In my experience, our choices and decisions lie between 2 extremes: A butterfly that causes a hurricane and a butterfly in a hurricane. The first is about taking action no matter how small or insignificant, then let the action do its part.  The other is about pure chance, no matter your actions. But I believe life rarely, if ever, puts us at the extremes. We always seem to have the opportunity to act and exert some influence even on what seems a hapless situation.

Watch this gem in action the next time you go to the movies. How ‘tempting’ are the Jumbo Popcorn and Jumbo soft drinks when compared with the smaller sizes? Watch the ‘great value’ you can get with only an extra 50 cents! Also note how rational doctors (and judges, although not mentioned in the excerpt) are not immune from irrational diagnosis or decisions… “The Psychology of Trade-Offs The psychology of trade-offs has been investigated in a series of studies … Confronting any trade-off, it seems, is incredibly unsettling… What then do people do if virtually all decisions involve trade-offs and people resist making them? One option is to postpone or avoid the decision. Imagine being in the market for a new music system and seeing a sign in a store window announcing a one-day clearance sale on CD players. You can get a popular Sony CD player for only $99,...

Companies that choose to be great instead of big. This book always comes to mind when I hear about growth for the sake of growth. But today’s excerpt from the book is about service. “Marilyn McDevitt Rubin, a columnist for the Pittsburgh Post-Gazette, already knew something about Union Square Hospitality Group when she and four friends went to lunch one day at Tabla, the fourth of Danny Meyer’s restaurants…“ “… and she expected that Tabla would offer a similar experience. But impeccable service is not what Meyer strives for. Instead, his restaurants aim to provide what he calls enlightened hospitality. Rubin began to learn what that meant when, shortly after placing her order at Tabla, she turned suddenly in her chair and slammed into a server holding a tray of glasses filled with water that he was about to put on the table. ‘I sat watching, transfixed, as the tray...

The story of a champagne empire and the woman who ruled it. ‘After the [Champagne] bottles had rested on their sides for a year in the cellars, developing their sparkle, someone had to find a way to get rid of the debris trapped inside. The easiest way was to rely on gravity. The process was known as transvasage… The cellar workers could just pour the wine from one bottle to another, leaving the debris behind. It worked in theory, but the sparkle of the wine wasn’t exactly improved by all this pouring. The other way to dispel the debris was called dégorgement… The cellar worker had to invert the bottle and pop the cork off just long enough to let a bit of the wine and all of the debris come shooting out—but not a moment longer… Working bottle by bottle, disgorging champagne was a time-consuming and expensive process. Even...

I would like to share with you a secret that will give you an edge over your competitors. All you have to do is become the Airline Captain With The Magic Wand. This can be easier than you think (really); and it’s entirely under your control. As you know I work with my clients to streamline their business operations. My involvement gives them the option to put their business ‘under management’. This gives them back the time they need to focus on whatever else they want to do. The Secret Every single success I’ve had with my clients could not have been possible without creating at least one checklist. Not once I was able to ‘work my magic’ without those magic wands. What’s with the Airline Captain? It’s a very useful metaphor. To know more, enjoy this Gem of the Month (below). Make a conscious decision to be an Airline...

Here is a well know formula for ‘success’: Success= Hard Work + Luck If I add a bit of perspective to this: Success= Hard Work (i.e. under your control) + Luck (i.e. uncertainty, outside your control). Perhaps being a scientist in my other life helps me appreciate how true this is. But some people would like to believe that ‘success’, however they care to define it, is entirely thanks to their own merits. Personally, I can easily forget how really hard I worked on every achievement I made. But I can never forget how things ‘just happened’ better than I could ever have planned. What does this have to do with business? A great deal. If you consciously apply this formula to your business, you are likely to make informed (and profitable) decisions. What is more important, you will be far better at avoiding (and spotting) time wasters who try...

