Want to have your own successful small business?: Don’t behave like the big ones!

 During the last 25 years, small companies have continuously outperformed the big ones in almost every sector of the world’s economy.

2013 the year of growth. (courtesy of justinhavre.com)

2013 the year of growth. (courtesy of justinhavre.com)

Few people in the world today have not hear the names and the success stories of companies like Google, Facebook, Apple, and many others, but almost nobody remembers that just 25 years ago these companies didn’t even existed in the world. Other companies as in the case of Apple, they were for many years at the brink of extinction through mismanagement and market irrelevance, and have staged a comeback trough a re-focus of their efforts on what’s important for their customers on the long run, sometimes ignoring the recommendations and expectation of the so called industry experts. Still other companies continue to bend and shape their operations to meet those experts expectations, without recognizing that they have little to no expertise on the actual business, and a lot on peddling their wares in order to fill their own pockets.

Who are those experts?

The experts I am talking about are the INDUSTRY ANALYSTS that continuously appear on TV or the internet to praise or criticize companies because they reached/failed to reach their sometimes absurd quarterly expectations. These experts are forcing CXO´s to bend their companies futures in order to drive stock prices (and by extension their CXO’s pockets in the form of quarterly bonuses and stock sales). What the CXO’s and other senior company executives fail to see and understand is that the overwhelming majority of these experts have no actual business experience running a company, and actually are playing the role of a Monday morning coffee-break football coach criticizing Sunday’s quarterback, team, and coach for their actions in the field.
Steve Jobs at the WWDC 07

Steve Jobs at the WWDC 07 (Photo credit: Wikipedia)

Their actions remind me of the response given by Steve Jobs during an interview on CNBC many years ago right after the company had announced their quarterly results. As expected the company had exceeded their own guidance figures, but had missed the experts expectations by a penny or two. Because of that reason the experts had decided to lower their recommendations on APPL, and the stock was going down in value (this was wen the stock was at $60 or so).. When questioned about it Steve said (paraphrasing from memory)

Apple provided a guidance number, and we exceeded this number. So we did what we promised we were going to do, and even more. We (Apple) are not responsible for the opinions of those experts, and are not required to meet their expectations. If those experts can’t come up with the right figures even after we publish our expectations, perhaps you should ask them, or they should be fired for not knowing their jobs.

What can a company do to succeed?

According to Ron Shaich (Founder, Chairman, and Co-CEO of Panera Bread), the first thing a company needs to do is to “IGNORE THOSE QUARTERLY EARNINGS EXPECTATIONS”, since they do not actually represent the business results but the expectations of people outside the business. Ron considers that EPS (the figures that those experts love so much) actually are a byproduct of company growth, and not the actual healthy grow of a company. According to him in order to grow a company should:
  • Build competitive advantage by delivering superior products
  • Improve customer experience
  • Hire the right people for the right jobs and actually properly incentivize them
It is interesting that another successful entrepreneur has almost the same recommendation for success. Leila Janah build her business by creating jobs in Africa smallest and poorest communities by outsourcing jobs from some of the biggest and best known companies in Silicon Valley and other U.S. and first world country companies**. According to her in order to succeed as a small company you primarily need to:
  • Execute: Or as it is also known GTD (get things done). Don’t be a perfectionist, don’t wait for the corporate resources, just go ahead and start doing.
  • Apologize: When you make a mistake, recognize the error, apologize and learn from it.
  • Banish negativity: There are enough real obstacles there to deal with negative people. Good people with positive attitudes can help you succeed when you face the real challenges of the business.
  • Hire for resilience: Don’t hire mercenaries based on their resumes, and their so called experience. Find out if they are actually the right people for your business, and if they are in there for the long run.
  • Use what you got: Call your friends, your friends friends, your contacts, and anyone that you may meet. You never know where the next right business opportunity may come from.
 With these simple lessons you could be on your way to become the next successful entrepreneur, or at least to improve your personal and professional life.
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