Summary: "A lot of people starting out in business would prefer to have a step-by-step formula or a specific set of rules they could use to achieve their goals. The problem is, there aren’t any. Rather, there’s a way of thinking that allows someone to deal with many different situations and take advantage of many different opportunities as they arise.” The Knack, page 3 To say Norm Brodsky is an experienced entrepreneur would be an understatement. Over the course of three decades, the Inc. Magazine columnist has started more than eight different companies, including a messenger business which was on the Inc. 500 list of fastest growing private companies three straight years in a row, and a records storage company which he sold for $110 million. Oh, and of course, as Norm recalls, we can’t forget his “greatest business failure” (and lesson) – taking his messenger business through bankruptcy in 1988. It’s this wealth of experience that Norm shares in The Knack, as he recalls his most important business lessons: from being embarrassed for being unprepared on his first day in court as a rookie lawyer, to a lesson in customer service after a memorable meeting with King Hussein of Jordan in the mid-1990s. At the heart of Norm’s entrepreneurial success philosophy is not a “step-by-step formula or a specific set of rules”. Rather, it’s a set of mental habits – “a way of thinking that allows someone to deal with many different situations and take advantage of many different opportunities as they arise.” So what’s the most important habit an entrepreneur should learn? Follow the Numbers. Golden Egg Follow the Numbers “After all, to be successful in any business, you need to develop a feel for the numbers. You need to get a sense of the relationship between them, see the connections, figure out which ones are especially critical and have to be monitored accordingly.” The Knack, page 74 You’ve probably heard the saying, “The numbers don’t lie.” Well, I’d hazard a bet that it’s a saying Norm believes in whole-heartedly. “Numbers run businesses. They tell you how you can make the most money in the least time and with the least effort – which is, or should be, the goal of every entrepreneur. What you choose to do with the money after you’ve made it is another matter. You can give it all away if you want to. But you first have to earn it, and the numbers can tell you how to do that as efficiently as possible, provided you understand their language.” The Knack, page 74 So how do you learn their language? The following two GEMs explore how to do just that. (And no, it doesn’t involve meeting with your Accountant.) GEM # 1 Track Your Numbers By Hand. No Computers Allowed. “Here's the best 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 by customer, and do the math yourself, using nothing more sophisticated than a calculator.” The Knack, page 74 Yes, in this technologically advanced world, with the Business Intelligence and Analytics industry offering businesses innovative tools to gain better insight into their businesses; Norm puts it plainly, “With pencil and paper. No Computers allowed.” Why? Writing down your numbers (actual/projected revenue, expenses, gross profit, etc.) by hand, at the very start of your business, gives you a feel for your business that you wouldn’t get if you relied on a computer to produce these numbers for you. You get a chance to really focus on your numbers, instead of simply reviewing them; especially key numbers such as gross profit (not only sales). “You have to write the numbers out by hand and calculate the percentages yourself. If you let a computer do the work, the numbers become abstract. They start to blend together. You don’t focus on them. You don’t absorb them.