In my previous post The Handbrake that Stops All Madness I advocated yet again that systems can be the solutions behind most of the firefighting that goes on in daily business. Having the handbrake is one thing but having a driving license is another. Here is a story I came across on Ted Talks as told by Dr. Schwartz. It shows what happens when a system has no owner or driver who can nudge the system back towards common sense… This is a story about lemonade gone bitter! A dad went to buy his seven-year-old son a lemonade while they were watching Detroit Tigers. All they had at the stand was Mike's Hard Lemonade, which he bought for his son. Dad had no idea that Mike's Hard Lemonade contained 5% alcohol. A security guard saw the son drinking ‘alcohol’ and called the police. The police called an ambulance. The ambulance...

Imagine you have a car and you suddenly start to have these problems: 1)The engine is not starting 2)The air conditioning is not working 3)The radio speakers sound distorted Your friends will think you are out of your mind if they see you working on the handbrake.  What they don’t know is that if you fix your handbrake, the car will not roll into your swimming pool; and then you won’t have all the problems caused by water. I came across this insightful (albeit frivolous) example when I was researching the Theory of Constraints. So what does this have to do with business? The theory of constraints is all about investing (upfront) in the effort to discovering the core problem (or bottleneck) behind a series of business problems that do not look related at first sight. It is usually not an easy task, but the rewards are worth it… In...

In my last post Ignore What Your Customers Say, And Some …I tried to convince you that you may know more than your customers about what they actually want; and to be prepared to give them what they meant to say rather than what they actually told you. Now how about YOU limit their options ...and make them happy customers? There are a lot of scientific studies on human behavior showing that while choice and the freedom to choose are positives, too many options to choose from can create decision paralysis amongst customers, and make them feel worse off even after they choose to buy (if they choose at all) Amongst the negative experiences after they purchase, customers may regret buying all together or they may think ‘what if I bought the other one instead?’ Dr B. Schwartz in his Paradox of Choice tells of the series of experiments titled...

My Customer Satisfaction Charter goes like this:  1. Ignore most of what your customers tell you that they want … they usually don’t mean it.  2. Tell your customers what they actually want, and mean it.  3. Limit your customers choices …  4. Smile While I am fully convinced by my Charter (ask my clients!) I would like to think it is actually foolproof for almost any business. I have ample evidence to support the fact that not only does it work, but it is actually the sweet spot for a Win-Win outcome for your business and your customers. While I do not need convincing of its power, I am actually looking for evidence to the contrary. Do you have any? If so I would love to hear from you. So how does this charter work? Two of my previous posts share some stories on this topic.  In the post...

It helped win the war against the Nazis. It will save the lives of 100s of children before you finish reading this paragraph. It can save you 100s of thousands of dollars in your business. It saved one of my clients $100,000 the first month he used it (and counting). Many books are written about it but still most (even smart) people dismiss it. Because many people dismiss it, those few who use it are reapping all the benefits (which one are you?). Hint: you can make one yourself for your business... My subscribers will receive the answer in my next post, but in the meantime feel free to put your Facebook comments below, or flick me an email and let me know your thoughts. I'd love to hear from you. Subscribe and download my free ebook Hands Off: Why employing more people does not give YOU more time.

A grueling 100km walk in the hilly bush land of NSW (Australia) gave me a valuable example of a basic but powerful business principle If you say it’s a heartbreak hill then it is … The Oxfam 100km Trailwalker on the Great North Walk (NSW) has many “Heart Break” hills that truly deserve that name. Most of the walk (day and night) is over bush tracks & fire trails. But you cannot enjoy the scenery for long before you find yourself flat on the ground from tripping over a rock or a branch; not to mention slipping down the side in a local creek or river… And when you add more than a 45-degree incline, you may agree that “Heart Break” is an understatement. Not only you have to gasp for every breath of air, but you have to watch every step, negotiate your body between boulders, over rocks and...

Give me a lever and a place to stand and I shall move the world- Archimedes (287 BC-212 BC) Archimedes, one of the most influential thinkers and inventors of antiquity, understood the power of leverage. While “moving the world” is not quite technically possible with his lever, he was absolutely on the mark with his deep appreciation of leverage. What does leverage have to do with your business? Leverage is about receiving benefits (and profits) disproportionate to the (relatively smaller) amount of work you put in to create those benefits. Where are the leverage potentials in your business? You can look at leverage in many different ways. I see leverage in two parts: The Levers and the Leverage Points. The Lever In my business, for instance, I conduct customer surveys, on behalf of my clients. These surveys allow us to gauge the impact on customer satisfaction of what we are doing ....

