From World War II until his death Getty was considered one of the richest men in the world, in this post I share his 10 winning formulas for business success. These rules were extracted from his legendary book “How to be Rich”, I have added footnotes to each of the rules to make it more relevant to our age and time. I hope you find this as useful as I did and make a commitment to apply these rules to your business.
Here are the rules;
1. Adequate knowledge of the business: Almost without exception, there is only one way to make a great deal of money in the business world-and that is in one’s own business. The man who wants to go into business for himself should choose a field which he knows and understands. Obviously, he can’t know everything there is to know from the very beginning, but he should not start until he has acquired a good, solid working knowledge of the business.
There’s no way one can run a business successfully without having adequate knowledge of the nitty gritty of the particular business he or she is venturing into. Take your time to learn as much as you can about the particular industry, market and peculiar characteristics of the prospective customers your product or service will serve. Also, make sure you have the necessary skills needed as the leader of the business. Remember, “time spent learning and planning is considered an investment in business and the knowledge eventually acquired is an asset and competitive advantage to the business.”
2. Commitment to the central purpose of a business: the businessman should never lose sight of the central aim of all business-to produce more and better goods or to provide more and better services to more people (customers) at lower cost.
In the words of Management Guru, Peter F. Drucker, to know what a business is, we have to start with its purpose. Its purpose must lie outside of the business itself. In fact, it must lie in society since business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. This then is achieved through the continuous production of more and better goods or the provision of more and better services to the society at lower cost. Because its purpose is to create a customer, the business enterprise has two-and only these two-basic functions: MARKETING and INNOVATION. It is not necessary for a business to grow BIGGER; but it is necessary that it constantly grows BETTER. A businessman or woman who runs a business that isn’t doing this should not hope to achieve any form of business success.
3. Financial management: a sense of thrift (economy) is essential for success in business. The businessman must discipline himself to practice economy wherever possible, in his personal life as well as his business affairs. “Make your money first – then THINK about spending it,” is the best mantra for the man who wishes to succeed!
There’s no way a business can be successfully managed without a good sense of money management on the part of the business owner. There must be a clear line of difference between ‘necessary expenses’ and ‘luxury expenses’. Always remember you’re not in business to satisfy your own personal desires, but to satisfy your customers’ desires consistently through the production of more and better goods or the provision of more and better services at lower cost. To do this, firstly, you must practice budgeting-a process of prioritizing necessary expenses essential to the survival and operational stability of the business. Secondly, negotiate everything! Always strive for a bargain no matter how small or intangible it may seem.
4. Seek continuous growth through necessary expansion: legitimate opportunities for expansion should never be overlooked or ignored. On the other hand, the businessman must always be on his guard against the temptation to over expand or launch expansion programs blindly, without sufficient justification and planning. Forced growth can be fatal to any business, new or old.
Every business like every child ultimately wants to grow; this is the natural inclination of every living entity. The alert businessman or woman would seek various ways through which the business can grow through expansions. There are a few strategies for business expansion such as; buying over other related businesses, licensing of products or services, selling of franchises, opening of more branches, creation of strategic alliances and the cheapest; network marketing. Adequate planning and research must be fully carried out before any of these strategies can be adopted. Any business which fails to grow through necessary expansion faces the risk of extinction!
5. You’re the BOSS, call the shots: a businessman must run his own business. He cannot expect his employees to think or do as well as he can. If they could, they would not be his employees. When “The Boss” delegates authority or responsibility, he must maintain close and constant supervision over the subordinates entrusted with it.
The great Inventor and entrepreneur, Henry Ford was once accused of being uneducated and rather than feel offended he posed a challenge telling his accusers to ask him any question whatsoever. With every question asked, Henry Ford simply called upon any of his workers who was qualified enough academically to answer the questions. On answering all the questions through his workers, his accusers claimed to have proved their allegations of Henry Ford’s illiteracy. Henry Ford smiling made a profound statement which will never go down in history; “I don’t bother to do the work anyone can do, I do the hardest work of all-thinking, which only a few men can do.” The few men who can think are those who become business owners employing those who cannot think but simply follow orders. Your key task as a businessman or woman lies in these words: directing human activities. And only those who know how to think can direct those who don’t think. To do this, you have to know a little about a lot (versatility) and employ those who know a lot about a few (specialization).