Essential business concepts everyone should know

“Anyone who owns a business today will be better off if they accept certain ‘truths’ about their business, and business in general.”

Anyone who owns a business today will be better off if they accept certain “truths” about their business, and business in general. Here are some thoughts:

  • An AEC firm – any business, for that matter – will only BE in business if it does something someone wants or needs and is willing to pay for. This is so fundamental, yet every day, I see business owners who forget this truth. They instead think about what they want to do. Or maybe even worse, they look at what everyone else is doing and are just another du jour service provider. That will work while demand exceeds supply. The moment supply catches up with demand, however, good bye!
  • Furthermore, every company has to be differentiated in some meaningful way – hopefully not just with pricing. Once the strategy degenerates to that of being the lowest cost provider for anything you do, quality and schedule will inevitably have to suffer. It is fundamentally unsustainable over the mid- to longer-term for just about any company, save the very largest in the business or one-person shows.
  • Owners are entitled to two different types of compensation. One is their weekly or monthly salary and other benefits they get for doing their job. The other is profit distributions and appreciation in equity that comes from their ownership. Both should be there in any entrepreneurial company.
  • No one HAS to work there. We no longer have indentured servants. Everyone has free will and the ability to go out and get another job or start their own business to make a living. The implications of this fact for firm owners is that they shouldn’t take anyone for granted and realize that employee morale is critical to their success.
  • People like to be kept informed. No one likes surprises. Best to build up to certain actions with lots of communication and information that makes your action a natural outcome. When there is little or no communication coming from management, employees will assume the worst.
  • Strategy is your basic philosophical approach to how you solve a problem or do a specific thing necessary to run the business. Sometimes, owners of firms that aren’t doing well want to make big changes to the strategy. While this may be necessary in some cases, in many more, my experience is that the problem lies not with the strategy but rather with the execution of it. In other words, strategy isn’t the problem. It is more of what is actually done (or not done) that is the problem.

Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

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Posted in Articles | February 11th, 2019 by