Best Practices of High Performance Entrepreneurs

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1. Ownership Best Practice #2.  Owners and managers have written the benefits that customers can expect from the business (Mission Statement).
A mission statement in its simplest terms is "Our business is successful because it provides our customers with __________ (fill in this statement)." Remember, however, that a mission statement is nothing more than a bunch of pretty sounding words if it isn't used as a standard by which all significant business decisions are measured. And in order for it to be used as a standard, the management team must all believe in it and support it.

A mission statement should not be vague. It loses its impact, however, if it becomes so lengthy that no one reads it. A properly crafted mission statement can appropriately be emblazoned over the door to the company headquarters. One of the best Mission Statements we have seen is that of a business consulting firm, "Our mission is to help our clients honorably achieve their objectives." It's short and sweet, and it reminds everyone why clients keep paying for their services.

2 – Ownership Best Practice #11. Mentors and advisors are used to develop management abilities.
Founders of successful businesses often have unique talents and abilities, which are often not shared by others in the business. Our work with thousands of high performance businesses has shown that one of the biggest problems owners have is the haven’t been able to successfully delegate and replicate what they do for the business 

3 – Management Best Practice #31. Management has goals to increase revenues 5X or more (minimum $5M), as soon as possible.
Growth is not just about more revenue, or even profit or resources. Growth is fundamentally about focusing on building systems that are effective and efficient at meeting customers’ needs. It is surprising how difficult it is to grow quickly until you get the right goal. 

One of our favorite studies concluded that businesses with at least $1 - $5 million dollars in revenues had a survival rate FIVE TIMES HIGHER than those below $1 million. It further stated that the revenue did not have to come just from one location. Some industries, such as wholesalers, need closer to $5 million to survive, due to smaller margins. 

Business leaders that focus on increasing revenues and profits 5X or more. ASAP, often achieve these goals up to 20 years faster than their competitors. The key is to start with powerful goals that give you a roadmap to success and drive you to take action now. The 5X ASAP™ goal can give your business-critical direction and purpose. Now go post your goals where your team can see them every day.

4 – Management Best Practice #54. Key Performance Indicators are used to track and manage critical performance.

What you measure and track will have a lot of impact on your company. If it can’t be measured, then it can’t be controlled. Key Performance Indicators (KPIs) measure progress toward important goals. Part of the secret of good KPIs is to pick five to ten measures or ratios that have real impact on your business and then track those items meticulously. The best metrics might be sales per employee, or the profit margin on daily sales, or a production ratio. Whatever they are, KPIs confirm whether you are on course, before it is too late to make adjustments. If you wait to see the monthly financial statements to make changes, it may be too late. Monitoring KPIs will help you make changes as the process progresses. 

5 – Marketing Best Practice #88. Management has defined a target market for each product line or business unit.
If you had enough money, you could get your message in front of every man, woman, child and highly-developed monkey in the world. No one has that much money. Management must limit its marketing expenditures to a cost-effective level. The first and most important step is to define the target market. The textbook definition of “target market” includes three categories: demographic, geographic and psychographic. In the simplest terms, you should “sift the world’s population” by answering these three questions: What is the age, sex and income level of people most likely to do ongoing business with you? Where do they live, work and shop? What thoughts, beliefs and activities bind them into accessible groups? The answers to these questions will define your target market. Every product line or business unit should have its own target market.

To manage means to control. Defining the target market gives management control of the message sent to customers, the quantity of product needed, the channels of distribution, the cost of communication, and the potential yield on marketing investment. For a multimillion dollar business with mass appeal, the defining criterion is typically geographic. The primary question is, “how far can we afford to reach?” For the rest of us, our budgets are more limited. We can’t afford to communicate our message to masses unlikely to buy from us. Defining the right target market will save millions of dollars in promotional spending. It will focus the minds of your prospects on the specific benefits your firm has to offer them. They will identify more strongly with your product or service and your business will expand more rapidly until you can serve other markets.

6 – Marketing Best Practice #95. The company has a written marketing plan for each product line or business unit.

