instinctively know how to manage high-risk situations.
- Selling: You are the best spokesperson for the business.
In my view – and this is born out by Gallup’s research – profitability is one of the most important traits. The bottom line is that highly successful entrepreneurs are fascinated by, and have a high level of mastery of numbers and money. Gallup calls this ‘business focus.’
First off, highly successful entrepreneurs understand the economic engine of their business and are working to a business model that is both sustainable and scaleable. They evaluate all decisions through the lens of profitability. They routinely ask, “How will this affect my bottom line?” They have sharp business instincts which they deploy to price their products or services in such a way that EVERY sale is profitable. They run a tight ship, keeping a close eye on operational costs and they axe loss making products.
Business focused entrepreneurs LOVE numbers, and have an instinctive feel for them. From weekly and monthly targets to quarterly performance reviews, they measure all aspects of the business. They know how each number is derived, and which activities affect these numbers. This high level of business focus gives them an uncanny ability to look at the numbers and come up with insights that their managers and employees have missed.
A business focused entrepreneur has a long-term perspective on the company. They’re able to paint and articulate their vision for what the company will be like months and years from now. They set targets, both financial and non-financial, for the month, the quarter, the year, the next 3, 5, 10 years. Once they’ve set those targets, they innately understand which steps to take and what levers to pull to achieve them. This comes from experience and the practice of reviewing your key financial reports regularly, over a period of time.
Why Is Business Focus Important?
The difference between an amateur and a professional is in their habits. An amateur has amateur habits. A professional has professional habits. We can never free ourselves from habit. But we can replace bad habits with good ones.” ~ Stephen Pressfield
Having business focus is the difference between taking a professional approach to your business. Or as Stephen Pressfield says, being an amateur. I appreciate that this is a pretty blunt statement. If you don’t pay attention to your numbers and do the fundamental activities required for business success – like keeping a cash flow forecast – then you’re not taking your business seriously. To quote Stephen Pressfield again:
Turning pro is a mindset. If we are struggling with fear, self-sabotage, procrastination, self-doubt, etc., the problem is, we’re thinking like amateurs. Amateurs don’t show up. Amateurs crap out. Amateurs let adversity defeat them. The pro thinks differently. He shows up, he does his work, he keeps on truckin’, no matter what.”
More tough talk! But sometimes you have to confront the brutal reality of the situation.
The simple truth is that if you don’t do the basic financial activities necessary to run a successful business, the chances are you’ll be one of the 50% of profitable businesses that run out of cash and go under every year. My wish for you is that you’re one of the businesses that are built to succeed. But the choice is yours.
How Do You Develop Business Focus?
In exactly the same way you learn any new skill. Start with the fundamentals. And then improve your knowledge and skill one step at a time.
A great place to start is with my short e-book, “How To Take Financial Control Of Your Business… And Get Off The Cash Flow Roller Coaster.” If you download a copy using this link, you’ll also receive a video explaining step-by-step how to prepare your cash flow forecast together with a cash flow forecasting template.
Join The Conversation
Question: Why do you think that such a high percentage of businesses remain under 10 employees? I love reading your comments so please do leave your feedback in the comments box below.
Explore These Additional Resources
Did you miss?
- The Secret To Cash Flow Success
- Business Lessons From Rio 2016
- The Mindset Of A Champion
- Take Stock Of Where You Are Now
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