A very happy new year, and welcome to the January 2020 edition of our Small Business Advice - designed to provide you with food for thought.
Find a quiet corner, grab a coffee, and make time to take stock and contemplate. Our aim is to provide enough varied content to be able to think differently about your business, to look to the future, and to generate some of your best ideas.
This month: Harnessing your biases, the joy of coming second, and taking money out of the equation.
WRITING YOUR OWN FUTURE
Whilst this keynote speech from Neil Gaiman is about writing - and building a successful career as an author – the advice is incredibly relevant to starting and running a business. Here are just a few of my favourites:
Small Business Advice
Not knowing what you are doing is a strength, not a weakness. When you are starting out, you don’t know what is impossible so you will try out more ideas – and this is how breakthroughs happen.
Try to maintain this early innocence by forcing yourself to never rule out an idea at the outset because you think it will never work – give everything a chance.
Small Business Advice
The problems of success can be harder to deal with than the problems of failure, because they are so unexpected.
Circumstances will change as your business grows and evolves, and you need to stay ahead of the game. You need to be able to say no more often. Make sure you have a way to evaluate each opportunity properly to make sure you are saying no to the right things.
Filter out the things that are not core to your business or your skills – and work out a way to establish which things should be done by someone else and which things should not be done at all.
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The one thing that you have that no one else has is you – your story and your vision for the business. Make sure you focus on doing the stuff that only you can do in the way that only you can do it.
Make your business unique by playing to your strengths.
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Take the time to let go and enjoy the ride every now and again.
I MAY BE BIASED, BUT...
If you read our monthly tips often, you’ll know that Morgan Housel has featured a few times thanks to his original insight. Here he is again uncovering some biases that can actually be beneficial to you in business:
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Enjoyment Bias. Make sure you actively enjoy your business and all it brings with it, because anything that feels too much like a chore will eventually be abandoned.
This is true for the business as a whole and the myriad tasks involved with running it, so make sure you divide out those tasks to the people who enjoy them the most – and that includes you.
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Historical Discounting. When evaluating a decision, or forecasting the future, it is important to give more weight to the recent past.
Look at all of the history, but weight your analysis towards the most recent results as these are the ones that were influenced by the factors most likely to still be in play today.
THE SECOND MOUSE GETS THE CHEESE
A lengthy academic paper here on the rewards for publishing first in a scientific journal – fortunately the key insights are all in the Abstract at the beginning.
This is fascinating because it goes against one of the most common business mantras of first mover advantage.
The study finds that the impact of publishing first is not a “winner takes all” effect, and if the person in second place already has a good reputation then the impact is even smaller.
Small Business Advice
When setting your strategy, don’t assume that you need to be first to everything. Instead, carefully evaluate those instances where you need to aim for first and those where you can afford to take a more considered approach.
Achieving the right balance will yield a much more effective plan with a higher likelihood of success.
EMBRACE BEING AN OUTSIDER
This article is a little unstructured, but you can get everything you need from the last couple of paragraphs.
In essence, it is looking at whether financial incentives are needed primarily to overcome certain social incentives that hold people back – such as the fear of standing out or being wrong.
Small Business Advice
In order to be successful, you have to be prepared to stand outside the norm and you have to be prepared to be seen to fail every now and then.
Taking controlled risks and operating in an unpopular space is how progress is made. By definition your innovative idea will lie outside the mainstream, so embrace it and go hunting.
WHAT STREAMS ARE MADE OF
A fascinating exercise in how to look at value – and pricing – in the digital world.
As the author himself notes, it is only semi-scientific but that’s to miss the point. The point is that everything can be expressed in terms of the cost of something else. Currency only exists to smooth the process of trade and facilitate staggered bartering, but it can blind us to the true value of something. If you only ever think of the monetary aspect, then you will make some sub-optimal decisions.
Context is everything – and framing decisions by couching them in something tangible can really help focus your mind. In this case, the very real number of streams required even to earn minimum wage is a real eye-opener.
Small Business Advice
Identify the most appropriate resource(s) to measure your decisions in and make sure you factor it in.
When setting your prices, ALWAYS ensure you reflect the value of your service rather than deciding on an arbitrary number.
When evaluating costs and investments, always consider the opportunity cost of what you CAN’T invest in as a result.
ONE SIZE DOESN'T FIT ALL
More woes in the ongoing struggles of M&S. Given the scale of the problems there was never going to be a quick fix, but the reason cited here for the poor clothing performance should ring alarm bells.
If any evidence were needed about the importance of planning - and of using data insight to support everything - it’s the fact that M&S ran out of popular clothing sizes. It’s highly possible that they also ended up with excess stock in the other sizes.
This is a classic example of not matching supply with demand - and while it may be hard to do precisely, it is essential to get as close as you can.
Small Business Advice
Getting your demand forecast wrong is a double whammy – losing out on sales and ending up with unnecessary waste. This is why starting every decision with a deep look at your data is essential.
It is always possible to find clues hidden in the data that should guide your production decisions.
It’s part science and part art, but investing to get this right will repay you several times over.
TAKING THE BISCUIT
Find out what happened when we sat down to chat with Paul Rostand of the Great British Biscotti Company. Packed with insight and advice, on everything from the importance of quality to the state of the high street.
This interview is highly recommended for anyone interested in hearing about the challenges and opportunities in running a business.
If you’d like to benefit from a sounding board for these - or any other - ideas for your business, why not contact Corner Finance at info@cornerfinance.co.uk or visit us at www.cornerfinance.co.uk
