What Makes a Business Last?
Originally sent exclusively to The Letter subscribers on October 20th. Want to be the first to get my personal newsletter in your inbox every Monday at 7am? Subscribe for free here.
I often think long and hard about my effectiveness, and that naturally leads me to think about the effectiveness of my businesses.
I know one of my companies is doing well when it doesn’t need me to stick my oar in.
That’s the hallmark of greatness: when you genuinely have a commercially profitable enterprise that works without you.
When you feel more like the chairman or a shareholder than the day-to-day operator.
It means you’re adding 1% improvements and ideas at a board level, coaching your people on how to turn “good” into “great”.
The business has an effective team operating a superb system - and to me, that’s the definition of a great business.
But here’s a question to ponder…
What makes a business last?
What drives customers to come back again and again?
What allows you to keep charging what you need to, regardless of rising costs - a quandary so many business owners face in a stagflation economy. That’s now by the way!
Many companies are chasing efficiency and volume to fight the doom loop of constant tax burdens and anaemic growth here in the UK.
Then there are the unicorns, the ones that can raise prices and customers still cough up, regardless of economic conditions.
Frankly, I want those businesses around me.
Here’s a truth for you: once you’re aware of this magical land of companies that don’t worry about costs going up, you can draw yourself towards it.
To put meat on the bone, join me on a little story.
A Stroll Through James Sinclair’s Sunday
This weekend, I went to M&S to buy some bits for a roast.
I’m the designated cook, so I like to do the shopping - I can’t have shoddy ingredients damaging my reputation as Britain’s next potential MasterChef.
My family were joining me after we laid our mum to rest earlier in the week, and I wanted the meal to be just right.
Marks & Sparks always ensures that endeavour.
But for the first time ever, I couldn’t quite believe the prices. I thought popping to Spain for lunch might actually be cheaper!
I was in the big M&S too - you know, the proper one, not the service-station-sized version attached to a BP petrol station, shopping in one of those makes a trip to Disney World look cheap.
£76 later, and just one bag of goodies (I took my own bag, by the way) I went home to prepare the family feast, gobsmacked at how little £76 had bought.
Inflation is still very much alive and kicking.
I’d bought some good beef, a bottle of vino, cauliflower cheese (obviously), veggies, strawberries and little else.
We all know M&S is pricier than the other supermarkets, and for good reason: it’s better.
Shopping has got more expensive and heaven knows every Tom, Dick and Harry is talking about it.
I can barely step outside without hearing a bloke moaning about Rachel Reeves and her calamitous handling of the economy, or turn on the radio without being bombarded by bad news.
My team, my news apps, even random people in cafés - everyone’s talking about our high-cost, high-tax, low-output economy squeezing spending power.
I don’t want to be around mood hoovers talking about this but it really is in the zeitgeist.
Until now, I rarely looked at food prices. I’d just pop what I needed in the basket and get on with my day.
But this… this blew me away.
Just one bag of shopping!
So, will I go back?
Absolutely. I love M&S.
My mum went there. My nan went there. I go there.
We know, like, and trust them.
M&S is a fantastic brand.
I pay more because it’s just better. Even their shopping bags are better than everyone else’s. Their veggies are top-tier, do they go to a magical land to get their apples? Each bite is one step away from an orgasm compared to Tesco’s offerings!
And here’s the thing all great brands do, the secret to keeping customers coming back again and again: they have a little more gross profit, so they can invest in customer cuddles.
That’s it!
There’s always enough staff to help. The packaging and quality are just that bit better than everyone else’s.
So generations go back again and again, for quality.
Customer cuddles make customers love you.
At my seminars, we do the same.
We give away a few little cuddles along the way, maybe some free books, a dinner invite, connections, time or maybe a surprise treat. Just a little more than people were expecting.
You can only do this when margin and gross profit are your friends. If your GPs are too tight, you’ll cut corners and end up running your business on fumes.
Leave enough room to surprise and delight your customers and you’ll love your business even more.
Sure, you might not be Aldi or Asda-sized - but who wants those fickle bargain hunters anyway?
I’d much rather have the M&S customer: loyal, appreciative, and proud to buy from you.
This week I decided to sell my hoover.
It was just collecting dust!
Quote of the Week
“Strength grows in the moments you think you can’t go on - but you keep going anyway.”
To your continued success,
James
PS. Have you listened to our podcast — The Business Broadcast: Real business owners, real challenges, real solutions? Why not apply to come on the show and get honest advice from JB and me! Here’s the link if you’d like us to help your business.