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Hierarchy of Business Needs

By January 24, 2015 No Comments

I have developed a Hierarchy of Business Needs:

1.) Don’t Fail

2.) Become profitable – Yes. You can be unprofitable and not fail.

3.) Hit Your Goals

The Great Game of Business is one of three books that I recommend to all of my clients, seminar attendees, and blog followers. I have probably recommended it to over 15,000 people worldwide.

Interestingly enough, the reason I am writing this post is because I would like to be considered for a speaker’s spot at the upcoming Great Game of Business Conference. The way I was introduced to this speaking opportunity was pure serendipity. I was speaking to a group in Springfield, MO, I mentioned during my talk that I strongly recommend reading The Great Game of Business, and I was approached after my talk by a great guy who works for The Great Game of Business organization.

Simply put, The Great Game of business is on my list of “must reads for CEOs,” because it embodies my Hierarchy of Business Needs.

First, The Great Game of Business teaches that people want to succeed (perhaps equally as important they don’t want to fail). Second, it teaches that the road to success (and avoiding failure) is through profitability. Finally, The Great Game of Business teaches that openness and transparency are the sure fire way to motivate people to help them achieve their goals. When workers achieve their goals they help Managers achieve their goals, and when Managers are achieving their goals, it is most likely that business owners will be achieving their goals.

My experience with the Great Game of Business was immediate. In my first reading nearly 7 years ago, I had just come out of a bad “partner” situation where I had been stolen from. I was bitter and angry and not open to sharing. I felt that I needed to find a way to manage people better. The problem is that I was looking for a way to manage from fear.

Thankfully, I picked up The Great Game of Business. I immediately connected with the openness, and honesty of profitability is simple and elegant. It is what I wanted to be, and what I wanted my Company to be. I did not want to be angry, and I did not want to feel like I had to fight to win. It gave me comfort that most people are good and want to win, and I immediately implemented open-book management at my Company. Today, that “open-book” management continues with monthly “open-book” meetings and a financial report by the CEO to the employees.

After I implemented these programs internally, I looked to help other small business owners. However, I would find a significant disconnect. My findings show that only 1 in 20 small businesses (less than $50 million in revenue) has accurate financial statements.

Worse than inaccuracy, today’s small business failure rates (11% per year according to the Brookings Institute) are an American tragedy. According to a 2013 study by the University of Tennessee, the number one cause for business failure in this country is given as “a lack of cash.” However, the “lack of cash” is only the final symptom of a terminally ill patient.

The lack of foresight might be a better culprit for small business failure. Perhaps, a lack of sustainable profits is another. What cannot be blamed (in most cases) is a lack of motivation or a significant lack of intellect. That leaves us with very few options. On the one hand, small business failure could be blamed on outside, macro-economic events that triggered the unavoidable death of the business.

While this theory may be popular in recessionary times, it is unavoidably a scapegoat. If the economy were to blame, all businesses in a specific industry would be wiped out during a recession. For example, you would expect that all housing companies would have been eliminated between 2007 and 2010. But, that did not happen. In fact, some (the best run) housing companies survived and a few even turned a profit.

The engine of our economy is the small business innovation engine. Yet, the abdominally high failure rate of small business is causing at least 25 million people each year to uproot their family and search for new employment. The stress caused by these job losses and the resulting from these failures are largely avoidable through education.

The problem is solvable by educating the business community on the principles and lessons of The Great Game of Business and mandating accurate accounting.

 

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