Small Business Basics
Rules for Success in Business

(Last updated: May 17, 2010)

Use this page to study my seven rules for success in a small, home-based business.

There are other rules that various experts have proclaimed as the way to achieve business success. But I believe my rules are better for first-time developers of a small business. These seven rules cover the main points and are easy to remember. However, regardless of what rules you follow, there is no guarantee of success.

Here are the topics:

Introduction to the rules
Rule 1: Exploit the source of all earned wealth
Rule 2: Use a systematic business development process
Rule 3: Conserve cash and use debt wisely
Rule 4: Acquire needed information and skills
Rule 5: Learn to face and resolve problems
Rule 6: Identify and perform all critical tasks
Rule 7: Know when to get help or change course

You can come back to this page whenever you encounter a problem with planning, starting, or running your small business.


IMPORTANT

Before using this information to start a business be sure to read the following notice: Disclaimer

Introduction to the rules

This page describes seven rules that can help you be a success in business. These guidelines will give you pointers in developing a business venture and help you stay out of trouble.

However, these rules cannot guarantee your success in business. Success depends on the conditions in the marketplace, your abilities and resources, and your willingness to do whatever is required.

These rules are very powerful. Most people who run a business work hard at it. But hard work isn't always the best way to achieve success. Efficiency experts like to say, "Work smart, not hard." The following guidelines will show you how to work smart.

Like most things that lead to success in life, you will have to exert some effort and may have to change some attitudes and habits to follow these rules. Will the rewards be worth it? That is for you to decide, my friend.

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Rule 1: Exploit the source of all earned wealth

The source of all earned wealth is the ability of a business firm to satisfy a demand in the marketplace at a profit.

Demand refers to a group of people or organizations that are willing to pay to have their particular set of needs and desires fulfilled. A business firm satisfies this demand by selling whatever is needed to fulfill these needs and desires at a price that the buyers can afford. A business firm makes a profit when its sales exceeds the total of its startup costs, costs of products sold, sales expenses, operating expenses, and other expenses.

Any particular set of desires and needs that you hopefully can satisfy at a profit is called an opportunity in the marketplace.

Here are the four keys to exploiting the source of all wealth.

  • Finding an opportunity in the marketplace
  • Starting a business to exploit this opportunity
  • Satisfying people's desires and needs at a price they can afford
  • Making a profit

You master these four keys by learning and doing. The other topics on this page and other pages in this website are meant to help you achieve this mastery. This can be an exciting adventure. However, any success or failure is entirely up to you.

Once you are able to exploit opportunities in the marketplace you won't have to rely on getting or keeping a job. You can make money by starting your own part-time or full-time business.

Insights

Regardless of the conditions in the economy, people will always have desires and needs they will pay to have satisfied. However, as conditions change people's desires and needs may change, as well as what they can afford to pay.

A small business may have an advantage over larger firms for certain opportunities that appear in the marketplace. This is so because a small business can be more flexible and quicker than a larger firm can. And it can deliver certain kinds of products (goods, services, or information) at a lower cost.

Procedures

Starting a small business will take a certain amount of time, effort, and resources. You may have to learn new attitudes, habits, information, and skills. You will have to accept a certain amount of risk, and there is no guarantee of success. However, this page and other pages in this website provide a great deal of information to help you.

So, should you try to start a business? This is a question you must answer yourself. Go to this topic on the Business Basics main page for my advice.

If you are happy in your present circumstances, then maybe you should leave well enough alone. If you aren't happy, then this website can help show you how to get started in your own business.

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Rule 2: Use a systematic business development process

When starting a business you should use a systematic business development process. This will ensure that all important steps are considered and that the ones chosen are followed in the proper sequence.

This process can help minimize the costs, efforts, and risks involved with starting a business. It also can help you develop the skills and self-confidence you need.

Insights

When you are caught up in the desire to start your own business you may want to just jump in and start doing things. This haste and lack of planning could lead to disaster. The business development process described in this topic helps you to slow down and consider what needs to be done. Also, it can prevent you from trying to start a business that has little chance for success.

It is human nature to use assumptions, expectations, guesstimates, and unverified beliefs as the basis for taking action. However, this may result in disappointments and failures.

For example, don't just assume that people will want whatever you decide to sell. Instead, do some research to make sure that people will purchase what you have chosen to offer. And don't just expect that your business will make a profit right away. Instead do some calculations to ensure that your business can make a profit under various sales volumes.

Procedures

Here is an overview of the business development process that I have assembled over the years:

Stage 1: Selecting a suitable idea -- Purpose of this stage is to select a business idea that meets your requirements and the needs and desires of prospective customers.

Stage 2: Preparing the groundwork -- Purpose of this stage is to complete an adequate amount of planning and advance preparations. This planning should limit the cash expenditures needed to start your business venture.

It is best to do most of the planning and decision-making during the quiet period before the business is started. During this activity, you can replace guesses and estimates with facts, informed decisions, and detailed plans.

