A Job Description for the Business Owner

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A Job Description for the Business Owner
Александр Александрович Высоцкий

What is the difference between the duties of a business owner and the duties of a senior executive in a company? If you are a business owner, you probably have already asked yourself this question. But at the same time you may have never seen a complete, detailed, step-by-step description of all the basic duties of a business owner of a typical company.

Acknowledgements

This book could not have been written without the support of the employees and partners of Visotsky Consulting, Inc. They are incredibly dedicated to their work and are committed to helping business owners. I want to express special thanks to the business owners who graduated from our Business Owners Program. Many of the ideas for this book came from my conversations with them.

Introduction

One might consider this book to be quite unusual. It is not about how to start a business, or how to earn millions. And it is not for those who dream only about creating their own businesses. Instead, the target reader for this book is someone who has already created his or her own business and continues to participate in the daily activities of the company.

Those who have founded their own businesses often fall into the trap of being too involved in or personally performing the day-to-day operations of the enterprise, only to find they cannot escape—sometimes for a lifetime. They set up companies to achieve their dreams, yet years later they feel like hamsters spinning on a wheel. To some extent, any founder of a company knows that his or her main purpose is not to solve daily operational issues personally. They understand that in focusing on strategic matters, they will be able to contribute much more to the business than by simply making sales or managing technical issues. There is a reason why most small to medium-size business owners cannot escape the daily grind and thus continue to be more like clerks at a grocery store, never “growing out of their first pair of pants.” One might say they become victims of their own success.

People like to continue doing the things about which they feel competent. That makes sense. Success is usually based on a high level of competence, and that includes knowledge, skills, and experience. New companies are created by enthusiasts, the experts in their fields, and it takes years and considerable effort to achieve that high level of excellence in anything. Real pleasure and comfort come only when such competence is acknowledged and results in a loyal client and customer base, an increase in revenues, and public recognition of the brand. It's very rewarding to receive well-deserved recognition. This natural to want to enjoy one’s success, but therein lies the trap: There is no desire to change anything fundamentally.

In order for a company founder to rise above day-to-day operational activities, it is necessary to think and act in a completely new way. This means leaving one’s familiar comfort zone and going beyond one’s current levels of confidence and competence for a period of time. The first step is to figure out in which direction to move, and why. In order to be able to delegate operational management to a top-level executive and become one’s own business strategist, it is first necessary to understand what the job is all about.

This book describes the real job of a company owner as a professional activity with certain very precise responsibilities. My intention is to define these responsibilities in a practical and cogent way, since they are actually really simple by nature. While reading this book, you will likely find that you have already been carrying out many of these duties of a business owner intuitively and that all the progress you have made with your business has, in one way or another, been linked to the fact that you have acted in a correct manner. If this were not true, then only graduates of specialized business schools could create successful businesses, and that is not the case. The only difference between a professional approach and an intuitive one is that the professional clearly understands what he or she did right, and what was done incorrectly. Being informed allows for a conscious use of the experience.

I am sure that after reading this book you will have a clearer understanding of the most important duties of a business owner and will be able to do your job in a more informed way. This will give you the opportunity to place operational management into reliable hands and elevate your company to a whole new level.

Chapter 1. The Business Owner’s Role

Why do some companies grow large, their names and products familiar to everyone, while others just barely survive, lingering for years on the edge of bankruptcy? For example how was Apple able to create a cult, a fashion, an emotional commitment for its premium-priced products (before 1994, when the iPod and iPhone were not on the market) in a highly competitive market offering products at lower prices? How did they do it? And why is McDonald’s so successful? Its restaurants are considered an essential part of any civilized place in the world despite constant criticism by nutrition experts and challenges from competitors. It can be assumed that the reason for success is some amazing product that is available on the market and is so attractive to customers that it guarantees the company a bright future. The product is important, but obviously there is something more to it. There are plenty of successful restaurants with delicious food and good service that are not as renowned as McDonald’s. Likewise, there are many technological devices, but few are as well recognized as those created by Apple.

