How do I get past the Hunter/Gatherer Stage of Business?

Blakeman

A few weeks ago, Danielle Keister, founder of the Virtual Assistance
Chamber of Commerce, posted the question "How many small business owners are running everything themselves?"

I think she asked one of the key questions of small business.  I`ll ask
it a different way using the entire history of man (in one short
paragraph).

For thousands of years we were hunter/gatherers, which took up all our
productive time.  Along came farming and instantly 20% of the community
could now do something completely unrelated to bringing home the
bacon.  Today less than 2% of us are focused on farming and virtually
none on hunting/gathering (except by choice).  The other 98% of us are
free to choose how to invest our time in "higher" pursuits and things
we love doing rather than hunting/gathering and farming.

The Mexican government coined the phrase "The Green Revolution" in 1948
to describe the process of planting 90% in proven
seed/fertilizer/watering techniques and the other 10% as a test
ground.  Eventually we all learned how to increase our yield per acre.

Two questions -
1) What percentage of small businesses do you think are Hunter/Gatherers?
2) How do we increase our yield per hour so we can get from survival
(hunting/gathering) through success (farming) to significance (ability
to choose how to invest our time)?

steve

Can you elaborate on what a hunter / gatherer business looks like? The same for the others?

Are you talking about the owners doing menial tasks?

Blakeman

Great Q - For me, a hunter/gather business is spending most of its time on survival - shooting everything that moves and eating anything it can pick, because tomorrow is too uncertain not to - tomorrow is not in the planning.  There is little or no discretion as to who they do business with, and have never thought about high-cost customers vs. low-cost customers.   It would also be owner-dependent.  If the hunter/gathering takes two weeks off he starves to death.   I know some small business that net $10 million a year but have never moved past H/G because the owner is too critical to the day-to-day and can`t be gone for 2-3 weeks or the whole thing comes tumbling down.A "farming" business has figured out how to get more predictable revenue from less time than hunting/gathering, either by dropping high-touch customers and courting more low-touch ones, or by hiring people to work IN the business doing the day-to-day operations while they spend more time working ON the business - planning, improving processes, systemizing, etc.  The ideal farming scenario has the owner doing as little day-to-day as possible, free to take vacations both physically and mentally at any time.The "significant business" to me is one where the owner is spending so little time farming that they now can work solely on whatever their long-term plan for the business would be - succession by an employee or relative, selling it, involvement in charities, mentoring, being a "green" business, having a positive measurable impact in the community, etc.  At this stage I think the owner is free to truly choose how to invest their time.If that clarifies, I`m curious as to what percentage of small businesses are in the H/G, farming, and/or significance stage, and how they are increasing their "yield per hour" to get to the next one.

jellynet

I would say only a few companies actually work on the strategic level and not the day to day operations level.  (of course I am talking about small businesses here)  A lot of medium and larger businesses will have more strategy due to specialization etc.   I believe that each has its own advantages and disadvantages though.

inactivemember2

Just my 2 cents - you hire a capable assistant! You`d be surprised how much they can free you up!
 
 

Blakeman

I`m not sure the question changes.  If the owner can`t go on vacation without having a significantly negative impact on their business, it`s in survival mode.  Interesting side-note on technology.  The advent of the desktop computer was supposed to reduce the workload of the employee significantly - all the research shows the workload increased significantly.  Not a surprise - we also spend significantly more time washing clothes since the advent of the washing machine then we did when we washed them by hand.  All technology does is speed up the processes and create more expectations for more and faster production.  Savvy companies buy their employees laptops to take home because research shows they spend 10-20% more time working than those with only desktops.Back to hunting/gathering.  if the owner of the small internet business can`t take two weeks off, it`s in survival mode and will "starve" if the owner isn`t out their hunting/gathering.  Just guessing here, but I`d say 80%+ small businesses are stuck in survival mode, having accepted the notion that this is the way its supposed to be if you own a small business (or in this case, the business owns you).

steve

Being self-employed is similar to being an employee. You`re trading
time for hours and if you`re not working, you`re not making money. I
learned that lesson when I was laid up in the hospital for nearly a
week. Almost lost it all as a result of not having a system to run my
business. Took me one time to learn.It wasn`t until I read some of Robert Kiyosaki`s Rich Dad Poor Dad books that I learned that being self-employed is not the same as being in business. In Cashflow Quadrants he says:

An "S*" owns a job, a "B*" owns a system and then hires competent people to run the system.


