July 5, 2010

What if I were to tell you that there is one factor about your business that I could use to determine whether or not you will be successful in the long haul.

What could that one magic element be? How much you market or advertise? Nope. How well-capitalized your business is? Try again. Customer loyalty? Sorry.

The answer is math. Let me explain.

Several years ago I came across a study conducted by a gentleman named Fred Berni. Berni owns a company called Dynamic Performance Systems that helps franchisors and employers select good franchisees and employees. Usually, we hear about how important it is for a potential franchisee to select the right franchise. But what is interesting is that it may be even more important for the business to select the franchisee, based on these principles:

• The franchisee is entrusted with the brand, often a very valuable one at that.
• He or she is the face of the franchise to the public.
• Unsuccessful franchisees are often litigious.
  

So it behooves franchisors to pick the right owners. That is where Fred Berni (and your business) comes in.

Berni was hired by the franchise industry to find out nothing less than how and why successful franchisees differed from less successful ones. (Note: What he found out about franchisee success directly correlates to general small business success, so the results I am about to share apply to all entrepreneurs, not just franchisees.)

Berni and a staff of psychologists surveyed hundreds of businesses over a several year period. They looked at high performers and low performers. They studied owners of single units and multi-units. They spoke with happy owners, frustrated ones and the successful and unsuccessful in many different industries.

Once they completed the long project, Berni's team crunched the numbers, did the math, and came to some startling conclusions: It is not money, skills, experience or connections that are the best indicators of your future success. Rather, the survey found that  attitudes are the best predictors of business performance.

Beliefs drive results. But that is just the appetizer. Having surveyed hundreds of small business owners, Berni's team found that the way a business owner treats his or her employees is the single most important factor in determining their success.

It turns out that being a great boss is more important than anything else when predicting your success in business.

The survey also found that:

• The most successful owners viewed their employees as valuable business assets, and treated their staff accordingly. Not a burden, not an expense, and not mere words, employees are valuable assets worthy of respect and care.
• The best owners managed in a participative, friendly, cooperative way, as opposed to a domineering, dogmatic, judgmental way.
• These owners, not surprisingly, had less turnover, fewer hiring expenses, happier employees, and a happier workplace. As a direct result they also had better customer service, more loyal customers, and better sales. 
  

What sort of boss are you? The avuncular uncle or the feared jerk? Given that the answer has a direct result on the bottom line, it's an important question to ask yourself.

(Note: A few other things in the survey are worth noting and knowing. In addition to being a great boss, the most successful owners are optimistic, good at sales and marketing, and they like to schmooze.)

Related Topics

• Managing

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Steve Strauss, Article, franchising, managing, managing employees, Fred Berni

Join the conversation ( 1 )

• Julie Rains 1 year 10 months and 18 days ago

  

  I definitely see (and love) the connection of happy employees, customers, and owners. Bosses can't give everything but they can create positive work environments, which is evident to customers. I am curious if the studies were on existing businesses only, or if franchisees were studied before and after starting their businesses.