You might never have heard of the McDonald brothers’ restaurant if one day Ray Kroc, salesman and co-owner of a small company manufacturing mixers for public catering, had not seen a line of customers at the only McDonald’s restaurant and gotten excited about the idea of opening a chain of these restaurants based on the same model. Interestingly, Kroc was not the first to franchise the restaurant’s operations. The McDonald brothers had been selling franchises for a while without much success. That is why they readily agreed to let Kroc take over the franchise sales.

The point here is that behind every truly successful enterprise there is always a determined individual who is loyal to his own ideals and ready to go all the way. And when such a person is also a very skilled manager, his company achieves unbelievable results. While both the competitive business environment and good market conditions are certainly important, neither are able to create a business masterpiece. Behind every masterpiece, there is always an individual at the top who strategizes everything.

The formation of groups is one of the oldest human endeavors. The history of mankind includes a number of civilizations, but no single civilization could have existed without its founders and leaders. Nowadays, when developed countries choose democracy, this political system seems to enable a group of people to create something worthwhile on their own. But after a more thorough evaluation, it becomes apparent that no single group has achieved considerable success unless that success was purposefully and persistently pursued by the leader of the group. The modern kingdom of corporations, brands, and corporate management creates an illusion that some kind of collective intelligence is responsible for building a successful enterprise. But the fact remains that behind every tremendous success is a talented leader who is loyal to his ideals. Mankind admires this kind of person and remembers his or her name. However, for some strange reason, people try to imitate the external demonstration of success while ignoring its very basis. They focus on the what, but give too little consideration to the why.

Two Types of Business Owners

In coming to understand the true role of a business owner, it is important to be aware of the two most common types of owners. The ancient works of Indian literature known as the Vedas help give us a way to describe them. Vedic religious traditions, including various characters and philosophic concepts, became a part of such religious and philosophical systems as Brahmanism, Hinduism, Jainism, and Buddhism, all of which were based on the Vedas. The Vedas are a source of socioeconomic and cultural information about ancient Indian history.

According to the Vedas, every person achieves his own level of spiritual development and has the traits and abilities inherent to someone at that level. Ancient Indians called these social levels varnas. The Vedas maintained that during his lifetime a person progresses up the levels while forming and developing particular personality characteristics. A person on the highest stage of spiritual personality development is called a Brahmin. Scientists, artists, and religious figures fall into this category. The stage below Brahmin is called Kshatriya. Kings, military commanders, leaders, and all people who devote their lives to service achieve this stage. Then there is the Vaishya stage, mostly represented by merchants and craftsmen. Those at the Vaishya stage can create groups as well, but due to their particular traits, they are fundamentally different from the Kshatriya. The Kshatriya serve their own group and have the group’s benefit as their main goal. In contrast, someone at the Vaishya stage needs a group to achieve his own personal success and enrichment. I am not claiming that this classification is very scientific, but it seems to be an apt way to assess different types of leadership. If you study various companies carefully, you will find that particular aspirations and traits inherent to the Kshatriya and the Vaishya are dominant in certain business owners.

A group’s achievements depend on its leader. And it is quite valuable to know that any group has a much greater chance of becoming successful if a Kshatriya is the leader, rather than a Vaishya. In contemporary terms, it can be said that a group whose leader does not have a genuine desire to ensure the prosperity of the entire group will never be truly successful. This is not based on conjecture, but on empirical evidence.

In Shanghai, I met the founder, owner, and manager (all one individual) of the B&Y Marketing Agency. At the time, B&Y employed twenty-five people who produced wonderful TV commercials and outdoor advertisements, in addition to designing shopping malls. For the previous few years, the company had stalled out and its yearly revenues had remained at about $1.5 million. I was interested in the discrepancy between the company’s high-quality products and its lack of growth, given China’s rapid economic development. During my conversation with the owner, I found that his main motive when starting the company was to provide an affluent lifestyle for himself and his family. This business owner was a perfect example of a highly qualified professional Vaishya who was trying to surround himself with assistants just to produce a quality product and enrich himself. It quickly became apparent to me that unless he changed his viewpoint about the way to run his business, his company would never advance.

