Below is an exerpt from my book “Billionaire in Training.” This is a sample of the teachings that I gave at Prairie Meadows on Wednesday, October 24.
So often I meet people who think they’re in business for themselves, and yet by my definition, they’re not. Let me explain. read more
Information: At this first stage being information the entrepreneur needs education in his choice area or interest. “Education” is a broad term that can have many meanings, but it is generally defined as the process of learning and acquiring information.
Entrepreneurship is a system of being self-employ with no breakdown as being condition with the problem, situation or challenges of unemployment in a given system. An entrepreneur is an agent of change.
A colleague on LinkedIn just referred me to a recent post about a 1993 WSJ article by Peter Drucker. Intrigued, I went back to the original article, Peter Drucker on Management: The Five Deadly Business Sins and found the advice relevant, fresh, and wonderfully counter to much of what passes for business wisdom these days. Here are his five sins:
Reading this article reminded me anew of Peter Drucker’s coolness and unfaddish insight. I suggest you read the whole article, but basically his five points boil down to two core principles:
Price your products and services to appeal to many consumers for a long time; and focus your energy on the opportunities that will create the greatest success for your whole business.
Price your products and services to appeal to lots of consumers for a long time: This is the essence of his first three points. Good business is an equitable exchange of value between producer and consumer. When you’re the producer – as a business owner, as a sales person, even as an individual selling yourself – and you focus only on what you’re going to get from the exchange; how to get as much as possible while giving away as little as possible — you’re, in effect, ‘worshipping high profit margins.’ It’s a mindset that’s antithetical to developing long-term relationships of mutual benefit. When, as a consumer, I’m dealing with a company that’s clearly focused on charging me ‘as much as the market will bear,’ so they can make the highest possible profit, I may buy from them once. But as soon as I figure out a better alternative – I’m gone.
It’s also the case if a company’s justification for their high prices is “we have to cover our costs” (cost-driven pricing). That’s not my problem as the consumer! You as the provider of products and services need to figure out how to create a cost structure that allows you to make a reasonable profit while still offering pricing that feels fair to me.
If, however, you offer me a product or service I want, at a price that feels fair and reasonable to me (and treat me as though you appreciate and value my ongoing business as opposed to just wanting to empty my wallet), I’ll come back again and again. And if you’ve structured your costs so that you can make a comfortable profit while offering me this fair and reasonable pricing — that’s how to build a thriving and sustainably profitable business.
Focus your energy on the opportunities that will create the greatest success for your whole business. This covers Drucker’s sins #4 and #5. ‘Slaughtering tomorrow’s opportunity on the altar of yesterday‘ means protecting your existing revenue streams at the expense of potential revenue streams. One current example of this: print media companies that try to limit the growth of their online business for fear it will ‘cannibalize’ their traditional business. Reality check, dudes: your old business will still die, and you won’t have anything to replace it.
‘Feeding problems and starving opportunities‘ means focusing your best brains and resources on trying to ‘fix’ things, vs. putting those resources on trying to take best advantage of high-potential opportunities. For example: if you’ve got some products that aren’t selling well, and some new ones that seem as though they might have huge sales potential – put your best sales people onto the new ones, vs. having them try to ‘revive’ the flagging ones.
Both of these efforts require looking at your business as a whole, and allocating your resources toward those things – markets, products, IP – that have the greatest potential for driving the overall success of your business over time. In other words, be strategic: consistently focus on those core directional choices that will best move you toward your hoped-for future.
These ‘five deadly sins’ seem so true to me – and so avoidable. Why do you think businesspeople still commit them?