“Efficiency is doing things right; effectiveness is doing the right things.” - Peter F. Drucker

Commentary: Peter Drucker is one of my favorite thinkers and quotes like this one show why. Many small businesses correctly focus on efficiency but they end up being efficient in things that don’t matter. Conversely, some small businesses are doing the right things very inefficiently. The key is to make sure you are doing both: focussing on the right things and doing them right.

Craigslist.org, the popular classifieds listing site, has a CEO with some unique thoughts on running a successful business. Many seem counterintuitive but craigslist has been running a huge site with a very tiny staff successfully for many years and was recently purchased by eBay.

Some thoughts include:

• No meetings, ever. “I find them stupefying and useless.”
• Put speed over perfection: “Get something out there. Do it, even if it isn’t perfect.”
• Listen to what users want. Try to make the site faster and better.
• He doesn’t reply to any of his 100 daily messages, most of which beg Craigslist to do a deal. “I’m not real chatty on e-mail.”

I love CEO’s that go against conventional wisdom - something tells me he’s on to something.

“A good plan, violently executed now, is better than a perfect plan next week.” - Gen. George Patton

Commentary: As we’ve written before, planning can go on forever until everyone thinks it’s perfect. However, many times a good plan is good enough and the quicker you start working on it the faster things will get done.

Seth Godin has yet another great article on customer service:

No, of course Sumner Redstone can’t answer every single letter sent to Viacom. But…

Shouldn’t every single inbound call be answered in one ring? Shouldn’t there be as much spent on self-service customer support as is spent on the design of the selling part of your website? Shouldn’t you be tracking in the finest detail what people have to say when they call in? Shouldn’t you be rewarding call center operators by how long they keep people on the phone, not how many calls they can handle a minute? Shouldn’t there be an easy, fast and happy way for an operator to instantly upgrade a call to management (not a supervisor, I hate supervisors) who can actually learn something from the caller, not just make them go away?

Customer Service is always a balancing act. You don’t want to spend your entire day on the phone with customers who’ll talk your ear off or complain about the tiniest of issues. However, you also want to make sure you spend time on your phone etiquette, escalation procedures and systems so you can concentrate on your high value clients.  When I call most customer service lines, the quiet subtext of the conversation from the representative is “leave me alone” “I don’t care” and “please go away” when it should be seen as an opportunity to impress me as quickly and efficiently as possible - that’s what I’ll tell other people and that’s what will keep me coming back.

As usual, Seth Godin gets it right with a fantastic article about doing things instead of whining about them.

Here’s some of the best excerpts:

Here’s a question that you should clip out and tape to your bathroom mirror. It might save you some angst 15 years from now. The question is, What did you do back when interest rates were at their lowest in 50 years, crime was close to zero, great employees were looking for good jobs, computers made product development and marketing easier than ever, and there was almost no competition for good news about great ideas?

Here’s what some people did while others whined:

• “While your company has been waiting for the economy to rebound, Reebok has launched Travel Trainers, a very cool-looking lightweight sneaker for travelers. They are selling out in Japan — from vending machines in airports!”
• “While Detroit’s car companies have been whining about gas prices and bad publicity for SUVs (SUVs are among their most profitable products), Honda has been busy building cars that look like SUVs but get twice the gas mileage. The Honda Pilot was so popular, it had a waiting list.”
• “While you’ve been wishing for the inspiration to start something great, thousands of entrepreneurs have used the prevailing sense of uncertainty to start truly remarkable companies.”

He concludes with this great line:

So stop thinking about how crazy the times are, and start thinking about what the crazy times demand. There has never been a worse time for business as usual. Business as usual is sure to fail, sure to disappoint, sure to numb our dreams. That’s why there has never been a better time for the new. Your competitors are too afraid to spend money on new productivity tools. Your bankers have no idea where they can safely invest…

You get to make a choice. You can remake that choice every day, in fact. It’s never too late to choose optimism, to choose action, to choose excellence. The best thing is that it only takes a moment — just one second — to decide.

“We don’t want to be rich, we just want to be richer that other people” - John Stuart Mill

Commentary: Small business owners tend to focus on money when we should be focussing on lifestyle. Acquiring more and more money is an endless game that never brings satisfaction. The best thing to strive for are the lifestyle of wealth: time-off, family time, not worrying about money, vacations, etc. When you focus on lifestyle, you’ll find that it takes much less money and requires you to focus on making your business run without you rather than requiring your constant attention in the pursuit of more money.

“Plans are only good intentions unless they immediately degenerate into hard work.” - Peter Drucker

Commentary: Sometimes the planning process goes on forever. Some people are obsessed with planning to a point where actual work never gets started. It is important that planning is effective, but as Peter Drucker states, it is imperative to get to work!

“Don’t worry, be crappy. Revolutionary means you ship and then test… Lots of things made the first Mac in 1984 a piece of crap - but it was a revolutionary piece of crap.” ~ Guy Kawasaki  

Commentary:

I think it is a myth that a new product that will solve problems or fill a need (especially a technology product) must be perfect before you launch it. Modern experience is showing that may not be true - lots of great products were buggy at first, incomplete when first launced: MySpace.com, Google, Xbox 360, etc. The key is to launch but then improve based on user-feedback.

Forbes.com has examined the most profitable and least profitable businesses to start and the results are pretty fascinating:

Most Profitable Businesses to Start:

1. Accounting Services
2. Legal Services
3. Dental Services
4. Specialized Design Services
5. “Other” Health Practitioners (chiropractors, physical therapy, rehab, etc.)
6. Outpatient Care Centers (spas, family planning, kidney dialysis, etc.)
7. Insurance Brokers
8. Physicians’ Offices
9. Medical and Diagnostic Labs
10. Depository Credit Intermediation (small banks, credit unions,

Commentary:

No big surprises here, fully 50% are medical related and another 40% are legal, financial or accounting related. I believe this shows that professional training pays off due to the high barriers to entry for these professions - not anyone can setup a medical, legal or financial related business, it takes some training, certification and skill. The one surprise was “Specialized Design Services” but that job still takes quite a bit of training before starting.

The lesson being that previous training is necessary to get into the most profitable businesses and being defensible either via education or skill is an important aspect to consider when starting your business.

The Least Profitable Businesses to Start:

1. Community Care Facilities
2. “Other” Support Services (tradeshow organizing, wrapping gifts, etc.)
3. Beverage Manufacturing
4. Real Estate Related Services (appraisers, property managers, etc.)
5. Bakeries and Tortilla Manufacturing
6. Amusement and Recreation Services
7. Motor Vehicle Parts Manufacturing
8. Specialty Retailers
9. Beer, Wine & Liquor Retailers
10. Travelers’ Accommodations

Commentary:

While I believe Forbes.com’s numbers are accurate, take note of the fact that this list is not destiny. For example, there are many examples of hugely successful businesses under the “Least Profitable” list: Coca-Cola for #3, Rainbow Bread for #5, Disney for #6, Hilton for #10 (with lots of smaller local businesses in the other categories).

Just because most people in your sector are not profitable doesn’t mean you have to be! This list is more of a guide showing that a) professionals with advanced education or degrees are the most profitable and b) businesses with lots of competitors and low barriers to entry are the least profitable.

Lesson: Follow your passion in business, learn proper management skills and success can be yours regardless of the industry.

“People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.” - Peter F. Drucker

Commentary: Taking risks is part of business. If you’re not taking risks than you probably aren’t accomplishing much. This quote from the Legendary Peter F. Drucker shows that the big mistakes are going to happen anyway, so you might as well be taking calculated risks to move your business (or your life) to the next level.