Like most corporate executives, owners of small and medium enterprises (SMEs) guard their business secrets zealously, sometimes to the point of not wanting any publicity for their companies. Among other reasons for shunning the spotlight, they fear that copycats might steal their proprietary ideas and practices and create rival enterprises that could edge them out of the market.
Among these cautious CEOs is an entrepreneur whose company is one of the best peforming SMEs today. On condition of not being identified, he agreed to share with the new generation of entrepreneurs the lessons he has learned from running his various businesses for many years now.
Here are his strategies:
1. Think long term.
As one who had inherited his father's business, he believes that new business owners should realize early enough that they will be in it for the long haul.
"To realize profits in a business sometimes takes more than five years," he says. "You have to first prove yourself to your customer before you could even get a foot in his or her door. And even if you find it easy to get in, it could also be easy to get thrown out. Also, you have to be like a chess player, able to think several moves ahead. Being shortsighted is very costly in business."
2. Let your lieutenants run the shop.
He believes that although an owner should really know his business inside and out, he should not spend too much time in its day-to-day operations. The company's managers can do this while the owner uses his time—at least a third of his time each day, he says—doing research and development, thinking of ways to grow the business and to do it better. "Imagine your role as the conductor of an orchestra, creating an ensemble of sound," he explains.
3. Use technology to stay in touch.
He says that the business landscape has improved dramatically with the development of mobile technology and the Internet, such that a businessman today can always stay connected, make decisions, and close deals even when he's out of the office. "A CEO can now operate even without a secretary or a physical office, and he no longer needs to type out letters or carry documents with him either," he says.
4. Connections are still important.
Even in this era of instant messaging, he says, it's still worthwhile to cultivate friendships and business alliances because it will help a businessman find leads for getting more business. "Before, an opportunity would find a person," he says."Today, you have to find that opportunity, and showing up in person is one way to do it."
5. Try to find the 'loopholes.'
He says that business before wasn't as elaborate, plentiful, convergent, and encompassing as it is today. "Before, there were a lot of 'pockets' but also a lot of holes," he explains. "Now there are no more holes, because chances are, somebody else has already found those."
Where can one find these holes? He suggests trying to look at possible mergers or acquisitions of companies within your industry and finding out where the gaps are in their business, then having your business fill those gaps.
6. Recognize who you are, where you are, and what your abilities are.
He says that a businessman shouldn't be so egotistic as to think that he doesn't need other people to help him. A good businessman, he adds, must also learn to be "rational and not emotional, to be focused without losing the big picture, and to be able to fit the 'micro' with the 'macro'." The minute a businessman wants to do everything, he says, his business is as good as gone.
7. Involve people from outside your company.
He says this should be done not just in the sense of outsourcing work. For instance, he explains, a businessman can "use" his suppliers as a source of information about how competitors are doing and how the industry is moving, and the businessman can also ask salesmen and other middlemen to bargain for discounts or better prices from suppliers or big vendors.
8. Learn to piggyback on your customers' success, but know that loyalty is fleeting.
"In business, if a customer slumps, so will you," he says. "There's no such thing as loyalty in today's business world anymore. Before, the attitude ran like this: 'All our suppliers are our partners, so we will support them for the long term.' But for today's customers, no supplier is indispensable. Every contract is up for open bidding, and it applies to all, friend or stranger alike."
9. Cut the middleman and go straight to the source.
While this may go counter to his earlier advice about using middlemen as bargaining agents with suppliers, he emphasizes that nothing beats dealing with the other business owner yourself. He explains: "To get the price you want, you can use the middleman as an ally. This is because he or she knows the supplier better than you. But I say that they are only intermediaries, to be used as a 'profit center' while you are still awaiting the final say of the other business owner."
10. To make more profits, watch your margins and limit your waste.
He says that this involves more than just cutting costs. For instance, he explains, printing companies often generate a lot of wasted paper, plastic, foil, and other printing materials because they need to allocate a certain width on each sheet of the printing area for trimming. This, he says, is usually considered an acceptable loss and a normal part of the production cost.
But he says that if businesses only learned to reduce that trimming area by even a few millimeters, the saved trimmings "would most likely equal their profit margin." He also suggests that businessmen should also learn how to take small orders to reduce the cost of big orders, which take more time and resources to produce. "So learn how to collect these 'crumbs' to make your money," he says.
Wrapping up the interview with Entrepreneur, he cites the following "mini-tips" as having also helped him succeed in his line of business:
• Service is still paramount, so empower your customer at all times;
• Beating the system is the key to creating your business niche;
• If you acquire things easily, you will likely also lose them easily;
• Price your products and services according to your market; and
• Be prepared to take a risk when needed.
Photos from Wikimedia Commons