Richard B. Sanford launched eleven successful small enterprises over a 40+ year career in Small Business.
He joined the show recently to talk about how he accomplished this and his new book: SUCCESS BY DESIGN: How to Create Ever-Increasing Income, Profit & Wealth in the World of Small Business.
You can listen here.
In his book, Richard compiled what principles, steps, tip and practices brought him this success over 40 years. His book shows the reader how to think and use "SIMPLIFIED STRATEGIC BUSINESS PLANNING" to generate ever increasing income, profits and wealth in the world of small business.
I very much enjoyed this book for its real world, do-it-now, approach to achieving success in the world of small business. That world, he reminds, is the world that creates new jobs. That world seems a bit dismal given our current economy. And this book can turn that around and our economy around.
Mr. Sanford. Thank you for being on the show.
You’re welcome, Zane. And, please call me ‘Dick’. I answer to that better than Mr.
Thank you for writing a great book.
Oh, you’re welcome. It was a pleasure to write.
I found it well-organized, well-written and eminently doable. You know it’s really more of a manual which is what I think small business needs.
I tend to call it a ‘handbook’.
Now who were you writing this book for? Describe the person that needs to read your book, where do they sit in an organization, what are their fears?
There are two audiences. First audience would be for a budding entrepreneur who is considering a startup small business and they have a dream in their head. And they really haven’t had any training or experience to guide them to come up with a good strategic plan for creating and building the business.
The 2nd audience are for those entrepreneurs who have survived the 1-3 year obstacle course you have to go through to become a success. Now, they’re looking to grow and expand their business. And here again, lacking strategic planning tools that’s not taught in high schools for small business and not taught in MBA programs...they’re all aimed at big business.
The tools needed in big business aren’t available to small business people - meaning a large staff of researchers and strategic planners and data banks and consumer analysis reports. Strategic planning in small business is done in the head of the entrepreneur with very limited resources and no real plan to guide them in doing so.
Somewhere in the back of my mind is a question, for probably another whole show, about the lack of strategic planning skills taught in high schools. I always think of strategic planning in many respects as the ability to organize an idea and lay out a plan and then be able to communicate it. That skill is not taught in our high schools says a lot of what our future holds for us.
Right on. Depending on who you listen to, 70-80% of all new business startups fail by the end of the first year. What a waste of resource and capital and energy!
Again, the purpose of my book is to increase the chance of success of those startup rates.
Now let’s talk a bit more about the purpose of your writing this book. As I was preparing for this show, I looked at your background and what stood out was 40 years in business, 11 successful startups. And I’m thinking you’ve probably got grandkids, you’re probably living somewhere warm and sunny in a relaxed setting. And here you are writing a book and a very good one.
You’re right on all of it and I even have my first great grandchild.
Yeah, you’re right. I’m in Arizona this morning, got up early, did my homework and prepared my mind for this show. I’ve been looking forward to it.
I watch so many people. I came out of a very poor family from an industrial workforce. And I watch so many of them lust for age 65 so they could drink all the beer they could drink and sit in front of a TV and die. That was not my idea of a rewarding retirement.
It’s fun to read, to think. It’s fun to create. It keeps you alive and vital. So, numbers of associates have told me:
“You can't fade out of this life and leave behind this model that you’ve pushed on to us and forced us to comply with to create successes. And you’ve gotta share it.”
In some respects, this book is a startup. What is your strategy for reaching that goal?
Very simple. I use the same model I use with all my businesses. I take it step by step and I’m underway.
Right now, I’ve identified the markets I want to reach and I’ve identified the methods in which I need to brand myself in the public domain before I start selling to those markets. So, it’s working. And evidenced by your wonderful invitation to talk about my book and my model on your radio blog. It’s a compliment.
I turn the compliment back to you. Thank you for being on the show. I‘ve looked forward to talking with you ever since I read your book.
And most small businesses start with a business plan. But you write that a strategic business plan is better than a business plan. What's the difference between the two and why's the former better than the latter?
Well, when I left big business and became an entrepreneur I’ve got some assets. I had some savings and some capital. So, I went to the bank and said I’d like some capital to start a business. And they said:
“Well, you need a business plan.”
And I said:
“ Oh, ok. What’s that look like?”
And they said:
“ Well, talk to your accountant.”
And what happened in retrospect was I had this dream in my mind about the business I wanted to create and launch. I told this dream, I described this dream, to my accountant and he replicated it with numbers. So, in other words, he took my dreams which were imaginations and he converted it into numbers and a business plan and the bank said:
“Oh, great! Great business plan. And we’ll loan you some capital.”
That is not a strategic plan. I hadn’t done research and analysis of the market - the products and markets I would provide - the space I would need and the business values I would applkly to a startup and running a business.
And as I progressed, I said:
“Gee. I need a strategic plan. I’m flopping all over the place, running around, do this do that.”
So, I went to the library, to the college. And said:
“Ok. Where are the books on strategic planning?”
