November 26, 2014

Top Five Secrets of Small Business Success

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Do you have an accountant, attorney or board of advisors? Do you keep them within your inner circle and rely on them to help run your business?

If you don’t, then maybe you should.

I had the chance recently to view some research data from Six Disciplines Corporation about what makes the most successful small businesses. That research, which polled leaders of businesses with between 10 and 100 employees, found that the best performing small businesses have five attributes in common:

  • a strong leadership team
  • the ability to attract and retain quality people
  • a disciplined approach to their business
  • the ability to strategically use technology
  • the wise use of trusted outside providers

The best-performing businesses rated more than 100% better on these attributes, than their lower-performing cousins, as this chart shows:

Five Secrets of High Performing Organizations

The top two attributes are not surprising. Management gurus and business executives alike probably would agree that the quality of the people in a business makes a huge difference between success and failure, or even success and mediocrity.But it’s the fifth attribute that’s one of the most interesting. The CEOs in the top 25% performing organizations attribute their high performance to relying on trusted outside providers such as accountants, attorneys, and board advisors.

I formerly worked for the CEO of a NYSE-listed company who often would say, “I feel naked without an in-house attorney.” I used to think he was an anomaly. I chalked it up to the fact that he was one of the founding executives of Lexis, the legal research company, and had spent most of his career with lawyers even though he himself was not one.

But I’ve since observed that the better the executive or business owner understands the complexities facing the business, the more he or she tends to rely on advisors. Maybe it’s because they know enough to “know what they don’t know.” So they seek out specialists they trust. This research seems to bear that out.

Six Disciplines has a white paper outlining the research along with tips on how to use it to run your business better, called the “Five Secrets of High Performing Organizations”:

 

Many thanks to Dale and Skip at Six Disciplines for sharing this research.

7 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

7 Reactions

  1. Interesting results. I would agree that the willingness of companies to outsource specific functions allows small business owners to focus on what they truly enjoy (and in turn sets them apart from competitors). An increasing number of small businesses are also turning to outside providers for sales and support functions, a trend that should serve to improve the number and quality of outsourced solutions.

  2. I am a little bit surprised. Though I understand that these are important prerequisites, I would like to think that a good foundation on effective marketing ( how to market and sell yourself and your products and the proper positioning) would be essential.

    Also strong financial knowledge. I know so many businesses who make the wrong pricing, or make the wrong bets simply because of inadequate knowledge on financial matters, or simply an inability to properly forecast and control cash flow.

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