Street Smarts by Bo Burlingham and Norm Brodsky | book summary
Summary in a Paragraph
the book is written by former entrepreneur's norm Brodsky and Bo Burlingham this book is all about their advice to new entrepreneurs and how they solve their own business problem.
10 Commandments for Business
1. Numbers run a business. If you don’t know how to read them, you’re flying blind.
2. Cash is hard to get and easy to spend. Make it before you spend it.
3. Don’t focus on the top line. Gross margin is the most important number on the income statement.
4. A sale isn’t a sale until you collect.
5. When your short-term liabilities exceed your short-term assets, you’re bankrupt.
6. Forget about shortcuts. Run a business as if it’s forever.
7. Identify your true competitors and treat them with respect.
8. You have no friends in business, only associates.
9. Culture drives a company. In the long run, the boss’s most important job is to define and enforce. it
10. The life plan has to come before the business plan.
CHAPTER ONE - How to Succeed in Business
- gross profit is most important thing for a business.
- maintain the highest monthly gross-profit margin you are capable of achieving. Do not go after any low-margin sales.
- Spend your time developing relationships with your highest-margin customers.
- focus on achieving critical mass.
- That is the major turning point for any new venture. Before critical mass, a business is a fledgling enterprise surviving on external capital.
- After critical mass, you’re living off your own internally generated cash. You have profits to put in the bank.
- understand the financial statement of your business.
- Learn to anticipate and recognize the changes in your business by developing a good feel for the numbers.
- Make sure you understand what cash flow is and figure out in advance where it’s going to come from.
- Control the sales mentality and balance it with a business mentality before it’s too late.
CHAPTER TWO - The Right Stuff
- Those who persevere win. Be resilient and welcome failure. That’s how you become a better businessperson.
- You learn by refusing to make excuses and looking deep inside yourself for the reasons things have gone wrong.
- Focus and discipline are more important than identifying opportunities, but they have to be balanced with flexibility.
- The solutions are seldom right in front of you. You need to learn how to spot them out of the corner of your eye.
CHAPTER THREE - Why Start-ups Fail
- don't look for new ideas look for concept that’s been around for one hundred years or more.
- look for industry in which most companies are out of step with the customer.
- third criterion for a successful new business: a niche finds or build it.
- the first business plan you write should be for nobody but yourself.
- most important loss in a failure startup is of time you put in it.
- Your time is more valuable than money, and you should be careful not to waste it.
- It’s good to have a lot of competitors because educating a market is a very expensive proposition.
- If you’re a first-time entrepreneur, it’s general y better to start a business than to buy one.
CHAPTER FOUR - Where the Money Is
- Before you ask people for money, make sure you know how much they like to invest and what they’re looking for.
- Start early to build a relationship with a commercial banker and use an asset-based lender only if you can’t get the money you need from a commercial bank.
- Bankers are businesspeople, too. Treat them the way you would like your customers to treat you.
- Your receivables are loans to your customers. Make sure your portfolio is in good shape.
CHAPTER FIVE - Magic Numbers
- the best piece of advice I can give to anyone starting a business: from day one, keep track of your monthly sales and gross margins by hand. Don’t use a computer.
- Write down the numbers, broken out by product category or service type and by customer, and do the math yourself, using nothing more sophisticated than a calculator.
- High gross margins translate into high gross profit, and gross profit is the main source of the cash you’ll need to support yourself and build the business.
- the best businesspeople I know all have certain key numbers they track on a daily or weekly basis. It’s an essential part of running a successful enterprise.
- Sales don’t make a company successful. Profits and cash flow do.
- understand that more sales almost always mean less cash flow—and less cash flow means trouble.
- Understand EBITDA and use a multiple of that—not sales— as the measure of your business’s value.
CHAPTER SIX - The Art of the Deal
- Because you’ll be inflexible. You’ll focus too much on your own needs, and you won’t hear what the other party is saying. As a result, you’ll miss opportunities to get better deals.
- In a negotiating situation, you have to keep the other party guessing about your real needs and priorities, or you may not get what you want. If you do get it, you’ll have to settle for a less attractive deal.
- negotiate first about a secondary matter, understanding that —at the end of the process—you’ll probably let the other party get most of what it wants on the issue in question.
- To get what you want, you first have to find out what the other party wants. There’s only one way to do that—by listening.
- In a perfect world, al negotiations would end with both sides walking away happy to have achieved its most important goals.
- The best deal in the world is when everybody walks away a little unhappy.
- Good negotiators always try to get the best deals for their company by taking as many bites of the apple as the other party will allow.
CHAPTER SEVEN - It Begins with a Sale
- if you don’t ask, you don’t get.
- If customers have come to you only because you’re cheap, they’re likely to leave when you raise prices.
- Never bad-mouth a competitor.
- You probably won’t discover your company’s niche until after you’ve launched the business.
- No niche lasts forever. You may have to discover new ones as you go along.