In 1995, my friends and I started the MacCenter Company in Ukraine. We specialized in selling and servicing Apple computers, and for several years I was the CEO and chairman of the board of directors. Even though the company was relatively small, it was highly professional. Now when I look back, I see that the main reason I founded the company was my personal desire to have a well-paid job that I liked doing.

Like many other enterprises, our company started from nothing. We renovated the office ourselves, tried to get our hands on some affordable office equipment, and had to come up with various schemes to get our first orders. For the first few months, we had to take part-time jobs as security guards because we did not have enough money to pay our staff. We even took turns spending nights at the office, cleaning it, and working as chauffeurs, couriers and porters. At the time, we were not even an authorized Apple reseller and service provider. But we were able to buy a shipment of Macintosh computers from an authorized dealer and, functioning as an intermediary, resell them to another authorized dealer. Our profit from the transactions consisted of two computers, which represented the main “capital” of our company. When we became authorized resellers, our first customers included some Western organizations like Motorola, the U.S. Peace Corps, and USAID, which were just opening offices in Ukraine. We were selling computers to offices and publishing houses, and by the end of our first year, we were the number one reseller in Ukraine. This was the height of our success. We were able to hire a sufficient number of personnel, and we had loyal customers and stable revenues. This was a time when the market was increasing steadily and the opportunities were almost limitless.

However, at the time the company was founded, my partners and I had the motives of a Vaishya—each of us was thinking of increasing personal wealth. That is why, upon achieving some success, the company stopped growing. At the time, I did not realize why that had happened. After operating for three years, I noticed that our competitors had surpassed us, and that it was important for us to expand. But in all of my attempts to reform the company, I encountered resistance from my cofounders. My partners held key executive positions, and as they were satisfied with the company's current level of performance, I was unable to pass my ideas on to them. Neither the other company owners nor I actually understood our functions, nor the tools for growth that were at our disposal. Eventually, after my attempts to turn the situation around were defeated, I left the company. I departed with my chin held high and made a promise to myself: There is no way in hell I will ever have business partners again. In that moment, I had not yet realized that it was my own incompetence that was the reason for my failure. One could say that the inner, adventurous Kshatriya had awakened in me, but my own incompetence had led me to defeat.

Since then, I’ve had many conversations with various company owners and have come to the conclusion that only a small number of them start out as Kshatriyas. Modern culture, at best, aims to raise obedient and hardworking executors, rather than develop leaders. Characteristically, a leader is fanatically loyal to his goals and persistent in their achievement. In his book, Grinding It Out: The Making of McDonald’s,[1 - Another book about McDonald’s I suggest all business owners read is McDonald’s: Behind the Arches, by John F. Love (New York: Bantam Books, 1986).] Ray Kroc wrote:

Press On: Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.

Yet when children are raised in a civilized society, the first thing they learn is to follow the rules. While doing so may make children socially comfortable, it also often suppresses their leadership traits. A child wants to play, but he is forced to go to bed; he wants to get on top of the dresser and jump onto the bed, but his parents don’t encourage such acrobatics. Of course, you should not let your children do whatever they want whenever they want—after all, your job is to keep them from harm. But keep in mind that all the behavioral rules imposed by the society, while nurturing, also tend to destroy leadership abilities.

My daughter attended a children’s group at a music school, and during one class I noticed a girl who was behaving like a robot. She did everything the instructor asked her to without showing any initiative. Frankly speaking, I felt sorry for her. I realized that this little three-year-old girl had already abandoned all hope of having a say in what happened in the world around her. At the end of class, her mother arrived—the nicest woman in every respect—and, with pleasure, took a seat next to her daughter and started helping the instructor. The way she treated her daughter shocked me. When her daughter dropped a toy she was playing with, she timidly reached out to pick it up. Before she could even finish doing so, her mother told her, “Don’t pick it up. Keep playing.” When the girl started playing with a different toy, her mother immediately responded by saying, “Dear, pick up your toys!” And when the girl hesitated a little again, her mother instantly gave her a new instruction: “Sweetie, go dance with the other kids.” Thank God she didn’t control her daughter’s breathing—it is probably the only reason the girl is still alive! After watching this, my only wish was that the instructor would keep this woman far away from my daughter and the rest of the kids.

