Small Business Revolution. Barry C. McCarthy
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have to raise prices or think of ways to trim inventory, menu items, or services offered, and other creative solutions.
Much of this book is a guide to helping you through the process of asking important questions and giving you options: it's thinking about these questions that allows you to get your bearings as a business. They involve where you are financially, what your products and services are, and how you stack up to your competition, among many other considerations.
In the course of filming many seasons of SBR, the Deluxe team has conducted literally hundreds of interviews with small businesses, and our team talks to millions of small businesses every month. We have never come across a business where the owner said: “I started the business because I was a business-school graduate and I wanted to put into practice the ideas I learned in the classroom.”
We think business schools are great and they can teach many valuable skills. I had the good fortune to graduate from one of the country's top business schools—Northwestern University's Kellogg Graduate School of Management. I am profoundly grateful for the privilege to learn at Kellogg, and for all the tools added to my kit. But having a world-class toolkit alone did not inspire me to start a business. People start businesses about something they care about, something where they can answer “why.”
The “why” almost universally is, at least in large part, about earning a living.
Behind the scenes at SBR: we met Jonas Janek in Season 3. Jonas and his business didn't make it on to the show, but he left a lasting impression as a small business owner who thought through these questions. Jonas and his wife, Andrea, live in Alton, Illinois, a bedroom community of St. Louis. They both enjoyed productive careers in big business for many years, but Jonas wanted to do his own thing. He wanted to open a business to do custom, high-end metal fabrication for any number of projects in the area.
A business executive, Jonas asked all the right questions. Yes, there was a market for what he wanted to do in a large urban area. Could he deliver products and services profitably? Yes, indeed he could. And how long before profitability? He worked all that out as well. Jonas was methodical and exacting. He bought the equipment he needed and hired skilled workers. Even through the pandemic, Jensen Fabrication thrived, and a lot of that had to do with the right questions Jonas asked and answered.
We have many medium and large businesses as customers of Deluxe. In fact, if you just focus on financial institutions, we have more than 4,000 of them as customers. Many small businesses are customers of our financial institution customers. This makes our customers' customer our customer too. That's why we love small businesses—it's where the proverbial rubber meets the road in America.
As a small-business owner, you are continually faced with the challenge of navigating the unknown:
Can I afford to hire another person?
How do I get more customers in the door without spending a ton of money (which I don't have) on advertising?
How can I possibly compete with the mega corporations that have moved into my territory?
And many more.
Your ability to pivot when new circumstances present themselves is as crucial as whatever skill you bring to the table with the products and services you offer.
Seeing the World as It Really Is
I come from a very long line of proud teachers. That's been the occupation of my mom, sister, mother-in-law, brother-in-law, several aunts, cousins, a niece and nephew, and an uncle too. I've met some of their students and I can confidently say that these and other teachers genuinely change lives for the better. Who's more noble than a math teacher who also is the basketball coach, and who takes a deep interest in teaching kids not just about school subjects or sports, but about life? The same is true for the drama teacher bringing students together to produce a show, or the music teacher producing a concert. In some cases, a teacher might be the only really positive role model in a kid's life. Teachers change lives.
Here's where seeing the world as it really is comes in: if you decide to be that teacher, then the job comes with certain realities—you may have quite a few weeks off in the summer, but you won't get rich. You can have this amazing impact on young people's lives, but don't get mad that you can't afford Paris every summer and can't have a Ferrari in the driveway, because that's not the reality of being a teacher. Teachers should be paid far more than they are, but unfortunately they aren't. If you choose that line of work, then make peace with its realities.
It's the same in business. Every business started as a small business. I started my career at Procter & Gamble. P&G was started by two guys who needed to make a living and decided to make soap and candles. P&G was founded 184 years ago and is now a global giant with more than $70 billion in revenue in 2020. Deluxe started similarly with a guy needing to provide for his family, and he invented the checkbook 106 years ago.
Not every business will turn into a P&G or Deluxe. In fact, the vast majority will stay small businesses, and sadly most will fail within five years.
You can make a fortune in business, of course, but so much depends on what you sell, where you sell it, and to whom. Not all business ideas, locations, and opportunities are the same. And that is more than okay. But as a business owner, it is essential you understand the realistic potential of your business and make peace with the opportunity at hand.
If you have a local product like a restaurant, then your maximum potential customer base is defined by driving distance from your restaurant. Similarly, if you sell a low-cost product, you may have a few buyers but you may need hundreds of buyers just to break even.
Our choices determine the trade-offs we must live with. Therefore, see your business potential as it really is, and not how you wish it to be; then decide if that's acceptable to you. Then make peace with your decision and get to work.
Here's the good news: you can think accurately and realistically about any business, and still find ways to grow most substantially. That's what this book is largely about. You just need to do it with your eyes open, and with as little wishful thinking as possible.
Four Crucial Decisions
If there's one thing that distinguishes small-business owners from lots of other people, it's how they must make tons of decisions without having the large staff and fancy reports that the big businesses can rely upon for support.
Let's talk about four of those many decisions—four that you always make, whether you realize it or not. How you decide will largely determine how successful you are in business. That's a bold statement, but it's based on our experience with businesses. So here goes:
Decision 1: Change Nothing or Decide to Change Something
This is the most fundamental decision for you to answer. On a daily basis we all have this decision to make about our business. Sometimes it's about mundane things like the front door to your store driving you crazy by slamming shut 100 times a day. However, it's not bad enough to do anything about it until something triggers you. It might be a customer within earshot, talking to another customer about how she so hates to be in your store for more than five minutes because of that door.
You live with something, or you decide to change it. Of course, the same is true about vitally important issues like “Will I raise my prices?” or “Should I give Bob one last chance about keeping the food temperatures in compliance so we're not shut down by the health department?”
You can continue on the course you're on, and probably get the results you've gotten. If your business is doing well, then more power to you. However, I suspect that you're reading this book because you want to find a way out of the hamster wheel that is draining all of your time and resources, and you're looking for a solution. If that is the case, then you've taken action by reading this book, and that's great. But the larger action