THE 5 P's OF A SUCCESSFUL ENTREPRENEUR

PLANNING - PATIENCE – PERSEVERANCE – PRODUCTIVITY - PROFITABILITY No matter what business you’re in or you want to be in, the five “P”s above are the key to continued success. According to “Using Goldratt’s Thinking Process to Improve the Success Rate of Small Business Start-ups,” Lloyd J. Taylor of The University of Texas (Permian Basin Elizabeth Seanard, Midland College Business and Economic Development Center) reports that Dunn and Bradstreet research concludes that only 37% of new businesses will succeed after five years and only 9% will succeed after 10 years. The first major downfall of entrepreneurs is the desire for instant gratification in their business ventures. This is most obvious in the planning stages of the business development process. In most cases of business failure the founder fails to plan. Here’s the typical scenario: * I have an incredible idea. * I think of a name and register it/get licensed. * I sink my life savings into buying product or equipment, get a building and hang out a shingle. * I hope and pray that people will find me. This process is demonstrated even more in the world of online shops and services. Its so easy to put up a web page, these days, that everyone is doing it. When nothing happens, people get discouraged. The problem is in the planning. The first part of planning is doing the research. Find out who else had an idea similar to yours. Who was successful and who wasn’t and why. Then create a plan that uses the best processes and procedures of the success stories and avoids the pitfalls of the failures. Plan for everything: brick and mortar as well as web presence; know what it’s going to take to get your product to market and get your fair share of the sales, then implement it; prepare for slow periods – set aside funds for the months that may not fair so well in the sales volume, so that you can pay the bills and keep adequate inventory; know what obstacles you might face and be prepared to over come them. Get your numbers together: know how much you’ll need to start up, how much you’ll need to keep running, and how much its going to take to keep up with the demand if you go global overnight. If you’re not well versed in business development, find a professional. After your plan has been executed and you’re feeling wonderful about the great start you’re off to, you have to be patient. The shiny new sign and the snappy radio ad may not do what you expect them too, right away. People are creatures of habit. They like the things they’ve always liked and do the things they always do. You have to understand your market and find a way to make that market come to you. Know that, unless you have a novel product with a multi-million dollar budget, it can take months, sometimes a couple of years to start turning a profit, depending on your product or service. Perseverance, more universally known by its current buzzword “drive,” is the second characteristic of success. In today’s business world, the word perseverance rarely shows up in a resume or in media advertising. However, it is the second-most important character of a successful entrepreneur. Its what gets you through the tough times, the days when nothing is going right, the weeks when you just can’t figure out how keep your head above water, and the times when your key (and maybe only) employee calls in sick and you have to work two days straight without sleep to get an order out by deadline. Business ownership requires that kind of dedication. One of the key things that inhibits business growth, and cuts into profits, is lack of productivity – making every moment of operation, every action or task of production, every minute of telephone or face-to-face time count. Processes should be trimmed down to the minutest detail. Cutting two minutes off of a packaging job, when there are dozens of packages going out every day, can mean a savings in manpower of an hour or more. Setting up shelving so that pulling orders becomes more efficient can improve the production rate significantly. Setting up computerized inventory management systems, barcode systems, etc., can mean the difference between hiring two people or three, which, in turn could mean a savings of thousands of dollars a year. Another scenario would be in the state of your technology. If you’ve been in business for a few years and you find that your information system (hardware, software, networks) are giving you trouble, it could be costing hundreds of dollars a week in productivity and downtime. Updating your equipment and improving your organizational structure may mean the difference between survival and failure. Finally: profitability. Unless you know how much it costs to take a product or service to market and make a sale, you’ve already failed. Every business owner needs to know how much money the company is making on every single product or service it sells. You have to know the profit margin, the amount of money that is spent on advertising, sales, marketing, and (if applicable) cost of production. Production costs are often the most difficult to estimate, but a simple rule of thumb is to know how much it costs for the raw materials and how much it costs in labor to produce, let’s say, 100 pieces. Once you know how much your production cost is, you can set a fair price. However, in doing so, you will need to know how much others are selling similar product for, and how your product compares to the average product. For example, if you are producing and marketing high-end throw pillow made with designer fabrics, your cost to market is going to be much higher than the average department store pillow. If, however, you’ve seen similar high-end products selling for hundreds of dollars and you can come up with a way to sell the same quality of pillow for a fraction of the market cost, you could, potentially, corner the market. On the other hand, if you’re making an average pillow, like the ones that are being manufacture in China for pennies a piece and selling on the market for $10, you would be hard pressed to create the same product on a small scale and be able to make any money. It is at the point of profitability where all of the other four “P”s come in. Without planning, patience, perseverance, and productivity being at peak performance, profitability will drop and business will fail. You must plan, be patient, persevere, be productive, and produce a profit, in order to succeed in any entrepreneurial venture. ============================ Resources: http://www.sbaer.uca.edu/research/asbe/2004/PDFS/23.pdf