Never spend any money on promotion unless you know whom you are trying to reach, what you have to tell them, what activities and media they will respond to, how much money you are willing to spend, and how you are going to spend it over time. Put the plan in writing to minimize conflict. Here are the objectives a good marketing plan can accomplish: 

     A. Focus your energy. As the owner, you may be your best salesperson, but you have hundreds of other things to do. A marketing plan should help you invest your energy where you will receive the greatest return. 

     B. Increase the number of prospects you reach. Your plan should include what you want your employees to do to help promote sales, what advertising media you will use, and what you will try to prompt your allies to do. The more people you have selling for you, the more people you will reach. 

     C. Coordinate your efforts. Your message will have more impact if it is the same in all media. Your sales reps should send the same message that is sent on radio, television, and in print. The plan should inform your employees and allies what you are promoting and when. The only way you can accomplish this is by preplanning. 

     D. Minimize overall expense. Your marketing plan should focus on the best means of communicating your message. Don't be seduced by advertising salespeople. Your marketing budget gives you a good excuse when they come calling. Tell them to leave their information and you will consider them in next year's budget. You still have the freedom to use a great new idea, but the budget requires you to make a conscious decision: What are you willing to give up in order to spend money on this new idea? Because the plan includes all promotional expenditures for an entire year, you can negotiate volume discounts and pay less for premium spots. 

7 - Productivity Best Practice #154 of 300. Personnel problems are resolved as they arise.

Don't sweep problems under the rug. It’s easier to clean up a little mess when it's found than a big mess that has accumulated over time. Your company's productivity is a function of your employees' productivity. Unhappy employees are not productive. Lack of action can also lead to some very messy lawsuits filed by employees. 

Corey jokingly tells his clients that the first time you are sued is the worst, but that’s not true. If you leave yourself vulnerable there are people who cannot resist the temptation to take advantage of your weakness. Having good personnel policies that are rigorously followed will prevent most problems and limit the damage from those few problems that can’t be avoided.

8 – Finance and Accounting Best Practice #195. Management tracks the profit margin of each product or service.

Calculating the margin on services is trickier than on products. Mechanics have estimate books with standard repair times to make estimates, and rebar installation estimators use weight and complexity indexes to bid projects. To calculate actual results requires timekeeping and job costing techniques. You should use or develop these techniques for your industry to learn where you are making or losing money. 

The proliferation of estimating software is a great tool to help build your High-Performance business. One of Corey’s contractor clients asked if the $15,000 investment in such a program was cost effective. With a brief analysis the answer was clear and it paid for itself in two months. The software purchase enabled the company to grow revenues from $100,000 to almost $300,000 a month in only five months.

9 - Risk Management Best Practice #222. Key person, business interruption, and disability insurance is adequate and reviewed annually. 

Key person insurance is more than covering the owner, but also key management and staff. If there is a person who is so critical to your operation that their death would severely damage your business, then they are a key person. The people who should be most concerned about you having this coverage are your staff and their spouses. If something happens to you, are they out of a job, or is there the cash to hire a replacement until the business can be sold for full price? This coverage will also protect your legacy to your family.

Oddly, once there is a plan in place for the continuation of the business, it reassures your most competent staff that they are part of a business that is professionally managed and has a future. It changes their commitment in a positive way. Business interruption and disability insurance are to cover you and your business in case you don’t die. Lucky you! In most cases, the business should be able to pay this expense after two years in operation, without crippling your cash flow. If not, then you still need to make dramatic changes in your operations. See the next million action item.

10 – Next Phase Best Practice #299. The board of directors offers valuable insight to the operation of the business, but assumes no management authority for the operations.

An inactive or incompetent board isn’t worth the donuts served at the board meetings. In the Enterprise phase, there can be many parties with an equity interest in the business. You may have capitalized your expansion by selling stock, so you must be accountable to all the stockholders. The board represents the stockholders and should always act in the best interest of these investors. They should help and advise in the weighty responsibilities of the president, but no board member should circumvent the president by attempting to micromanage the business. The only authority over the operations of the business that the board should exercise is to hire and fire company executives. Owners and managers should accept the advice of directors, but never allow them to breach their fiduciary duty as a separate, advisory body.