TLFeBOOK The 7 Irrefutable Rules of Small Business Growth TLFeBOOK TLFeBOOK The 7 Irrefutable Rules of Small Business Growth Steven S. Little John Wiley & Sons, Inc. TLFeBOOK Copyright © 2005 by Steven S. Little. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc. 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. 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HD62.7.L58 2005 658.02′—dc22 2004022890 Printed in the United States of America. 10987654321 TLFeBOOK To the memory of my nephew Dean, who gave us all the gift of perspective this summer. TLFeBOOK TLFeBOOK vii C ONTENTS Preface: Did I Really Say “Irrefutable”? ix Acknowledgments xvii About the Author xix C HAPTER 1A Realist’s View of the Small Business Landscape 1 C HAPTER 2Are You Really the Entrepreneurial Type? 27 C HAPTER 3RULE 1: Establish and Maintain a Strong Sense of Purpose 43 C HAPTER 4RULE 2: Thoroughly Understand the Marketplace 69 C HAPTER 5RULE 3: Build an Effective Growth Planning System 85 C HAPTER 6RULE 4: Develop Customer-Driven Processes 105 C HAPTER 7RULE 5: Put the Power of Technology to Work 137 C HAPTER 8RULE 6: Attract and Keep the Best and the Brightest 167 C HAPTER 9RULE 7: See the Future More Clearly 197 Appendix: Personality Tests That Measure Entrepreneurial Types 217 Index 231 TLFeBOOK TLFeBOOK ix P REFACE D ID I R EALLY S AY “I RREFUTABLE ”? Y ea,I sure did. Ir-re-fu-ta-ble. There I said it again. Without question, this is the one word that best describes what I’m trying to say. However, like many words, this one may have different meanings for different readers. To get us off on the right foot, I want to be sure that you and I are clear on my meaning. Let me explain. SOME BACKGROUND Throughout much of the 1980s and 1990s, I was president of three different fast-growth businesses. In each case, these businesses went from pretty small to considerably bigger (but still pretty small in the grand scheme of things). The biggest one reached more than $12 million in revenue and 100 em- ployees, and all three went through significant growth phases. At a relatively early age, I did learn a few things about what it takes to grow a small business. I also learned that I liked talking about small business growth more than I liked actually doing it. I come from a long line of teachers and orators, and eventually the pull of that familial persuader gene proved more than I could resist. I TLFeBOOK [...]... recently attended a small business summit in Washington where in one single morning, various speakers told the audience that small business created “over half,” 70 percent,” “80 percent,” and “over 85 percent” of all new jobs in this country 11 TLFeBOOK THE 7 IRREFUTABLE RULES OF SMALL BUSINESS GROWTH The Little Engine That Could Small business is the engine of economic growth in the United States —Vice... 7 TLFeBOOK THE 7 IRREFUTABLE RULES OF SMALL BUSINESS GROWTH consistently second-guess your decisions They expect you to be there when they arrive and still be there when they leave Sounds just like a boss to me! One big difference, though: These bosses expect you to pay them for their efforts, whether you have the money in your account or not Please understand this I am far from being anti-employee... one-person entity In many cases, the person conducting the work doesn’t want the business to grow The intention is to make a living or earn a little extra spending money Other nonemploying firms are truly small businesses interested in growth The following are examples of the nonemploying firms interested in growth versus the comparatively static types previously listed: 3 TLFeBOOK THE 7 IRREFUTABLE RULES. .. running your own business In fact, if someone asked me whether it is the best of times or the worst of times for small business in America, I could argue either point of view In my opinion, the current state of small business could be accurately described as both the best and worst of times—and I explain why later in this chapter But first, let’s take a realistic look at what the term small business encompasses... for the majority of new jobs created in this country —Labor Secretary Elaine L Chao, 2003 Large corporations shed jobs and wreak havoc during times of recession On the other hand, small businesses are the backbone of our economy; they create 75 percent of all new jobs —Representative Nydia Velazquez, 2003 Three-quarters of the net new jobs from 1990 to 1995 were created by small businesses They are the. .. businesses They are the engine of our nation’s economy —Representative Ed Bryant, 2003 Small businesses are the engine of the American economy They create 75 percent of all new jobs —JohnKerry.com, 2004 13 TLFeBOOK THE 7 IRREFUTABLE RULES OF SMALL BUSINESS GROWTH The job creation controversy has been raging for years in political and economic circles I have tried very hard to understand the core arguments made... growing small company, however, the rewards can indeed be great Among the Inc 500 class of 2003, 78 percent reported a net worth of over $1 million Nearly half were multimillionaires One in five was worth more than $7. 5 million Keep in mind that these are the elite, however The median five-year growth rate of these 500 companies was a whopping 692 percent 8 TLFeBOOK A Realist’s View of the Small Business. .. in the U.S —Representative Jim Moran, 2004 Seventy percent of new jobs are created by small business owners —President George W Bush, 2004 [Small business] is the engine that drives our economy and provides most of the nation’s job opportunities —Senator Kit Bond, 19 97 Small businesses provide some 70 to 80 percent of jobs in America —Senator Arlen Specter, 2004 The small business community is the. .. like water in the middle and late 1990s, but 9 TLFeBOOK THE 7 IRREFUTABLE RULES OF SMALL BUSINESS GROWTH most of it went to high-risk/high-potential-reward investments in tech companies, especially on the West Coast According to the Commission, “In 1999, California received slightly more than 43 percent of all new venture capital investment—a whopping $20.8 billion Of this total, nearly $ 17 billion was... One of the best examples is the idea that small businesses create almost all the new jobs in America Politicians have done more than their part to perpetuate this myth Pull up any politician’s talking points on small business, and you’re bound to see the assertion that small business creates all or most of the new jobs in the United States (see The Little Engine That Could”) I recently attended a small . Congress Cataloging-in-Publication Data: Little, Steven S. The 7 irrefutable rules of small business growth / Steven S. Little. p. cm. Includes index. ISBN 0- 471 -7 0 76 0-0 (pbk.) 1. Small business Management—Handbooks,. TLFeBOOK The 7 Irrefutable Rules of Small Business Growth TLFeBOOK TLFeBOOK The 7 Irrefutable Rules of Small Business Growth Steven S. Little John Wiley & Sons, Inc. TLFeBOOK Copyright © 2005 by Steven. much of the 198 0s and 199 0s, I was president of three different fast -growth businesses. In each case, these businesses went from pretty small to considerably bigger (but still pretty small in the