Entrepreneur, President and Chief Science Officer of Provident Clinical Research & Consulting, Inc., Kevin C. Maki, was kind enough to take the time to answer a few questions about his practical and results oriented book Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner.
The author shares ideas and techniques, proven in the real world by successful entrepreneurs, for building and maintaining a successful entrepreneurial business venture.
Thanks to Kevin Maki for his time and for his interesting and comprehensive responses. They are greatly appreciated.
What was the background to writing this book Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner?
Kevin Maki: When I was a teenager I went to work for a very successful couple who owned a small hotel. I learned a great deal from them about business and entrepreneurship. Many of the lessons from my 10 years in that hotel have served me well as the operating manager of a business unit and later as a business owner. Those experiences started me on a lifelong quest to understand what separates successful and unsuccessful entrepreneurs and what I have learned is conveyed in Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner. I hope that my book will help others to thrive as business owners.
Why do some entrepreneurs find tremendous success while other entrepreneurs struggle to survive as businesses?
Kevin Maki: The purpose of a business is to obtain and retain profitable customers. In general, businesses who market their products or services well and who deliver good value to their customers will thrive. Delivering good value means setting customer expectations through marketing and sales efforts, and then meeting or exceeding those expectations through great execution. If customers feel they are receiving good value for the price paid, they will return again and again. Expectations are not the same for every business. Guests who stay at a Four Seasons hotel have a different set of expectations from those who stay at a Holiday Inn Express, but each can offer good value relative to expectations with good marketing and execution.
Does an entrepreneur have to learn to be successful in order to achieve business success?
Kevin Maki: In my opinion, the skills necessary to become a successful small business owner are learnable. However, some people are more likely to be successful than others. Top entrepreneurs have several characteristics that I discuss in the book, some of which include dogged persistence, a willingness to delay gratification, a bias toward action (rather than analysis paralysis), and a reasonable understanding of one’s personal strengths and weaknesses. If one understands his or her personal strengths and weaknesses, strategies can be employed to leverage the strengths and work around the weaknesses through delegation, partnering or outsourcing.
Are there traits and habits that are shared by successful entrepreneurs?
Kevin Maki: In addition to the traits listed above, some habits are important for success in any endeavor, including entrepreneurship. These include an ability to save money and a willingness to commit to continual learning. I always remind my kids that we live in an information age where “readers are leaders” and “learners are earners.”
Kevin C. Maki (photo left)
Most entrepreneurs talk of the importance of customer loyalty, but not every business is successful in maintaining a loyal customer base. How can customer loyalty be achieved?
Kevin Maki: The main path to customer loyalty is to continually deliver customer experiences that exceed expectations. This relates to the quality of the product or service delivered, as well as other elements of the overall experience. Purchase decisions are made on the basis of several attributes, including time (faster is usually better), price, quality (of the service and/or the product), convenience and risk. In order to obtain customers, your business must be better than your competition in one or more of these areas. In order to keep customers coming back, you must provide value. Many customers will be willing to pay a premium and still feel they are receiving good value if the experience is superior to that provided by your competitors.
Continually striving to improve the customer experience by eliminating sources of frustration, reducing waiting times, and enhancing service will pay off in greater loyalty. It is imperative that everyone in your company who has contact with customers or clients is friendly and devoted to providing exceptional customer service. Rude, apathetic, or condescending interactions will result in lost customers and such behavior cannot be tolerated. It is up to you to ensure that your staff understands what is expected and is held accountable for this level of performance. Successful performance and achievement should be acknowledged and celebrated.
How can the 80/20 Pareto Principle be put to work on behalf of the entrepreneur?
Kevin Maki: 80/20 analysis is a powerful tool. Most business owners who make the effort to perform 80/20 analyses will find that 20% of their customers are responsible for 80% of their profits, 20% or their products or services are responsible for 80% of their sales, 20% of their employees are responsible for 80% of the productivity, etc.
Conversely, the bottom 20% of customers, products/services and employees are likely producing little and quite possibly reducing profits. 80/20 analysis can also be a great time management tool. If you find that you are spending more than 20% of your time on low-level activities that could be better performed by someone else, you are probably short-changing strategic planning, marketing, sales, or other activities that produce a greater return on your invested time.