Stage 3: Achieving the desired results -- Purpose of this stage is to get serious about your small business startup. The previous two stages were all about preparing paper work that incurred only some small expenses. Now that you have proved your business concept and your ability to get things done, the stakes will be higher.

Choosing your guidelines -- I have devised two versions of a systematic business development process. Both versions are intended for the development of a home-based business. Each version consists of 16 steps spread over the above three stages.

Here are the two versions of these guidelines.

Simplified guidelines -- This version has predefined most of the procedures for the 16 steps. Thus, you don't have to spend time deciding how to carry out the development process. This version is meant to be used with the services shown under the Start a Service Business main page

Go to the Business Plan for Simple Services page to see this version.

Detailed guidelines -- This version describes each of the 16 steps on its own page. It is meant for a more complicated type of home-based business. This website does not include any business ideas to be used with this version.

This version includes a go/no-go test at the end of each step to keep the business developer from trying to start a business that probably is not viable.

Go to the main page of the Small Business Startup section to begin reviewing this version.

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Rule 3: Conserve cash and use debt wisely

You need to maintain an adequate supply of cash and other resources to weather any unexpected setbacks. This also means to avoid going into debt unless it can be readily repaid.

By conserving cash and other resources and minimizing debt and risks, you are demonstrating that you are a responsible manager. Thus, you will have a better chance of obtaining loans from banks or other people.

This “nest egg” that you maintain also will allow you to take advantage of any new opportunities that you discover.

Insights

It is a common failing for people to spend money as soon as they receive it, or even before they receive it. This leaves them without any reserves for emergencies.

It takes special traits to start and run a business successfully. One of these traits is the ability to defer or avoid mundane pleasures. By mundane pleasures, I mean spending money for luxuries or nonessentials, and spending money that you haven’t earned yet.

Successful business people find pleasure in their achievements, such as increasing their personal empowerment. So one of the secrets to success in business is your ability to find pleasure in those things that lead to business success. Then you will automatically be drawn to doing the right things. Conserving cash and other resources, and minimizing debt, is one of those right things.

Procedures

When you are planning what you need to start and run a business remember this rule: spend money wisely and go into debt cautiously. Consider ways that you can do without something. Study the Bootstrap Methods page for ideas on saving cash.

Start with a small business that uses only your existing resources and skills. Then as you prove out the business concept, you will be in a position to expand.

Remember, the best use of cash, credit, and other resources are to expand a successful small business.

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Rule 4: Acquire needed information and skills

This rule shows how to acquire any information and skills you need to start and run a business. You probably will always need to acquire some information and skills before starting a small business. However, your first business should be fairly simple. Thus, it should not require much more information and skills than are described on this website.

Insights

Your fear of the unknown tends to restrict you to your comfort zone, even if you are not satisfied with your present circumstances. Your comfort zone defines your range of familiar actions. (These are the actions that you will be apt to engage in, regardless of whether they are appropriate at the time.) Successful people have learned to venture outside their comfort zone by acquiring new information and skills.

The best way to increase your comfort zone is gradually, one step at a time. As you continue to acquire more information and skills, you will become more proficient at running your business.

Procedures

The following two subtopics show how to put this rule into action.

Acquire any needed information -- The first place to look for useful information is within this website. This site can show you what to do and how to enhance your abilities. You can study whatever section seems to have what you need.

If needed, you can go to outside sources of information. For example, the Outside Information and Publications page can be very useful.

Regardless of what task you are undertaking, other people probably have performed a similar task and solved any problems encountered. One or more of these people probably have written how-to information about this. To find some of this written material, you can use a search engine on the Internet, a card index in a library, or the reference section of a library. If the task involves work around the house, you may be able to purchase a how-to manual at a building products store.

When researching a task, you might want answers to some of the following questions:

  • What requirements, restrictions, and desired results apply to this task?
  • What preparations are needed before starting on the main task?
  • Are there any guidelines, instructions, or other useful information available to show me how to do the task?
  • What equipment, materials, supplies, and other resources are required to complete the task?
  • Are there any reliable shortcuts that could make the task go faster?
  • Where can I go for advice if I need help to complete the task?

You may need some information about the marketplace, competitors, similar products, and your prospective customers.

Here are some sources for that type of information:

  • Business research sites on the Internet
  • Advertisements for comparable products
  • Trade journals and organizations
  • Business section of newspapers
  • The Wall Street Journal newspaper
  • Retired business people
  • Telephone surveys of competing firms
  • Interviews with potential customers

Acquire any needed skills -- Go to this topic on another page to download a free or low-cost version of my Magic Success Secrets ebook. Then you can study Chapter 10: Learn New Skills in this ebook.

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Rule 5: Learn to face and resolve problems

Anyone trying to plan, start, and run a business will usually encounter one or more problems. So the best course of action is to face this possibility and learn what to do about it. This means to accept that you have a problem and do whatever it takes to resolve it.

In some cases, you may need to acquire information and skills, as described in the previous topic. In other cases, you may have to change some of your attitudes, habits, or work methods.