Do you want to know the surest way to get what you want in business? Then watch your language … Let me explain What is the difference between these two wishes to a genie in a bottle? I want to have a quality life … I want to play 1-hour tennis with my daughter each Friday morning, before we sit down together for breakfast at our favourite café and chat about our week and weekend… The difference is that the genie will easily be able to grant you your second wish, each Friday! But he will be scratching his head about the first…Quality life? What is it that you actually want? Remember you cannot hit a target that is just a  “concept”… like “quality”. Think Vapour, Liquid, Ice. “Quality”,  like VAPOUR, you cannot actually hold in your hands…and it can have absolutely any shape or size because it has no...

In general, there are two types of business risks (and uncertainties) that not only you cannot eliminate from your business, but they actually determine the raison d'être of your business: Strategy Risk Execution Risk I call these genuine Business Risks. Almost every other risk in your business is unnecessary Bad Risks; e.g., bad book keeping, weak recruitment strategy, weak understanding of your market, low customer satisfaction, mispricing … etc. Most businesses fail or struggle to grow due to the unnecessary Bad Risks! Ironically these risks are under your control. These risks can (and should) be almost eliminated How to manage Strategy and Execution Risks? The main reasons Business Risks cannot be eliminated is because they are impacted by external factors outside your direct control (new technology, competition, customer preference, economic environment … etc.). For instance, you cannot control the entry of a very powerful competitor with top customer service (Strategy risk) but...

Before answering the ‘toaster’ question try answering these questions: Can your salesperson clearly explain and sell to your prospects your product/service without themselves being technically apt in providing the actual product/service If your sales double or triple right now, would you be able to cope without breaking at the seams and ultimately compromising quality etc. When you recruit talent, do you look for years of experience in your type of work? Or do you focus on the ability of the candidate to manage the workflows for your business as these impact the customer experience the most? Your answers to any of these key questions help me to appreciate, in a flash, how healthy your business is and if it is ready for growth. So if you give a strong YES to all these questions your business is ready to grow in a healthy way. These questions are not mutually exclusive....

Imagine you were an investor in the largest but then struggling aluminium company in the world. What would you decide to do if you heard this start of the first speech of Paul O’Neil the new CEO: I want to talk to you about worker safety. Every year, numerous Alcoa workers are injured so badly that they miss a day of work. Our safety record is better than the general American workforce, especially considering that our employees work with metals that are 1500 degrees and machines that can rip a man’s arm off. But it’s not good enough. I intend to make Alcoa the safest company in America. I intend to go for zero injuries. According to Charles Duhigg in The Power of Habits, if you are like the many of the investors and advisors who heard that speech, you would run for the exit door, pick up your phone...

Systems are the key to enormous productivity leaps in your business. But if left unchecked they can take you right back to square one and put you back in damage control mode. What Systems should do In my Hands-off report I talk about systems as the Holy Grail for a lot of good things in your business. How else do you expect to provide the quality of service your customers expect from you each day, while you and your employees enjoy a satisfying work-life balance? Whatever aspects of your business that you systemize (recruitment, marketing, delivery, customer surveys, training, etc), never lose track of the purpose behind building such systems: Consistency of your service Clear thinking for your strategy Work-Life balance Risk Management What systems should NOT do I was interested in a business recently, so I registered on their email distribution. As expected I started receiving automated educational emails...

You will have to be one of the lucky few (or from another planet) if you have not been to a business meeting where you were bored out of your mind, mustering the last bit of energy to keep your eyelids open while pretending to show some interest… Even if you are a sole operator (or own a large business) and have never been blessed with this experience keep reading. I am not going to dwell on the reason why internal business meetings go haywire. And I will not give you the top 10 reasons why meetings are crucial as there is plenty written on the subject such as: Death By Meeting by Patrick Lencioni. But I want you to answer this… Do you know of a successful and sustainable business (large or small) where regular and frequent meetings are not an important feature in their operation?  If so I would...