I should emphasize that the numbers do not always come out to 20% and 80%, but the key concept is that a small fraction of inputs generally account for a large percentage of results. It may be that 15% of your customers account for 65% of your profits, or that 10% of your employees account for 75% of your management headaches. The important point is that if you take the time to analyze your business with an eye toward identifying inputs and outputs, strategies will become obvious to improve performance by doing more of those things that produce outsized results and less of those things that generate a poor return.
What are some of the most common mistakes that lead to entrepreneurial failure and how can they be avoided?
Kevin Maki: I am constantly amazed at the number of businesses that make very basic mistakes that lead to failure. The most common of these is inadequate attention to marketing and sales. You can have the best product or service in the world and fail if you do not have effective marketing. “Nothing” is the terrible thing that happens when you fail to promote your business.
A second, frustratingly common error is failing to reduce or eliminate customer frustrations. Having a web site that is difficult to navigate, or that has a shopping cart that is difficult to use is an all-too-common example. Slow or apathetic service is another example. I recently ordered tee-shirts from an online store. It took nearly 3 weeks for them to arrive. Another online store delivered my tee-shirt order in 3 days. Which one do you think I will use in the future? How difficult would it be for the slow company to cut its delivery time by half or more? Why don’t they do this?
Marketing is critical for all businesses. How can entrepreneurs market more effectively?
Kevin Maki: There are few areas in business that have a greater impact on success than marketing. Effective marketing is targeted to those that have an above-average likelihood of buying. This can be based on geography (e.g., those who live close to your retail store), demography (customer characteristics such as age, gender, income level, etc.) or other characteristics such as occupation, hobbies, etc. Effective marketing emphasizes particular benefits to the consumer who uses your product or service.
Finally, the best marketing strategies are measurable. I prefer marketing strategies where the response can be tracked in a way that allows analysis of cost per lead, cost per initial sale, size of initial sale and residual value from repeat sales and referrals. This allows the business owner to target his or her efforts toward those activities that produce the greatest return per dollar spent, spend less to those that are marginally profitable, and eliminate those that are unprofitable.
How can lifetime customer value be measured and maximized?
Kevin Maki: I am going to sound like a broken record here, but the key to lifetime customer value is to provide a great customer experience so that the customer perceives that he or she received good value. Happy, satisfied customers return more frequently, make larger purchases, and are less price-sensitive. They also recommend your business to others.
Many entrepreneurs find difficulty in managing employees. How can an entrepreneur keep employees engaged and motivated to success?
Kevin Maki: Loyal, satisfied employees feel fairly treated. They feel that their efforts are appreciated, that management cares about them as people, and they regularly receive praise and recognition for good work. They know what is expected of them, have the tools needed to get the job done, and feel that they are able to do what they are good at on a daily basis. They feel challenged by their work and regularly have the opportunity to upgrade their knowledge and skills.
The most productive businesses or business units are comprised of people who agree with the company’s mission and values and enjoy interacting with one another (i.e., have a sense of camaraderie). Camaraderie will be eroded by chronic incompetence or lack of cooperation, so managers must work hard to rectify these when they occur.
In a down economy, can an entrepreneur still find business success?
Kevin Maki: Successful entrepreneurs tend to do well and gain market share during economic downturns. They have managed their businesses conservatively during the good times, especially regarding cost control, so that they can capitalize on opportunities during downturns. They have not overleveraged and they have built up cash reserves, which allow them to acquire assets (including talented employees) at bargain prices. They invest in staff training and upgrading of skills and knowledge to enhance performance and marketability when the business cycle turns up again.
Successful entrepreneurs also recognize the importance of investing in marketing and sales during economic downturns. Cutting way back on the marketing budget to save money during a downturn is a bit like cutting off one’s leg to lose weight. The number on the scale declines, but the result is a handicap.
What is next for Kevin Maki?
Kevin Maki: During this economic downturn I am working hard on improving our businesses, investing in enhancing our systems and expanding our capabilities so that we are well positioned to gain market share as the economy improves.
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My book review of Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner by Kevin C. Maki.
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