Insights

I believe that it takes a person with special traits to start and run a small business successfully. One of these traits is the willingness to drop old methods that are no longer useful and adopt new methods that produce the desired results. Other traits are self-confidence and a "take charge" attitude.

You usually can improve your business performance by your willingness to make certain changes. These changes are spelled out in the following subtopic.

Procedures

The two following subtopics show you how to put this rule into effect.

Facing the problem -- If you have difficulty in facing problems, you may need to enhance your attitude and beliefs. You may need to develop self-confidence and a "take charge" attitude. In this case, I recommend that you study Chapter 7: Develop Empowering Beliefs of my Magic Success Secrets ebook.

Resolving the problem -- I have developed several methods for resolving problems. These methods have been a great help to me over the years. You can study them at Chapter 18: Resolve Any Problems in my Magic Success Secrets ebook.

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Rule 6: Identify and perform all critical tasks

When starting and running a business, there are certain activities that are essential for success. These activities are the building blocks that put the business on a solid foundation. Without this foundation, it will be very difficult to develop and operate a successful business.

Also, business owners who develop the skills needed to perform these activities are better able to handle any problems or unexpected situations that may come along.

Insights

Business developers may be tempted to avoid these activities because they can be difficult to perform. This is one of the main reasons why so many businesses fail or never get started. The solution is to study the Acquire needed information and skills topic above. You also may want to study my Magic Success Secrets ebook.

In trying to accomplish a particular objective, there usually are some tasks that are crucial to success, and other tasks that are only marginally helpful. The challenge then is to get all the crucial tasks done, and to spend as little time as possible on the non-crucial tasks.

However, people tend to do the things that they enjoy doing or that they know how to do. The crucial tasks tend to be things that are difficult to do or that people lack experience in doing. To be successful, you need to search out the crucial tasks and make sure that they are done.

Most of your business hours will be spent providing the product to the customer and running the day-to-day operations of the business. However, no matter how hard you work at these tasks, they cannot turn a mediocre business into a successful business. To be a success in business, you have to identify and implement the critical success factors for that business.

Procedures

There are critical tasks common to every business. The following lists contain those activities that I believe are most important to the success of starting and running a small business.

Critical tasks when starting a business –- These seven activities are essential to getting a business off to a good start.

  1. Selecting a suitable business idea
  2. Verifying all important assumptions and estimates
  3. Minimizing cost, effort, and risk
  4. Overcoming obstacles
  5. Satisfying all startup requirements
  6. Testing and perfecting the marketing strategy
  7. Rapidly earning a positive cash flow

Critical tasks when running a business – These seven activities are essential to maintaining a successful business.

  1. Getting customers
  2. Satisfying customers
  3. Making a profit
  4. Avoiding common problems
  5. Setting and meeting appropriate goals
  6. Maintaining all vital support needs
  7. Keeping up with new developments

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Rule 7: Know when to get help or change course

Sometimes you run into a problem that you can't seem to solve. After repeatedly coming to a dead end when trying to solve a problem, you should stop. At this point, you need to consider whether to get help or change course.

Getting help

There are several ways to get help with solving the problem. You can talk to people with more experience or knowledge about your situation. These people could be friends, relatives, coworkers, or retired business people. But don't expect them to solve your problem. All you want from them is to get you pointed in the right direction.

You could research the problem on the Internet. Your search terms could be "how to fix [describe your problem]." On the other hand, your search terms could just describe the situation itself. Let's say you want to know the governmental rules in your state for a certain business activity. Your search terms could be "rules for [business activity] in [name of state]."

Another way to get help with a problem might be to visit your local library. You could talk to the clerk in the reference section. You could look up the situation in the subject portion of the card catalog.

You might find help from business publications or organizations. You might want to subscribe to any trade publication for your business activity. Another possibility is to join the local Chamber of Commerce. The U.S. SBA (Small Business Association) has many publications and online articles that might be of help.

Changing course

Changing course refers to a more drastic solution to your problem. Thus, you might decide to change your business idea, enter a different marketplace, get more knowledge and skills, or even give up on starting a business.

If your current business idea is not suitable for your abilities, requirements, or resources then you probably should choose a more suitable idea. Don't let the desire to make a lot of money cloud your judgment about what is possible or suitable for you.

Perhaps your problem is trying to enter the wrong marketplace. The marketplace could be the local area where you live, or the broader market of the Internet, for example. You need to research whatever marketplace you will use. Normally you can tell from the existing advertisements how to appeal to the needs and desires of customers.

Quite often when people try to start a business for the first time they lack skills in how to start and run a small business. Therefore, you may have to spend time educating yourself before trying to start a business. This website has many resources to help you develop the knowledge and skills needed. I recommend that you review this entire website before trying to start a business.

The last recourse is to give up on starting a business, at least for the time being. As mentioned above, you may need to spend time developing the needed knowledge and skills first. On the other hand, it may be that you lack the resources needed to start a business. Thus, you may have to accumulate some cash first.

These following two main pages can help you accumulate the cash you need to start a business:

Earn Extra Cash
Reduce Living Expenses

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