10 Real World Lessons Learned From Running a Small Business (Part 1)

Apr 15, 2014 11:32:00 AM

This month marks the 5 year anniversary of the start of Good Start Packaging. Our blog is focused on helping the food service industry be more successful and to reduce plastic. But this week, I thought I’d share some practical tips I’ve learned as a small business owner these past five years in the hope that my experience might help reduce wasted time and money for a few small businesses and speed the path to your success. Though I’m not a restaurant owner, I think these tips are applicable to any small business including restaurants.

After having run a sales organization for a large public software company, I figured running a small packaging distribution business would be about the same level of difficulty. I was wrong! In fact, it's much more challenging, requiring more stamina, more ability to wear multiple hats, and a greater ability to synthesize multiple streams of information into meaningful actions. A small business usually has little room to waste time or money so this is really a critical skill.  

Below are the top 10 things I’ve learned that help build success. 

1. No Whining

In this fast-paced world, it's easy to identify people and companies that are getting ahead unfairly, unethically, or just with far less work than you’re putting forth in your business. It may actually be true that you’ve been dealt an unfair hand but no one ever got rich from complaining. 

One of my favorite sayings to my business friends who are struggling to make it is “if it was easy, everyone would be doing it.” I like this saying because it accomplishes two things. 

First, it reminds the entrepreneur that they’re special and critical to this world. The entrepreneur by definition is the one who keeps getting up and reinventing themselves when things aren’t going well. They never give up. Challenge only makes them want to work harder and smarter. That by itself, is inspirational enough to others to be worth doing whatever you’re doing. It's also a reminder that struggle is actually a good thing.   

Second, business owners need to realize that it's not bad luck to have challenges. Your purpose as a business is to overcome challenges to create value. Having that clarity of mind when the next “unfair” challenge hits you will give you a better perspective on how to react to it….hopefully by stepping up to it and not whining.  

2. Don’t take your customers for granted

I used to get frustrated when after building rapport with a coffee shop owner, and providing them with product information, they would fixate excessively on price when it came time to buy. They would seem to ignore all the expertise, our mission, and the services we offered and just say our prices should be the same as some big box wholesale store where they shop. I felt treated as a commodity and not respected for my hard work. Then I woke up to the reality facing our clients. 

I realized that, thanks to the internet, pretty much everything can be considered a “commodity” these days. Instead of being depressed about this, I shifted my perspective to see it as an opportunity to grow my skills and be creative. 

Making my job easier was the fact that most of the packaging industry reps I’ve seen believe that their job in a commoditized world is to figure out how they can sell at the lowest price. In fact, it’s the opposite. Whether you’re a packaging sales rep or a restaurant owner, your number one job is to show value for your clients and never stop doing it even when they become loyal customers. Resist the urge to show value exclusively through unsustainable price cuts, coupons and promotions but instead do so by knowing what your clients really need and giving it to them. 

This is hard because it’s sometimes unclear as to what to actually offer. In my case, I thought outside the box and realized our clients need better visibility for who they are and what they’re doing for the environment. So we started Good Start TV that features their stories so their prospective customers can really connect with them.  We also help them with in-store education about the investments they’re making in sustainable packaging so that their customers know they care and reward them with more loyalty. It's something they never expected from a packaging company and they appreciate the effort. 

The key is finding something you can do reasonably inexpensively for a lot of customers that will add value. It doesn’t have to tie back directly to your core product.

Finally, make sure you regularly communicate through thoughtful and helpful newsletters, personal visits, and phone calls to make sure clients know you care and that their business makes a difference to you. If you’re a retail operation, get to know your customers by name and tell them you appreciate their business.

3. Set Key Performance Indicator Goals Not Revenue Goals

The more experienced I get in business, the more I think that our obsession with revenue as a gauge of personal success and long-term business viability is utter madness. This is the case for both start-ups and established large corporations. 

Here’s why:

a) You can have great revenue but lousy profit because you’re giving away your product or your costs are too high. Plenty of businesses with huge sales figures have gone bankrupt this way.

b) You don’t know what you don’t know. Focusing on revenue in the early stages of a business might make you lose sight of unique learning opportunities to show value for your clients with new products. 

c) You can’t directly control when or whether revenue comes in. It’s a function of your products, sales execution, your customer’s buying cycle and the market.

d) If you overestimated your revenue numbers, the morale of your whole company might take a hit because everyone worked hard but still didn’t achieve the goal. Just as bad, if you blow out your revenue estimates, you might get cocky thinking you can do no wrong, and start making poorly thought-through investments thinking that your track record is sustainable. 

Solution: Instead of revenue goals, set Key Performance Indicators. These are written 30/60/90-day goals that are regularly set and evaluated. They involve actions you can actually control and measure. So for example, a salesperson can’t predict how much revenue they’ll bring in, but they can control the number of customer visits or outbound calls they’ll make. Restaurants can set a goal of staging a certain number of special events (e.g., music nights if you’re a coffeehouse) that draw new customers. 

4. If you don’t love what you do, find something else to do

It takes a ton of stamina to get up and work long hours every day, having to figure it all out as a business owner instead of having a nice playbook like many employees do. You can drink all the coffee you want and work out every day. But you won’t have the mental strength to keep at it through the tough times if you don’t fundamentally love the challenge and love the product you’re offering the world. It is better to cut and run to something else that really energizes you than keep trudging along at 50 MPH in an 80 MPH zone hoping for the best.

All that stated, you better disconnect and take some vacations once in a while. 

5. “The customer is” NOT “always right”

Don’t let clients walk all over you. If a prospect is so big or one in which you’ve invested too much to walk away from, something is very wrong and it's probably your fault, not theirs. Don’t let yourself get that far. Before you take on a low-margin, high-maintenance client and especially one who doesn’t operate ethically or with mutual respect for you, take a breath and THINK. Think objectively about the true long-term cost to your health, your business, employees, and suppliers of winning this client. 

If the truth is that you’re really trying to land a big client for your ego and just praying all the red flags you’re sensing will magically go away later, you may be in for a world of pain later. It may be better to have a more diversified customer base so you’re not relying on one customer you’d love to dump but can’t afford to do so. 

I hope lessons one through five are valuable bits of information you’ll keep in mind as a small business owner. I'd also encourage you to take a look at part 2 of this blog post which includes five more lessons. From knowing your numbers to setting realistic time frames for success, these tips will hopefully help your business thrive with fewer bumps along the way.

Ken Jacobus

Written by Ken Jacobus

Ken Jacobus is CEO and founder of Good Start Packaging. He works with restaurants and other organizations around the U.S. to help them find the best sustainable alternatives to traditional plastic take out food containers. When not busy trying to eliminate landfills and plastic, he hikes, bikes, skis, reads, and plays with his family around his home in southern New Hampshire.

Post a Comment