It is amazing to me that people raised in a “civilized” and conformist society still aspire to achieve anything. In my opinion, the desire to achieve is the reason many business owners, while in the process of growing their business, go through an evolving set of goals. Starting with the desire to provide themselves and their families with comfortable living conditions, they eventually discover the desire to achieve something more. I am no exception. Having started a business to create a source of income and opportunities for professional growth, I, too, eventually realized that I wanted to create a really big business game. For whatever reason, it seems that many of us first need to see that we are capable in order to become inspired to create something really worthwhile. From the moment we are born, the world tries to convince us that the only way anybody can become a somebody is by following the rules and being controlled by someone else. It is therefore vital that you come to realize your inner abilities in order to achieve something truly worthwhile.

Take, for example, people who enter the business world right out of school and start successful companies; they all share the same trait. Before going into business, they became experienced and comfortable at managing teams. It's really that simple. A student gets experience as a class president, a member of a student committee, or a project leader; and when the business world becomes accessible, she or he already has a basic understanding of the rules of the game. She knows people need well-defined and achievable goals. She knows people’s activities need to be coordinated, and she also knows a great secret: If you tell a person that something needs to be done and that person supports the group’s goal, he will do his best to make it happen.

Steve Jobs is an inspiring example of such a group leader. His subordinates claimed that he asked for the impossible—that his standards were too high, and that it was technically impossible to make his dreams come true. The engineers thought Jobs was crazy when he asked them to place the Macintosh LC inside a beautiful but tiny case. When Jobs came up with his legendary Macintosh Classic, he was told that nobody needed such a computer. Jobs pushed his employees to work eighty hours a week and did everything possible to help bring his ideas to fruition. He was so difficult to work with that in 1985 the shareholders decided to oust him. As a protest, Jobs sold all of his shares and started other projects. A series of strategically important mistakes for Apple while under the leadership of a CEO who knew about increasing profits but who operated far from the ideology of the company followed, until Jobs returned in 1996 to rescue a failing company.

In most cases, we need to go through a transformation that helps us realize our abilities, talents, and leadership potential. In fact, a person begins to feel the desire to become stronger than others only when he feels strong enough himself, becomes aware of himself as an individual, and recognizes his talents. That is why when we first start a business and build a team of like-minded people, we experience self-doubt and lack confidence in our abilities. The better our results are, and the more strongly we become convinced of our own abilities, the more evident is the desire to do things that will enhance the lives of other people. Therefore, in building a business, generating some revenues, and building a small team, we get confirmation of our own strength and gain the motivation to grow. So in the business owner is born a Kshatriya.

Chapter 2. The First Step to Competency

There is a god I am ready to pray to: the god of competency. Competence is a mixture of knowledge, practical abilities, and creative goals. If one of these elements is lacking, competence does not exist. One can tell whether a person is competent simply by looking at the results of what he has undertaken. If a man is a competent husband and father, his family thrives, his wife is happy, and he is proud of his kids’ achievements. If a business owner is competent, his company prospers and grows larger without any headaches. If you are interested in knowing just how competent you are as a business owner, look at your results in this area. If you are always busy with urgent problems, if the company drains your energy and time, then you will never have harmonious operations and growth. Therefore you are currently not competent as a business owner.

You could argue that your company works just fine—better than many others do—and that people even have good reason to be jealous of your achievements. But do not fool yourself. Quite simply, we all have different standards. It doesn't matter what others dream about or what their level of competency is. If instead of working on strategic planning you work on day-to-day problems, and the company’s expansion only creates an extra workload for you, then you are not a competent business owner. You may be very good at day-to-day things, but you are not a competent business owner. If you are starting to realize that this is how things are for you, congratulations! You have taken the first step on the path to competence. The first step to competence—although not the easiest—is to admit that there are things you do not understand and that you lack the needed skills and experience. One must admit to a problem before it can be fixed. If a person does not take this step, he will forever be stuck in the mind-set of a know-it-all.

