Why long-term success requires discipline, not just momentum
Human nature is inescapable, and we all experience its challenges from time to time. We do not mind doing a task when it is easy, when we are interested in it, or when it does not get in the way of what we really want to be doing. But when a task is difficult, out of our comfort zone, or not interesting to us, our likelihood of doing it well decreases dramatically.
Entrepreneurs are no exception, but to achieve long-term business success, we must learn to do the difficult, tedious tasks.
Early success does not guarantee lasting success
We all know about the high failure rate of start-ups. There is also a high rate of businesses that had initial success but then closed. The owners were unprepared for and unwilling to do the things that a profitable, well-run company requires. They did not understand that early achievement does not guarantee ongoing success.
Wins do not always lead to more wins – they can instead sometimes lead to complacency. Building and maintaining long-term success takes ongoing effort and skill. If you want to be better, you have to do better. Here are three places to start.
1. Do you act like your money matters?
This one seems like a no-brainer, but the truth is, many owners do not fully know how to read or understand their financials. This means many do not know how to manage, plan, or implement change based on numbers rather than guesses and feelings.
Key financial questions every owner should know
What are your margins? What is your break-even point? What does it cost to run your business daily? What is your loaded labor rate? What is your bid-to-award ratio? What is your cash flow cycle?
2. Do you act like your employees matter?
Most employees need active management. Telling them what to do, walking away, and expecting them to do it without training, oversight, and follow-up is not management. Sitting in your office and saying, “They know what to do, why won’t they do it?” is really saying, “I don’t want to do my job. Why won’t they just manage themselves?”
Measuring leadership, productivity, and accountability
What is your utilization rate? What are your turn and churn ratios? What does it cost you to hire and train a new employee? Are your managers managing, or are you a fireman, babysitter, and policeman? What is your productivity rate? Again, knowing your numbers is an essential aspect of long-term business success.
3. Do you act like your products and customers matter?
You are in business to sell something to someone. Owners can lose sight of that truth, especially when they have met some of their goals. Products and customers become secondary considerations, rather than primary. It is rare for a company to survive a decline in product quality and customer service.
Understanding product performance and customer demand
What are your rates for waste, scrap, and rework? What are your warranty costs? What is your market absorption? Can you define your demographic? How diversified are you? What do your customers want that you do not sell? Do you know your inventory turns by product line? What are your costs to carry inventory?
Long-term success is built, not achieved
If you want to achieve long-term business success, you have to do the work — there are no shortcuts. A business must be built on the firm foundation of good leadership, discipline, and execution. Success is not final; there is always something else just over the next hill. It is there, but you will only see it if you are looking for it.