* S = self-employed, B = business owner



That was an eye opener for me. Up till that point all my ventures were
built around me. Everything is different this time. Our business plan
involves hiring competent people to run the system. For me the fact
that our bakery is 2 1/2 hours from our house was a selling point (and
we don`t plan to move any time soon).

Have just started reading The E-Myth Revisited. Sounds like he`s headed down the same road. Looks like a good read.

steve

However, many entrepreneurs perceive their product as totally unique, never-before seen in the history of the universe.

I`d suggest that an important bit of information for any entrepreneur
to take to heart is that no matter how much they want to believe their
business is totally unique, it probably isn`t. In SOME way, that
business or product is "like" some other, well-established business
that`s been going on for a very long time.It`s
the perception many entrepreneurs have that competition is bad that
drives them to do something completely "new". Competition is good; it
means there`s a viable market out there. Also, if the market can`t
support one more entrant then you need to look at another business to
get into.

Blakeman

I wish I knew where I got this, but I`ve heard research confirms that at least 70-80% of all business activity is identical to every business out there.  Anecdotally I can certainly support that - planning, systemizing, hiring, training, managing, sales, marketing, acquiring, retaining, accounting, benefits, structure, processes, culture, etc.  These business concepts and many more apply to every business.Bottom line - the purpose of EVERY business is a) to acquire and b) to retain customers.  There is no other purpose of a business except for the owner himself, which is to create the desired lifestyle for themself and their family/SOs.  There`s an awful lot we all share in common even if the product or service itself seems very unique.

steve

Couldn`t agree more. That`s why something like StartupNation works so well for so many different people in different businesses.

Blakeman

Very practical wisdom, Cartess.   Most businesses can figure out a way to farm in such a way as to increase their yield per acre, or yield per hour - by focusing on customers that make you more money in less time.- by hiring or outsourcing the $6-$20.00 per hour jobs, leaving time to focus on jobs others really can`t do (whether its client acquisition, networking, process development, etc) - that will increase your overall yield per hour.- by changing/improving processes- by changing marketing strategies (small businesses waste huge amounts of money trying to mimic big business marketing)- by dropping some product lines that cost more money to manage then they bring in.- and a bunch of others depending on the business itself.One of the toughest humps to get over is moving from survival mode, where the owner is indispensable, to success mode.  It seems that the same "take-a-risk" entrepreneurial spirit that moved somebody to mortage their future to get into business disappears when they think about hiring someone to do the day-to-day tasks so they can actually grow the business.  You always make less money up front because you`re now paying someone else - but there`s a lot more money to be made focusing on the big picture.

iouone2

excellent post CraigL.

Blakeman

Craig,Great thoughts, thanks.  Some smart/important guy came up with the "acquire and retain customers" statement - I just stole it (I think Da Vinci said the best artists are just the best plagiarists?   ).   But the "Exchanging a product for a value" statement
is not inclusive enough for me as a purpose for business because it doesn`t address profit, customer satisfaction, and a number of other things.  (If I don`t have a product or service, I can`t acquire customers, so it`s a given in my statement.) I can "exchange a product for a value" and go out of business quickly because my value wasn`t high enough or I treated customers or employees badly, had lousy processes, awful suppliers, etc.   Whereas the "retain" part of the "acquire and retain customers" requires that I sell at a profit, treat my customers and employees well, plan for the future, etc - all so that I can be around to retain the customers I acquired by exchanging the product.    For me it`s much more inclusive.  I haven`t found a business it doesn`t apply to.Re: building a great product (or service) - this only makes it easier to acquire and retain customers - you can actually do it quite well with a bad one, so I can`t see that a product`s worth or quality is the single most important factor that make`s or breaks a company.   It`s just a really important factor (maybe #3 behind acquire and retain?).It seems to me that "exchanging a product (or service) for a value" describes very well what businesses do - maybe the key activity, but for me "acquiring and retaining customers" helps me sum up the purpose of a business more inclusively.

Blakeman

Works for me!