Is your business beautiful? Yes beautiful. Imagine giving a visitor a tour of your business. You are showing her how your business runs. You show her how your staff answer the phone, how they greet each caller. Then you show her how a quote is done or an order is taken. How it is processed. How the service (or product) is drafted, prepared and delivered. You then show her your billing system. Your customer satisfaction survey. You introduce her to your sales people, your technical staff… She notices how each and every employee is calm and under control, even at the busiest hour. She then passes by the "Vision Board". She looks at all the random ideas that are proposed to take your business one step closer to that vision. Would such a tour give your visitor a beautiful picture to take away? What is it about a business that could...

In my last post for this year I want to take you far away from your business, your family and all around you for just a few moments. I want you to have a look at this picture of us (all of us) from 1.5 billion km away. The spacecraft Cassini took this picture of Earth in 2006 when Cassini was still well within our solar system.  Earth is the dot, which has to be magnified (top left-hand corner) for you to even see where it is! And remember that our solar system is yet another insignificant dot in our galaxy that is another insignificant dot… This “Pale Blue Dot” is what we call home. And to paraphrase Carl Sagan, everyone you’ve ever known, or ever heard about, from the very beginning of time until now is or was on this dot. Every “grand” achievement or success you’ve had, or...

U.S. psychologist Barry Schwartz refers to an experiment in Switzerland in 1990’s when the government planned to run a referendum on where to dump nuclear wastes. Psychologists polled the well-informed citizens if they agree for a nuclear waste dump in their community: 50% said yes, despite their understanding that it was dangerous and it would impact their property values; but they also knew it had to go somewhere, and they felt responsible. Then psychologists added a financial incentive to the same question: if we give you 6-weeks pay each year, do you agree to have a nuclear waste dump in your community: Only 25% said yes. One would expect that by adding a financial incentive more people would say yes. Instead what seemed to happen is that the incentive shifted people’s focus (irrationally) away from the social responsibility and towards the financial incentive. And 6-weeks pays seems not “worth it”...

They usually stand for Key Performance Indicators but I have seen enough damaging KPIs to warrant the other acronym. What are they good for? KPIs are one tool in the arsenal of management consultants. They are used to help assess employee performance against measurable outcomes (e.g., financial or sales targets, process documentation etc). A sophisticated KPI system tries to align the employee KPIs with those of the company and its vision & mission. This is backed by continuous feedback and support for each business division and each employee, to help reach their targets. Where it all goes wrong Die by your KPIs Always ensure that KPIs do not become the purpose instead of the mean. They should only be stepping stones towards the higher purpose as expressed in the vision & mission of your business. Most importantly, remember that KPIs are not rules. There is a great deal that goes...

Put anyone of this trio ahead of the others in your business: Shareholders Clients Employees and I guarantee your business will lack energy and long-term viability. This is the law of business longevity and I challenge you to try to disprove it by pointing to one viable and thriving business that compromises on anyone in this trio. When you put shareholders first It happens time and time again in both small and large business. One year “valuable” employees are sacrificed to keep an earnings promise to shareholders. Next year, clients feel the effect in compromised quality on service or product while the business struggles to meet earnings targets. Greed and shortsightedness are the obvious sins. Focusing only on earnings and shareholder wealth is like building a house of cards. It’s only a matter of time before this shortsightedness unfolds and disaster strikes. But also remember that shareholder satisfaction is the...

You already know that Reality TV has nothing to do with reality. People who know they are being watched (by millions!) act differently. Something analogous can happen in your marketing focus groups. Focus groups proponents believe they can probe the likes and dislikes of consumers by designing or simulating something in a closed room, and perhaps with invisible viewers behind mirror walls. You should not look only at success stories of focus groups, but also at disasters thanks to focus groups. These mixed results should highlight the randomness of the outcomes and how really difficult it is to understand what consumers really want. Facts There is a sea of studies to back each of the following (related) facts: 1. Claims by individuals on how they would react or choose in a given situation are not consistent with their actual actions in real situations (we say something and do something else)....