As the result of a merger between two manufacturing companies in 2000, I became a co-owner and CEO of the Geroldmaster Manufacturing Company.[2 - Geroldmaster, LLC is a company in Kiev that designs and manufactures souvenirs and medals for various government ministries and agencies, social organizations, and corporations. It also produces military medals. The medals are designed by experienced artists. After a sketch is approved, computer 3-D simulation is done. Complex elements of the medals—portraits, garlands, and the like—are fashioned by sculptors, after which the sculpted models are scanned on a three-dimensional scanner.] Although at first the company was not the most experienced and well-equipped, by 2004 it had left all of its competitors behind, thanks to the implementation of the management tools discussed in this book. I had no choice but to start this implementation. As the company's production volume had grown larger, the organizational chaos had torn my company apart. Interestingly enough, in spite of all our problems, we were manufacturing the best products. This saved us from alienating and losing customers, even though we were consistently behind schedule.

Once the company was functioning smoothly, I left the CEO position to focus on the owner’s role. I started conducting outside seminars on management, during which I explained in detail the organizational know-how that had allowed us to become industry leaders. To my surprise, I found that none of the owners of Geroldmaster’s competitors attended my seminars, even though I consistently invited them. It was just unbelievable! Within a few years, Geroldmaster had become the established leader in its field. It was the youngest, most audacious company on the market, with the highest-priced products, which, like a tank, had rolled over the medal-design and -manufacturing industry, making products for government ministries and agencies, the military, and major corporations, as well as for a variety of social and religious organizations. Even though the owners of the competing companies knew that I was providing the answer to the question “How did Geroldmaster do it?” they still did not attend my seminars. They were stuck in an “I know it all” attitude.

When a person is stuck in such a mindset, he has tons of excuses as to why the situation should be exactly as lousy as it is. If you talk with him and ask what the problem is, why things are the way they are, the excuse is “the market conditions,” or “We don’t have any experts,” or some other made-up nonsense. But the truth is, that business owner is simply afraid to face the real situation, because upon facing it, he will have to do something that he has probably never done before. He is like a bad driver who blames other drivers, bad road conditions, and the weather. A man with problems in his personal life will tell you what is wrong with modern women and society in general. They simply do not have enough courage to look and see things as they really are.

In order to get rid of this “know it all” attitude, either you need to establish very important goals for yourself, or receive a good kick in the butt. An owner may realize that the results of his hard work are just a weak shadow of the results he desires, or he may find the day-to-day problems become too overwhelming. It is those in the latter group, who want to resolve day-to-day issues, not just cope with them, who most often seek our consulting help.

I wish I could brag that I got out of the “I know it all” attitude thanks to having important goals, but in truth, it was my clients who helped me with this. In 2002, the business was expanding, and as a result we had an almost completely uncontrollable company. Nearly 80 percent of our medal-manufacturing orders were overdue. Since most of our customers were military or government entities, my tenure as CEO was plagued by unpleasant adventures. My workday started and ended with dealing with unhappy customers. There was no way we could even think about strategic planning—I felt as if bullets were whizzing over my head. These unhappy customers were my miraculous kick in the butt. With my feeble attempts to fix things, it took a few months before I realized I had no idea how to run a growing company. That period was a turning point for me. I started looking for answers as to what I should do to make the company more manageable so that I, as the owner, could focus on strategic planning, rather than on fixing small issues.

Unfortunately, not enough literature is available on how well-known companies have handled times like these. The subject of management tools is considered too boring, and often too difficult for most people to comprehend. You can, however, find information on how a particular product was created or how successful manufacturing and retailing companies were started. Interestingly, every prosperous company has its particular management tools, but the general public does not know when and how they were implemented. The reason for this is simple: Only people at the very top of companies are interested in this topic, and their number is limited.

Since you are reading this book, either your goals or your problems have already given you a push, and you are looking for answers to questions related to a business owner’s role, as well as to the management of a company. In the following chapters, I will discuss the functions of a Kshatriya in a business, as well as how the business owner’s role differs from that of a manager.

