State of the business owner
Key Findings from a study of over 800 small to medium sized businesses in early 2012.
(Data supplied by E-Myth & Synotac)
The Planner and the Pessimist
Business owners were starkly divided into two groups:
1. The Planner
Planners believe they control their destiny and are busy navigating towards their vision for the future of their business.
- Have a coherent vision of the future
- Regularly track business metrics
- Have concrete plans to move towards their business vision
- Are innovative with technology
2. The Pessimist
Pessimists believe the future is dictated by external events beyond their control that limit them from creating the life they want.
- Do not have a vision for their company in the future
- Have few or no formal plans for making progress towards this vision
- Do not regularly consult metrics to track business progress
Businesses that were owned by Planners:
- Grew faster in 2011
- Had higher annual revenues
- Were more optimistic about 2012
- The owners took home more compensation
The three keys that helped companies grow
1. Fundamentals
We found that businesses that thrived in 2011 followed a simple formula:
Vision + Plans + Data = Success
- Only 42% of all businesses had a written description of what they want their business to look like in the future
- The greater the extent of revenue planning, the more successful businesses were in 2011 and the more optimistic they were about 2012
- 65% track business metrics at least monthly
- 66% use their P & L and Balance Sheet to make decisions
- 43% quantify their lead generation efforts
- 39% monitor web traffic regularly
- Businesses that tracked business metrics monthly were 80% larger and earned 60% more than their peers
- Businesses that use financial statements to make decisions were 45% larger and earned 60% more than their peers
2. Accelerators
Once you have the fundamentals in place, there were two primary areas we found that could be used to accelerate your progress towards your vision:
- Technology
- Marketing
When asked about the biggest trend affecting their business in the next three years, business owners consistently cited technology and the internet as drivers for change in their businesses, good and bad.
- Before a prospect arrives 41% of businesses monitor their reputation online by observing what their customers and employees are saying
- 80% negative information online has made me change my mind about purchasing a product or service
- 87% positive information online has reinforced my decision to purchase a product or service
- After referrals, websites were the only type of marketing rated highly effective by more than half of the respondents
- 65% have defined the key characteristics of their target market
- 35% have a marketing plan that they revisit at least quarterly to evaluate results
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Businesses that monitor their lead generation and website analytics outperformed those that didn’t:
- They grew 20% faster in 2011
- They are twice as optimistic about 2012
- They generated 30% more revenue overall
- They took home 20% more compensation
3. People
There were two major groups inside of your business that determined success:
- Your employees
- YOU (business owner)
Key factors in retaining top employees:
- Recognition
- Professional growth opportunities
- Clear expectations
- Trust and autonomy
- Fair compensation
Only 30% of all businesses had results-oriented role descriptions for all their employees
Business Owners:
- Business owners with a partner outperformed those without a partner in every area measured
- Business owners who had a relationship-driven model took home substantially more compensation than transactional companies
Vision + Plans + Data = Success
Like to find out more about building your own recipe for success?
