The 10 Ps that spell success

The Australian Financial Review

www.afr.com Tuesday, 25 February 2003
Written by: Christopher Jay

Official statistics and reports on causes of bankruptcy among small business people largely gloss over the real personality factors behind most business failures, according to longtime specialists in business insolvency.

Insolvency specialists are required to supply the commonwealth with annual reports on reasons for personal bankruptcy and insolvency problems.

"The reasons, however, are predefined by the commonwealth," said Michael Jones, principal of insolvency practitioner Jones, Condon, "and deal with such things, as lack of working capital, high interest, commitments, inability to provide for tax commitments, health problems and marital discord.”

"The reasons as prescribed by the commonwealth reflect more the symptoms of the disease, rather than the disease itself.”

"Over a number of years, we have sought to identify common personality traits that apply to the people behind failed businesses. We have then turned the focus in the opposite direction to identify the personality traits that contribute to business success."

These can be summed up as the 10 Ps, for identifying who should prosper and who will wind up in insolvency.

The 10 Ps are performance, preparation, practicality, perseverance, perspiration, perspective, perception, priorities, presentation and positive thinking.

Performance means making it happen,” said Mr. Jones. “If we are dealing with sales, performance means writing out the invoice, not preparing a marketing budget for discussion with the committees

"If we are talking about collecting debtors, performance means banking the money, not preparing a list of people to chase it up. In small business there is no room for a lack of performance and things must happen on time.”

That said, it is still necessary to prepare marketing budgets and lists of debtors to pursue activity which comes under theheading of preparation.

The most important item of business preparation is the budget" 'said Mr. Jones, "and I would have to say that in all the items handled by our office, this item alone is famous for its omission.

“Small business people tend to avoid preparation of budgets due to cost constraints. This to me seems like a false economy, particularly when you look at costs of liquidation."

Practicality is an obvious but nonetheless key personality trait in effective small business people. Liquidators say they can provide endless examples of hair-brained schemes that on any objective analysis were doomed to fail.”

The most successful people in business appear to be those who know how to get basic things done, not necessarily those with the greatest IQ or level of education.

Perseverance is a feature small business people who stay afloat in tough trading conditions. "This is the ability to be tenacious, with an unwillingness to give up," noted Mr. Jones. "This is particularly important to business people who are carefully following their business plan. As times get tough, successful people know they need to stick to it"

A lot of small business requires strenuous and sustained activity by the proprietors, often working long hours, which can come as a shock to people previously in structured nine-to-five employment.

A specific example which crops up among liquidators is ex-public servants accepting redundancy packages to go into small business, only to experience a worryingly high level of failure when confronted with the realities of the need for perspiration.

"Many people who start a business believe life as a business person is much easier, much more fun, very glamorous and provides a better lifestyle than the alternative," Mr. Jones remarked.

"What is often omitted is the fact that to be successful in business boils down to a lot of very hard work."

To counterpoint the perspiration, small business people also need perspective, the ability to work on the business, rather than in the business. Business survivors are aware of the need to be able to stand back from the coalface and take an overall view of how their business is going.

This brings in perception, processing and digesting information from a number of sources, from the status of competition to the attitude of the workforce.

"Setting priorities is essential, particularly with our bankrupts and insolvent company directors; they're in a pickle, they can't see what's important and must be done now, and what can be left,” said Mr. Jones.

"Most successful people set their priorities down in writing, and most successful people do this daily. Directors of failed companies generally do not do this at all.”

Feather dusting applies to using mirrors to create the allusion of abundance in fruit and retailing are simple examples of the importance of presentation.

Most failed businesses show very bad presentation, in terms of stock display, cleanliness, shop fronts and related issues by the time the insolvency practitioners arrive at the door.

The final important P is the power of positive thinking. "Nearly all the individuals we look have lost this ability,” said Mr. Jones.

“Once negative thinking sets in it is the beginning of the end for a business.”