Chapter 3. The Main Goal and Purpose

The widely known concept of a company mission statement is an essential component of management. It should be noted that this concept can be applied to any group of people, and even to a single person. Various management books give different definitions of the mission statement concept; however, my most precise understanding of it came from studying L. Ron Hubbard’s works, particularly the Administrative Scale of a group described in the article “Basic Management Tools.”[3 - L. Ron Hubbard, “Basic Management Tools”, in The Management Series, Vol. 2 (Los Angeles: Bridge Publications, 2001), 304.] In the article, he stated that any organization must have an exact and clear main goal and purpose. An effective mission statement is comprised of two parts: the main goal and the purpose. I will discuss this further.

First, however, I want to share my thoughts about Hubbard. I first became acquainted with L. Ron Hubbard’s works on management in 1999, and I was surprised to find that in his articles and books he described a set of practical principles that clarifies the foundation for successful management of an organization. The application of these principles in my business yielded excellent results, which enabled us to achieve a new level of expansion for my companies. From 1951 to 1986, Hubbard wrote more than 2,500 articles on various aspects of management, ranging from such topics as rules regarding the relationship between the owner and top executives to the development of marketing strategy and brand positioning. Most of these articles have been published in the nine-volumes The Organization Executive Course. In his articles, Hubbard revealed the laws of “classical management,” and he published many noteworthy discoveries in the field of management. To my surprise, these works are not yet widely publicized and few people in the business community have heard about Ron Hubbard as a management expert.

The Main Goal

For the purpose of this discussion, the term goal here is not used as more commonly is, as a physical, measurable, achievable thing. What is being discussed here is the main goal, which is the basis for the ideology of a company, something that makes sense for a group’s existence.

During a trip to Novosibirsk, I asked an owner of a construction company, “What is the main goal of your company?” Without any hesitation, he replied, “We work so citizens can admire and be proud of modern Novosibirsk buildings.” His answer surprised and delighted me, since I had gotten used to the state of confusion this question usually triggers. This answer might seem counterintuitive, given that people usually conduct business in order to make a profit. However, the fact is that the main goal of the most popular, successful companies is targeted to benefit a great number of people. It is usually included in the mission statement. For example:

Apple: “To make a contribution to the world by making tools for the mind that advance humankind.”

Google: “to organize the world’s information and make it universally accessible and useful.”

Microsoft: “to enable people and businesses throughout the world to realize their full potential.”

McDonald’s: “providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.”

It might seem a little strange for people to start businesses if they benefit not just the founders but other people as well. Of course, we all have personal goals in life, things we try to achieve. It can be creative expression, achieving personal comfort, or establishing high living standards for one’s family. No matter what your job is, personal goals are equally relevant to a middle manager and to a business owner. One may be dreaming about a sports car, while the other may dream about professional acknowledgment or glory. As a rule the more a person has suffered defeat in the struggle to achieve his goals, the less his desire to achieve goals, and the fewer his personal goals.

When a business owner creates a main goal that does not go beyond his company, but stays “inside,” the company will not be able to expand and overcome obstacles. It is like trying to climb a mountain while having a goal of chatting with friends, or trying to lead an army while having a goal of looking good in a uniform. Of course, this is as silly as it sounds. That is the reason why a main goal “to become number one” inspires only an employee who has self-identification issues, for it is vitally important to such an individual to stand out from the crowd, and being an employee of a number-one company is a way of achieving this. But what does this have to do with the main goal of the group? Such a goal would be boring to people with high self-esteem who want to achieve big goals. It doesn't mean that “becoming number one” is a bad goal; it just cannot be the main goal. It is a good mid-level goal on the way to achieving something more. It is impossible to expand your influence without breaking out of your shell, working only in perfect comfort and coziness inside. I will discuss mid-level goals at greater length in chapter 12.

The main goal is relatively simple, as truth is simple. Fools are fools only because they cannot accept the truth as it is. Therefore, to perceive something closer to the truth, such people need to add some form of complexity. Only then will they look at the complexity, wrinkle their brows, and discuss it. For example, when somebody says that his personal goal is, “to increase people’s abilities,” others might ask, “What for? What is the sense?” The silliness of these questions is that the goal, on its own, is the basis for the sense. There is no clearer sense than this for the basis of the goal. What is the sense in climbing mountains, or what is the sense of competing in a contest, other than reaching the summit or triumphing in competition? Do not look for any clearer sense to a main goal than the intention to achieve that goal.