Last week, I had the privilege to participate in the Oxfam 100km Trailwalker 2012, a gruelling global fundraising event against poverty and injustice. It was a great event, and I could not let this opportunity pass without drawing some business ‘lessons learnt’. I will elaborate on each of these in future blogs: Planning Fallacy The statistics are that about half of the 4-member Oxfam teams would have at least one team member retiring before the finish. The 2012 statistics are no different as 55% of teams were incomplete at the finish line. But none of us believed this statistic would apply to us. For our team, yours truly was the last man standing (barely) after 34.5 hours, 10 hours later than our expected time. Lesson 1 The term Planning Fallacy was coined by Nobel Laureate D. Kahneman. Humans seem to ignore external and objective evidence relevant to any activity or...

Can you say this to anyone visiting your business, and then actually walk them through your business workflow? Would a new employee (or a potential buyer of your business) be able to see exactly how your business works end-to-end, live? If this is not the case, then your business is likely to have one or more of the following business risks: Missed revenue opportunities, because of difficulty dealing with sudden increase in demand Unidentifiable bottlenecks in your operations Difficult-to-manage Key Person Risk Inefficient training of new and existing employees Inconsistent quality in product or service Talent potential not fully utilized Let me explain Regardless of what kind of business you are in, a great deal of your operations can be described in a number of processes or workflows.  Having a crystal clear picture of your business workflow is like watching an engine running from the inside. You will be able...

This is one of the first questions I ask a client who wants to sell their business. If they answer, “I do not have time to think” I tell them that it is unlikely that they will sell it at a premium as it is currently run. The act of “thinking” will not necessarily (and directly) increase the value of your business, but the process you need to go through in order to find the time to think, is where the rewards are. Also being able to think leads to the old adage “work on your business not in your business”. In other words, thinking can transform you from a self-employed to a business owner. You can sell the business but not yourself! Symptoms of not thinking If you are doing any or all of these three things, you are likely not thinking clearly: You are reactive not proactive: Everything...

In the previous post on Being Unique I discussed what a Unique Selling Proposition (USP) is, and how vital it is to a successful business. In this blog, I look at the thinking process to help you discover and construct an effective USP for your business. You should think of your Unique Selling Proposition as having three distinct dimensions: Target client: e.g., price-conscious travelers, working mothers, etc. You can even be more specific; e.g., working mothers with CBD jobs…). Clear value to the target client: What do your clients get when they buy your product/service? Think what your biggest benefit is to them, not how good and fabulous your business is. If your target market is educated and wealthy individuals a “Guaranteed Highest Quality and Delivery” can be far more appropriate then “Lowest Price Guarantee”. No (or minimal) risk to the target client: Eliminate as much risk as possible through...

Perhaps it is coincidental, but statistics show that about 80% of businesses fail within 2-5 years, and about 80% of businesses do not have a “Point of Difference” or a unique attribute, or when they do, they fail to show it. This is a short version of a typical conversation I may have with my client: Coach: ”Can you tell me why I would buy from you, and not from your competitor?” Entrepreneur: “We have a great quality product, great service, we are the best!” Coach: “What would your competitor say if I ask them the same question?” Entrepreneur: “Actually they copy us like crazy!” Coach: “So why would I buy from you and not them?!” Entrepreneur: “I told you we are the best!” So what?! This is what your customers will say; what is it for them? Why should they give you their hard-earned money? The right answer (and...

Do you know the difference between “real-profit” and “risk-profit”? A real-profit is the reason you are in business, while the risk-profit is the profit that is related to a risk that is not in your core business and that you should spend (or invest) in a way to reduce your risk, and to protect the real-profits. Business case 1 A client CEO of mine was telling me that his company board lacks focus about their succession planning and he was finding it difficult to emphasis its urgency and importance to many members. We estimated a business insurance cover of about $40,000 p.a. for each of these key positions. With 5 directors on the board, this is about $200k p.a. of “risk-profit”. While it is very unlikely that all directors will get hit by a bus together, any risk on any of the key directors will put a dent in the...

