The Wisdom Of An Australian Insolvency Expert And The 10 Things You Need To Run A Successful Business

Australia team celebrate winning in Hockey5s Men’s Gold Medal Match on day eleven of the 2014 Summer Youth Olympic Games at in Nanjing, China. (Photo by Feng Li/Getty Images)

Here are the brutal statistics: Management failure is the chief cause of business failures in Australia and 82% of them are small firms with 20 or less employees.

Insolvency expert Michael Jones sees a lot of personal hardship, emotional pain and family tragedy when he’s called in to deal with a failing business.

He sees people trying to make a living from a business, putting themselves through stress and heartache and working long hours with little reward.

Over three decades he’s build up a list of attributes you need to run a successful business.

“What is good management?” he says.

“At the end of the day it comes down to the person, the personality, what kind of people they are and what their mind sets are.”

Jones first started looking at what was common to the people whose businesses had failed.

Then he turned that around and looked at what would be the opposite personality drivers.

Michael Jones

“I’ve been dining out on this for 20 years,” he says

“You don’t learn this at management school.”

Her are the 10 Ps of Success, according to Michael Jones:

Positive Thinking

The ability to see the outcome and absolutely believe in your own ability to achieve it, really believe deep down in your own spirit.

“If you don’t have that you are never going to be successful in any business,” Michael Jones says.

“If you open a business thinking you are going to fail then you are going to fail.

“However, positive thinking isn’t wishful thinking which is usually unachievable. Positive thinking is a positive belief that you’re going to do it.”

Practicality

Successful people tend to be practical people.

The smartest kid in the class, with all As, the Dux of the school, doesn’t necessarily go on to have a stellar business career.

And sometimes toward the bottom of the class there is a guy who goes on to make millions, employs hundreds of people, gets to drive the Ferrari and travels the world.

“I see it in every day life,” he says. “And the ingredient seems to be practicality.

“In small business you need to have the ability to solve big problems in a simple, straightforward practical way. Sometimes it’s a gift and sometimes it’s common sense.”

Preparation

Think of the Commonwealth games and how much effort the athletes put into winning a gold medal.

“In business there is one fundamental point and that is the business plan,” he says.

“And the most important ingredient in a business plan is the budget.

“The accountants I talk to say their clients think their fees are too high to pay them for a business plan.

“I say to them: ‘Wait till they see the liquidator’s fee’.”

In any business a written budget is essential.

“It can be relatively simple, saying what your revenue is going to be and what your expenses are,” he says.

“But the vast majority of businesses just don’t have it.”

Priorities

Work out what is important and what is not.

And deal with important things first and devote time to the important things.

“Essentially it’s just time management,” he says. “Basic skills in managing time.”

Presentation

When Michael Jones goes into businesses which have failed, he usually finds they look like a war zone.

“It looks a dreadful, a bloody mess, physically” he says. “And even when the businesses are operating they just didn’t look too good.”

Early in his career Jones would see farmers who were getting into trouble.

One of the stock agents told him: “I can tell you when a farmer is successful or not as soon as I walk through his front gate. If you have to lift and drag that front gate to get in then he’s a lousy farmer. But if the front gate swings beautifully I can guarantee that bloke knows what he’s doing.”

As a boy, working in the fruit and veg section of Woolworths, Jones would stack the apples up and give them a dust and shine.

“When we had shiny apples, they would just walk out the door,” he says. “If we didn’t have shiny apples they would it there all day.”

What presentation doesn’t mean is looking like a millionaire.

“They’ve got to have the fastest, fanciest car,” he says. “I can’t tell you the number of bankrupts we look after who have a Mercedes Benz or a BMW on lease. That’s not what I mean by presentation.”

Perseverance

Don’t give up. Keep going

Perspiration

This means hard work.

“Running a small business is a bloody lot of hours of hard work and there’s no substitute for it,” he says

“Anyone who tells you that starting a small business is sitting on clover is heading for failure.

“I called it P for perspiration and if you don’t understand that you’re going to go broke.”

Perception

Spreadsheets are good but you can’t run a business like a robot.

“To run a business you need a bit more than textbook management style,” he says.

“The message is to get out and about,” he says.

“You get all sorts of messages about your market, about your staff, about the various stakeholders, just by basically walking about. It’s subtle information coming through to the brain simply by being out there and being tuned into it.”

He says it’s also about how the rest of the world perceives the business.

“Think of the word Hoover,” he says.

“My mother used to hoover the floor. The brand name became the product.”

And perception can also destroy the business with a negative view.

“What you have to do is not allow anybody a negative view of your business,” he says.

“If anyone even makes a joking negative reference to your business you’ve got to thump them down and you’ve got to educate them and re-educate them.

“You don’t want to the slightest negative thought. It spreads like fire.”

Performance

You have to make things happen.

“Mostly they’re family owned businesses,” he says.

“You as the owner and the operator have to make things happen.”

Perspective

If you’re working 60 hours and a week and earning $30,000 you might think about getting a job, working fewer hours and earning more.

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