- Your reputation is your most valuable business asset, and your competitors play a critical role in shaping it.
CHAPTER EIGHT - Good Sales, Bad Sales, and the Ones That Get Away
- I don’t worry about closing sales. I worry about making customers feel as though they’ve been heard, understood, and responded to. I want them to leave with a warm and fuzzy feeling. If they do, the sales will follow.
- you can’t do business with everybody.
- You’re better off with a base of many small customers than with a few large ones.
- Showing is more effective than telling when it comes to signing up new customers. Let them experience what you have to offer.
- Listening is a lost art. You can gain a competitive advantage just by listening careful y to what your prospects and customers are saying.
- It is almost always a bad idea to reduce your prices just to fil unused capacity. You will just undermine the more profitable part of your business.
CHAPTER NINE - Customers for Keeps
- Growing a business is much harder if you are constantly having to replace customers you’ve lost.
- Customer retention is the key to growth, and you retain customers by building strong relationships with them.
- One way to build relationships with customers is to help them become smarter buyers by teaching them your business.
- Make a point of treating old customers like new prospects. Otherwise, it’s easy to start taking them for granted.
- You will lose contact with your customers as your company grows unless you build customer facetime into your schedule.
CHAPTER TEN - How to Lose Customers
- Customers don’t like feeling that they’re supporting your lavish lifestyle. Don’t give them reasons to think they are.
- Make a habit of having small price increases on a regular basis so that you aren’t forced to have a big increase later on.
- Your company is probably your most valuable personal asset. Don’t undermine its value by letting your margins erode.
- Beware of the rules you make. They may inadvertently force your employees to provide poor service to customers.
CHAPTER ELEVEN - The Decision to Grow
- Business is a means to an end. Do a life plan before you make your business plans.
- When trying to move to the next level of sales, don’t assume you know all the factors that led to your initial success.
- Growing a business is a matter of choice. Before deciding to grow, make sure you know why you’re doing it.
- Bigger is not always better. Smal companies have some advantages that large companies can’t match.
CHAPTER TWELVE - Becoming the Boss
- As close as you may be to your employees, neither you nor they should forget that it’s a business relationship and needs to be treated as such.
- If you, like most entrepreneurs, prefer selling to managing, remember that you can hire other people to do management. You don’t have to do it yourself.
- The way to deal with employee theft is to improve your systems, not to stop trusting people.
- When the time comes for you to step aside and turn day-to-day operations over to your managers, get someone you trust to help you with the transition, and find other ways that you can contribute to the business.
CHAPTER THIRTEEN - The One Thing You Can’t Delegate
- Your company’s culture can be your most powerful tool for finding and keeping great employees. Don’t miss the opportunities to shape it that arise every day.
- The one thing you can’t delegate is the responsibility for making sure the company has a single culture, not several competing ones.
- Expenses have a natural tendency to creep up over time. If you want to control them, you need to get everyone involved in the effort.
- Look for opportunities to send the message to employees that you real y care about them, and that you want them to care about keeping costs down.
CHAPTER FOURTEEN - Selling Is a Team Sport
- That’s the first rule: hire salespeople, not entrepreneurs.
- don't hire salespeople from same industry.
- Salespeople are your representatives in the marketplace. Make sure you choose salespeople who will represent you well.
- Beware of hotshots and would-be entrepreneurs, and don’t hire salespeople from within your industry.
- Sales commissions cause divisions in a company and get in the way of building a team. Don’t pay on commission unless you have to, and switch to salary plus bonus as soon as you can.
- Al your employees have an impact on sales, at least indirectly. With the right training, you can teach them how to have a direct impact.
CHAPTER FIFTEEN - Help! I Need Somebody
- When you’re struggling with a problem, get an outside perspective to make sure you’ve identified the real one and come up with a solution that’s going to address it.
- Accountants are good for explaining what has happened in the past, but don’t go to them for business advice. Talk to an experienced business owner instead.
- Your lawyer’s job is to tell you the potential legal consequences of a decision or a course of action—not to give your business advice.
- Yes, your small company can afford to hire world-class executives as long as you’re willing to create a situation in which they can make money and have fun.
CHAPTER SIXTEEN - When the Student Is Ready, the Teacher Appears
- There are great business lessons to be learned wherever you go, but you have to remember to look for them.
- Solving a problem is a two-step process. First, you should stop the bleeding, and then you need to address the underlying cause.
- Preparation is a crucial competitive edge. Don’t assume you know what’s in a contract—even an old contract—unless you’ve gone back and reread it.
- The harder someone pushes you to make a quick decision, the more insistent you should be about taking your time.
CHAPTER SEVENTEEN - Keeping Up with the Stones
- Be prepared to carry new salespeople for up to a year before getting the kind of production that will justify what it costs to hire them.
- If you want salespeople to make good sales, teach them how your business makes money.
- Watch your numbers careful y, and—when they change—find out why. There’s always a reason.
- Enthusiasm is the lifeblood of a business. Be generous with it.