Choose any list of “top reasons” for business failure, during any period of time, from any business record or database, etc, and you will find almost all of them have one thing in common. Here is a compilation of the most common top reasons of business failures, which come up in most of the published lists I came across. What do you think they share in common? Financial Risk Poor financial records Badly managed receivables and credit Poor Quality Assurance Lack of understanding of pricing Over-leverage Growth strategies not supported by working capital Operational Risk Lack of clear accountabilities amongst employees Low employee engagement and training Lack of understanding of suppliers operations and risks Pressure from creditors Low or no insurance covers Lack of independent advice Market Risk Poor customer relations Competition ignored or not understood Industry and market trend not well understood and monitored The common thing among all...

Do not fall in love with a cute marketing idea just because you and your team like it. This is a sure way to miss an opportunity and incur unnecessary costs. The key to effective marketing is to test, test and then test again before you commit resources to your campaign. Example 1 General Electric ran two ads with identical headlines and text, but with different pictures in the ad: A-     A picture of a smiling baby B-      A picture of a woman putting a GE light bulb in a lamp Which do you think out-pulled the other? Following review Ad B was found to have 3 times higher response than Ad A (according to a couple of sources) Example 2 Which of these two headlines, run by an insurance company, had the better response? A-     If you are a careful driver you can save more money on insurance B-     ...

Are you tempted to price your products/services lower than the competition to boost your sales? What stops the competition from retaliating? Will you retaliate again? Who will reach the bottom first? The reason that price reduction comes to mind first as a means to increasing sales is because it is the easiest thing to do and seems to be under our control; and not because it is necessarily the most effective way to increase revenues. These are two key questions I ask my clients when pricing is discussed: 1) Do you know of a competitor who is pricing higher than you, and not losing sales to you because of your lower pricing? 2) Do you know of a competitor who is pricing lower than you but is not winning your clients over because of their lower pricing?   Clearly any answer to either of these questions is not pricing, but almost certainly the...

OK, perhaps two problems? Certainly not ten! You may have 30 issues you battle with each day in your business, but I always challenge my clients that we can identify 1, 2 or 3 core problems at most that underline all these issues or symptoms. There are no secrets behind this. After all, the whole universe as you know it, or imagine it (including the brain cells you use to imagine it!) came from one Bang! Your business ‘issues’ are no different. But this distillation to core problems requires objectivity, serious dedication and lots of energy. And the rewards are immense to your business and you personally. Current Reality Tree Eliyahu Goldratt, in his Theory of Constraints, referred to this thinking process as building the Current Reality Tree. Basically, you can imagine your issues to be the branches of the tree while the core problem is the trunk; you start...

Last week my 5-minute-old daughter, Sophia, reminded me, yet again, of a powerful but often-overlooked business tool: the Checklist. If you are under 60, there is a good chance your health in the first few minutes of life were quickly but accurately assessed by the Apgar score. The score is a very efficient and quick way to assess the health of a newborn in the first few minutes by looking at the 5 categories in the checklist: Appearance, Pulse, Grimace, Activity, and Respiration. Each category is ranked between 0 and 2, resulting in an Apgar score between 0 and 10. Dr Apgar “invented” this system in 1952 while chatting over coffee with a physician who asked how she would make a systematic assessment of a new born. Before then each physician followed their own hit and miss approach, and the Apgar scoring is credited for an important contribution to reducing...

…that’s what your customers might be saying. Or as Henry Ford put it " If I’d asked customers what they wanted, they would have said a ‘faster horse’ ". Business success stories may start from a new (or borrowed) idea followed by a continuous process of improvement. This is the iphone story, and part of the “Toyota Way” known for “Kaisen“ or “change for the better” . Did you know that Toyota makes thousands of improvements a year based on real market feedback? Taking market feedback into your improvement process is a real sign that you are listening to your market and the market can reward your business handsomely for this. But can you expect the market to think outside the box on your behalf? Extra Chunky taste buds … Malcolm Gladwell tells the story of the food expert Dr Howard Moskowitz who discovered during the 1980s that one third...

