by Rick Leibowitz (December 2005)
Having recently joined the staff at Coconino Community College as Director of the Small Business Development Center, I have had the opportunity to meet many local business owners, community leaders and other wonderful people interested in starting small businesses. In many of my conversations with the aforementioned groups, I am asked the question, “What is the secret to success for a small business?” My stock response will always be, “You need to have more income than expenses.”
I do not say this just to be funny and I certainly do not want to trivialize the serious challenges that many small business owners face. But there is a certain Zen-like message in this response that I hope is not lost on those who hear it. Robert Pirsig, author of Zen and the Art of Motorcycle Maintenance wrote, “the solutions all are simple after you have arrived at them; but they're simple only when you know already what they are."
For many small business owners faced with challenges, the problem is not that they do not know the solutions to their own challenges, but rather that they are often too distracted by operational responsibilities to focus on what really needs to be done to improve their business.
In every business, the ultimate responsibility of success lies with the small business owner. It was that small business owner who made the decision to start or purchase that particular business and it is that small business owner’s responsibility to understand their core business model and what they need to do to succeed. Your core business model is how you established pricing for your products and/or services and the related costs to each sale (often referred to as direct costs, variable costs or cost of sales). For example, if you have a lemonade stand and you sell each cup for $1.00, but it costs you $0.20 for the lemon, sugar, cup, lid and straw, your core business model would be that you make $0.80 per transaction. You can then look at how many transactions it takes to cover your fixed costs, things like advertising, payroll, rent and insurance. To me, the Zen in small business management is to become consciously aware of your sources of income, variable costs and fixed costs in your everyday operations and recognize what needs to increase and what needs to decrease. To quote Zen Teacher Shunryu Suzuki, "Zen is not some kind of excitement, but concentration on our usual everyday routine."
For your particular business, think about your daily deposits and where they come from. What are your opportunities to increase the amount of deposits? Where can you find new customers or how can you get existing customers to purchase more from your company? In regard to writing checks or making petty cash paid outs, think about cost savings opportunities. Can you negotiate better pricing from your vendors or find alternate suppliers? Are you marking up your products adequately and in accordance with industry standards? If you are purchasing inventory, are you paying attention to how long it sits on your shelves before selling? Are your employees maximizing their productivity? Are your major purchases and investments absolutely necessary to your operations?
While you consider your options, understand that there may be consequences to any change you make to your business. Be mindful of your decisions and be prepared for the consequences of any change. Thinking you have the right solution to a problem does not guarantee success. Monitor changes in income and expenses resulting from your business decisions and search for new solutions again, if necessary. After all, that is your ultimate responsibility as a small business owner. To quote the Dalai Lama, "Good wishes alone are not enough. We have to assume responsibility."