And discovered that all of them, all of them, were written for big business. And all of the said:
“Here’s what you do. Do this. Do that. Do this. Do that.”
And none of them told me how to do it.
And that is true today. I search in libraries and I search in libraries and anything to do with strategic planning, without exception, they say “here’s what you do” and they never tell you how to do it.
So, I said to myself:
"How do I modify strategic planning for big business scale, modify this and simplify this for entrepreneurs?"
And over the years I developed my model called Success by Design.
The first step in creating a strategic business planning is defining the mission of the business. You write that there's only one mission for every business. You advise the reader to bookmark that chapter until he understands this. What is that central mission for all businesses?
First of all, I would invest if possible in American corporations and buy stock and look at their annual reports. They used to all have a mission. Today they disguise it.
And the mission was wonderful. They were flowery and told what they were going to do to change the world, benefit humanity.
Pretty soon, I got to thinking:
" That is not the purpose of a profit-making business."
There is only one mission that meets my definition. And that is for every profit-making business is to create ever increasing income and profit and wealth. Failure to do that, the business self-destructs. And big ones, big businesses are doing it every day. They lose their focus about why they were created and to whom they are accountable for their performance.
And all the good things that happen in business and our economy are a result of a profit-making business. And profit-making comes from ever-increasing income. Just for the purposes of inflation, if you don’t increase your business income 3-5% then you’re falling behind!
So, their missions...they don’t understand, apparently that that is their obligation to their shareholders, to their employees. What kind of employment is it in a business that is losing money. They’re heading for the failure circle, not the winner’s circle.
That’s the only legitimate mission I use.
Now, in my book I describe some reasons that businesses don’t want to lay that out because there’s a certain element in our society that has demonized profit-making which is kind of ridiculous. Because all of the good things in our economy, in the life of consumers comes from companies who create profit and invest it back in their employees, invest it back in their communities.
We’re the greatest charity giving entity in the world. I wonder where people think that comes from. You think that comes from a business that loses money? Not so.
That’s the mission that I use. But I give them some latitude. As you mention, I ask them to book-mark in my book and if they can come up with a better one, then use that mission.
Has anyone come up with a better one that they’ve shared with you?
Never have, Zane. When they start to think about it....that’s like saying
“Gee, I’m going to make society better by losing money. That’s my mission.”
When they speak it out, it’s very obvious what it should be.
Hand in hand or should I say step by step, comes this next step. And that’s the step of creating your purpose. What's the difference between a company's purpose and its mission?
The company’s purpose is what you will do to be beneficial to society and to customers and clients. It’s what you will do that will generate profit. That becomes specific as to the profit, the product, the markets, etc. And what business are you going to be in and how are you going to conduct that business.
So, that’s the description about how to think about creating a purpose. That’s chapter two in my book.
Listening to you, you’re so clear, you’re so crisp, it makes me wonder if there’s not some sorta mental malaise in our business leaders that they are not able to differentiate between the two or are afraid to differentiate between the two.
True. I discussed that in the purposes as well. Businesses today are demonized for making a profit which is ridiculous because all good things come from making profits. They don’t come from loss or failure.
So, they hide it. They use generally a purpose as a substitute for a mission. I don’t have any problem with that. If you want to hide the mission, that’s ok. I did when I created descriptive promotional and sales material for my business I did not lay my mission out for that to attract the detractors. So, I put the purpose out - how we’re going to benefit society and consumers, our clients.
I did the same thing as big business. When you’re being demonized for your mission no sense in adding fuel to the fires so you publish your purpose.
But, if I were sitting on the board of directors for a major corporation I could tell ya the first thing I would say is:
" Is this company making a profit? Or are you heading for the loser’s circle. And exactly what are you doing about it. From income comes profit, so what are you doing to control expenses and not waste our income. Convert it into profit and from profit creates wealth."
We share it with our investors. We share it with our communities. If you go out and just walk around the community and look at all the good things that happen from just the profit-making companies, it’s incredible.
As I’m thinking, and I didn’t have this question as part of the list we’re going to go over, and this might be a personal observation. I think people have no problems with companies making tons of profit, take Apple, when they’re bringing value to their lives, solving a problem, making their lives better.
All you have to do is to talk with your friends and ask them what kind of computer do you use. Is it ok? Should I buy it? And they’ll say yeah! Is it ok for Dell to make profit? Well, what isn’t ok to make profits?
These detractors...well, they’re never asked the question:
Do you like the jeans you’re wearing?
Is that a good product?
Is it ok for them to make a profit and stay in business?
And they’ll say:
"Oh, it’s those other giant big corporations, mystical...they’re terrible, they’re attitude."
It’s a lack of education from grade school on. We don’t teach enterprise. We don’t teach free enterprise. We don’t teach strategic planning.
Part Two of this conversation will be published Monday, November 21.
Part Three of this conversation will be published Tuesday, November 22.