As a business consultant in San Luis Obispo County, I work with a lot of small businesses and startups. What I love about consulting small businesses and startups is their mindset. They all have a big dream and a vision statement to support that dream. I would say that having a dream and a vision statement is a key element in how to grow a business. In fact, I consider it part of a fundamental mindset that business owners need to succeed.
Dream and a Vision Statement
If you’re not familiar with vision statements, they are a statement of how the world will be a better place because your business is in it, i.e. because of YOU. These tie into business dreams because while money is nice to have, most people go into business driven more by a desire to make an improvement in the world, even if it is just in their niche or service area. Believing in your business and the impact it will have in the world is a fundamental mindset. Businesses that are just in it for the money lack the passion and drive to succeed. You must believe deeply that it would be a DISSERVICE to others if you did not help them.
Fundamentals 2 & 3
But there is more to having a successful business than a dream and a vision statement. In fact, did you know there are 3 fundamental rules for business success? The first 2 rules are mindsets business owners must have in order to have a successful business.
- Better before cheaper—in other words, compete on differentiators other than price.
- Revenue before cost—that is, prioritize increasing revenue over reducing costs.
- There are no other rules—so change anything you must to follow Rules 1 and 2.
These 3 rules are from a study by Michael E. Raynor and Mumtaz Ahmed published in the Harvard Business Review after researching more than 25,000 companies.
Better Before Cheaper
When I consult with new business owners, many of them think they have to be the cheapest option or no one will buy. This certainly is not true. The idea is to serve your client better, not for the cheapest price. While price can be a deciding factor in a purchase, it isn’t the only factor and it isn’t always the deciding factor. In fact, some people will buy the most expensive version of a product with the expectation that the extra expense makes it the best. You want to sell your product or service based on benefit and value. People buy based on benefits. As a business owner, your goal should always be to provide the best benefit, and this is a fundamental mindset.
Revenue Before Cost
Business owners also need to make money. As a business consultant, I focus on business financials and financial growth for my clients. But in order to increase revenue, never look at reducing cost until you have no other alternative. Why? Reducing costs often means a reduction in quality, and remember, we are looking at serving your client in the best way possible, not by giving them something cheap or without the best benefit. It is a fundamental mindset of successful business owners to increase revenue in other ways that do not mean a reduction in quality. If you need to increase your revenue, it may be time to increase your asking price. Remember to look at the benefit you provide and decide accordingly.
Dream and a Vision Statement
Better Before Cheaper
Revenue Before Cost
There you have it, the three fundamental mindsets for having a successful business. Leave a comment below if you are already using one of these three!