Beware of confusing your vision with your strategy. Don’t forget that the strategy must always be at the service of the vision. And it must change 1000 times if needs be. And if you have the conviction in your vision and the stamina to try 1000 rounds to get there, make sure that each round counts. Make sure that each round carries a lesson to the next round. How? First, keep track of your decisions. Compare the “before and after” of each decision. For instance, do not fall in love with a marketing idea and a good sounding slogan. Stay focused on the goal of the marketing strategy. Make sure you change one thing at a time in each campaign. Then observe the impact of that change on your sales. Second, and in order to be able to try 1000 ways, you must always make calculated decisions. No decision should...

Near misses in business are more prominent than you think, and as Nobel Laureate Daniel Kahnman puts it, ‘We can be blind to the obvious and we are also blind to our blindness’. Be very careful of those seemingly minor mistakes in your business operations, because some of them have the potential to seriously jeopardize your business. Their danger is that they somehow look harmless or “business as usual”, so entrepreneurs pay little attention to them, until disaster strikes. In short, some hiccups can cause death! Minor but dangerous hiccups An example can be recurring faults in widely marketed products that get discovered just before full production and distribution. If the cause of these faults is not eliminated or contained, it only takes one fault undiscovered to put a serious dent to the bottom line through, for example, cost of recalls and, not to mention bad reputation. Another example can...

Human impulses and fears can make you give up on your vision way too early, and for the wrong reasons. Quitting too early and on impulse is boringly human, anyone can do it. However, quitting according to intelligently prescribed criteria is a successful business decision, and allows you to survive the experience, learn a lesson, regroup and try again. So, have an explicit exit strategy in your business plan spelling out exactly what your criteria for quitting are. And each time you see your fear and doubts take over your thinking, revisit your written criteria and re-assure yourself again that your fears are unfounded. Well thought out quitting criteria and strategies keep your impulses and fears in check. Sticking to these criteria can save your business from premature decisions. And if it happens, your quitting will be planned and orderly.

You’ve probably heard about the 80/20 rule, known also as Pareto Principle or the Law of the Vital Few. In business, pay closer attention to what those vital few can be telling you about the risks ahead. The Vital Few in business It is not uncommon to observe something like this in business: 80% of profits from 20% of customers; 80% of sales from 20% of products; 80% of sales made by 20% of the sales staff; 80% of complaints from 20% of customers, etc. There is nothing special about the ‘80%’. But the key is that your business could be generating the bulk of its revenue from a few ‘star performers’ (be they customers, products, staff, etc). The common approach of concentrating more on these top performers has its obvious merits. It also helps identify some of the “lower-yielding” customers (for instance) who seem to demand the greatest amount...

Tolstoy opened the first chapter of his Anna Karenina with... “Happy families are all alike; every unhappy family is unhappy in its own way.” This became known as “The Anna Karenina Principle” applicable not only to families, but as much to evolution as to corporate governance. So this is my “business” version: “Successful businesses are all alike; every unsuccessful business fails in its own way.” It’s a useful reminder of how business failures can reveal more focused lessons to aspiring entrepreneurs than business successes. The reason is that in a lot of cases what brings down an apparently successful and thriving business is a “hidden” Achilles’ heel (or small series of heels!), which becomes all too apparent during the post mortem. On the other hand, the success of a truly viable business cannot be due only to some business aspects, but to all business aspects humming together:  value to customers,...

Like it or not, Chance and risk are at the heart of your business success and profit margins. This is not an invitation for putting your hands up and blaming it on the weather.  To the contrary, understanding how risk plays a key role in your venture can make the difference between landing safely in bad weather and not flying at all. The key is to be aware that your understanding of chance must be at par with your understanding of business fundamentals. Business fundamentals are what you read about in business books and discuss in MBA courses. They constitute the know-how of how to run and manage a business and what business structures look like and why. For instance, every business needs a product or service, market awareness, sales, client base, delivery mechanism and cash-flow & profitability. Take any one of these away and you won’t have a business,...