3 Laws of Business Success
There are certain laws of the universe that are working whether you know about them or not. They may even determine some of your success in business and life. Below are just 3 of the business laws to consider for success…
Law #1: The Law of Purpose
The purpose of a business is to create and keep a customer.
Many people think that the purpose of a business is to make a profit. However, while that may be the purpose of the individual who starts of invests in the business, a business is really a separate entity that has a purpose of its own, and the business owners need to be passionate about their business. In fact, a good way to assess the purpose for the existence of a business is to imagine that the owners of the business had to appear in from of a tribunal each year and justify getting permission for the business to carry on. You will see immediately that “making a profit” would not be enough of a reason for the enterprise to justify it continued existence.
The first corollary of the Law of Purpose is…
Profits are a measure of how well the company is fulfilling its purpose.
You can tell that customer creation is the primary purpose of a business by simply observing that the majority of the time and attention of the most important people in any successful company is focused on the creation and keeping of customers. The level of sales and profitability that the company enjoys is the result or measure of how well the organization, and everyone in the organization, contributes toward the achievement of that purpose.
The second corollary of the Law of Purpose in business is…
Profits are a cost of doing business, the cost of the future.
Many people are confused about the role of profit. Some of them feel that profit, or even the pursuit of profit, is somehow associated with “greed.” The fact is that profits are good. It is profits that pay for everything. It is profits that pay for wages and development, and all the many constructive things that a company can do when it is serving its customers well.
The opposite of profit is loss. Where there are losses, there are reductions in economic activity, fewer jobs, and often the collapse of the enterprise. Where there are continuous losses in a business, there is no future for the people who work there. Anyone who is opposed to profit making is therefore opposed to the future of the people who depend upon that business for their livelihood. These people cannot have a future where there are no profits.
Some people feel that profits are too high. Over an eighty-year period, however, from 1920 to 2000, the largest companies in America have averaged annual after-tax profits of approximately 5 percent a year. Of the total expenditures of more companies, less the costs of raw materials for manufacture or good for resale, almost 85 percent of all costs are wages, salaries, and bonuses. Wherever a country, or even a part of a country, has lots of profitable companies, it usually has lots of well-paying jobs and great opportunities for the people working at those jobs.
How you can apply this law immediately:
1. Look for opportunities to make your company more successful. Your ability to impact the profitability of your company is the critical determinant of your long-term success. Do you know the price and profit of your enterprise? What are your most profitable products? Where do you have an influence on the money coming into the company?
2. Identify the areas where you can help create and keep new customers. Look for opportunities to develop and promote new products and services. Find ways to build greater loyalty among your existing customers. Do something every day that increases your company’s ability to create and keep customers.
Law #2: The Law of Organization
A business organization is a group of people brought together for the common purpose of creating and keeping customers.
A business organization begins to form when the tasks that must be done to create and satisfy customers become too great for a single person. The founders must specialize and focus on the essential jobs that only they can do and delegate those jobs that can be done by others. New positions are then created, and new activities are undertaken. The company expands its capacity to serve its customers. This growth process continues as long as the increase in people continues to increase the number of customers who are satisfied by that organization.
How you can apply the law immediately:
1. Determine your primary output responsibility, defined in terms of how you contribute to the company’s ability to serve customers.
2. Identify how your job is changing within your organization. Determine the changes you will have to make in your knowledge, skills, and activities to remain valuable, if not indispensable, to your company. Make a plan today to increase your ability to contribute to the critical results that determine your company’s success.
Law #3: The Law of Innovation
All breakthroughs in business come from innovation, from offering something better, cheaper, faster, newer, or more efficient in the current marketplace.
In Peter Drucker’s book Innovation and Entrepreneurship, he discusses the seven major sources of innovation in business. He explains several ideas you can use to make innovation a way of life, both for yourself and for your business.
The two major sources of innovation, according to Drucker, are unexpected success and unexpected failure. In the case of either, you must carefully analyze what happened to determine if a potential breakthrough has occurred.
The “tip of the iceberg” theory of critical thinking is especially helpful in examining successes, failures, or any unexpected events. Is this a single event, or is it the tip of an iceberg? Could this be the beginning of a trend, indicating a major shift in the marketplace? Many great business breakthroughs occur as the result of recognizing a trend in the market and then moviong before anyone else to take advantage of it or, conversely, recognizing a trend away from your product or service and moving to minimize your exposure and develop other products or services while you still have time.
Perhaps the most significant trend of our age is the movement toward personal computers and the Internet. When the first personal computer was develo9ped, IBM did its own research on the future of this product. IBM consultants came to the conclusion that the total world market for personal computers was only 300 or 400 units per year. The company decided to stick to the main frames. Today, more than 50 million personal computers are sold each year, and mainframes have become secondary to the computer revolution. IBM ignored the tip of the iceberg!
How You Can Apply this Law Immediately:
1. Identify and analyze the trends in your business. Where are sales growing or declining? What are you customers telling you they want more of? Less of? What should you be getting into or out of?
2. Admire your successful competitors! Where and how are your most successful competitors achieving the greatest sales and profitability? What are they doing that you could learn from and improve upon?
3. Analyze your biggest success and failures of the previous year. What valuable lessons do they contain that you can use to your best advantage in the months and years ahead? Remember that all great success is preceded by failure, and every failure contains valuable lessons you can learn from. What are yours?
Recession Proof Your Business
To learn more of the laws of business success, as well as many more tools and techniques to beat the current economy–join me for my new emergency Teleseminar titled, “Recession Proof Your Business.” It is taking place on June 25th, 2009 at 2pm PST. Limited lines available so if you are interested in learning to survive and thrive in this economy, learn how by clicking here.
*What did you learn? Leave me a comment!
About Brian Tracy — Brian is recognized as the top sales training and personal success authority in the world today. He has authored more than 60 books and has produced more than 500 audio and video learning programs on sales, management, business success and personal development, including worldwide bestseller The Psychology of Achievement. Brian's goal is to help you achieve your personal and business goals faster and easier than you ever imagined. You can follow him on Twitter, Facebook, Pinterest, Linkedin and Youtube.