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How to Run a Thriving Business 1st edition How to Run a Thriving Business Strategies for Success and Satisfaction by Ralph Warner always up to date Th e law changes, but Nolo is always on top of it! We off er several ways to make sure you and your Nolo products are always up to date: 1 Nolo’s Legal Updater We’ll send you an email whenever a new edition of your book is published! Sign up at www.nolo.com/legalupdater. 2 Updates @ Nolo.com Check www.nolo.com/updates to fi nd recent changes in the law that aff ect the current edition of your book. 3 Nolo Customer Service To make sure that this edition of the book is the most recent one, call us at 800-728-3555 and ask one of our friendly customer service representatives. NOLO Or fi nd out at www.nolo.com. please note We believe accurate and current legal information should help you solve many of your own legal problems on a cost-effi cient basis. But this text is not a substitute for personalized advice from a knowledgeable lawyer. If you want the help of a trained professional, consult an attorney licensed to practice in your state. NOLO 1st edition How to Run a Thriving Business Strategies for Success and Satisfaction by Ralph Warner FIRST EDITION OCTOBER 2004 Editor RICH STIM Book Design TERRI HEARSH Proofreading SUSAN CARLSON GREENE Index THÉRÈSE SHERE Printing DELTA PRINTING SOLUTIONS, INC. Warner, Ralph E. How to Run a Thriving Business: Strategie for Sucess and Satisfaction/ by Ralph Warner. p. cm. Includes index. ISBN 1-4133-0104-5 (alk. paper) 1. Small business--Management. 2. Success in business. I. Title: Thrive and prosper. II. Title. HD62.7 .W374 2004 658'.022-dc22 2004055213 Copyright © 2002 and 2004 by Ralph Warner. ALL RIGHTS RESERVED. Printed in the U.S.A. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the publisher and the author. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. Quantity sales: For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For academic sales or textbook adoptions, ask for Academic Sales. Call 800-955-4775 or write to Nolo, 950 Parker Street, Berkeley, CA 94710. Acknowledgments Believe it or not, this book took me four years to write, during which time I was frequently diverted to other Nolo tasks. I’m not sure I ever would have found the willpower to finish had it not been for the encouragement of my production assistant Susan Cornell. I am also indebted to Susan for many good ideas. My friend Rich Stim was an inspired editor, who made many substantive and creative suggestions. The result is a much-improved book. Nolo’s inimitable researchers, Stan Jacobsen and Ella Hirst, contributed much valuable material to this book, allowing me to at least occasionally back my opinions with fact. Huge thanks to Terri Hearsh, who designed this book. Terri's sharp eye spotted several errors and omissions, allowing me to fix them with no need to be embarrassed by conscientious readers. Finally, just as this book was going to press, George Miller introduced me to the wit and wisdom of Richard “Kinky” Friedman, of The Texas Jewboys. My life will never be the same. Table of Contents Introduction 1 Build a Meaningful Business How a Tiny Business Took on the Texas Legal Establishment ............................... 8 How to Make Your Business Meaningful .................................................................. 17 2 Choose a Business You Care About Plan for the Long Haul.................................................................................................. 32 How to Stay Interested in Your Business ................................................................. 40 Fire Yourself/Hire Yourself ............................................................................................ 47 3 Understand How You Make a Profit Never Be Vague About Money .................................................................................... 53 Getting a Quick Plan on Paper ................................................................................... 56 4 Start on a Shoestring Why Small Is Better ...................................................................................................... 71 Spending Money Wisely ................................................................................................ 79 5 Get and Keep a Competitive Edge Convincing Customers That You’re Special: An Overview .................................. 88 What Makes Your Business Special? .......................................................................... 93 Keeping Ahead of the Competition ........................................................................... 99 6 Innovate Now and Forever Invention ........................................................................................................................109 Copying ..........................................................................................................................113 Serendipity .....................................................................................................................116 A Case Study in How Good Ideas Surface............................................................122 Making Innovation a Continuous Process..............................................................127 7 Target Your Customers Be Specific ......................................................................................................................143 Go After Both Novice and Experienced Customers ..........................................149 Don’t Forget Your Current Customers ..................................................................152 8 Market Your Business Creatively What Advertising Can—and Can’t—Do ...............................................................158 Other Downsides of Advertising .............................................................................161 Marketing to Your Target Audience..........................................................................177 9 Hire and Keep Good People Don’t Hire Casually .....................................................................................................183 Don’t Hire Problem Employees ...............................................................................187 How to Hire Top People ............................................................................................191 Keeping the Great People You Hire ........................................................................199 10 Drive a Modest Car Drive a Modest Car ....................................................................................................216 Lead, Don’t Dominate.................................................................................................220 Credit Is Cheap—Spread It Around ........................................................................225 Don’t Become Lazy .....................................................................................................227 11 Don’t Work Overlong Hours The Importance of a Sane Schedule........................................................................232 Planning to Work Less and Make More ..................................................................238 12 Learn to Live With Luck The Perils of Good Luck ............................................................................................248 Coping With Bad Luck ................................................................................................252 13 Pay Your Bills Early The Benefits of Paying Bills Early .............................................................................260 What to Do When You Must Pay Late ...................................................................267 14 Embrace Your Best Competitors Why It Makes Sense to Cooperate With Your Competitors ............................273 Your Competitors Are Your Natural Friends ........................................................274 Your Competitors Can Be a Source of Business .................................................276 Working for Your Competitors ................................................................................278 Your Competitors Will Help Define Your Reputation ........................................279 If You Can’t Say Something Nice … ....................................................................280 15 Don’t Buy a Franchise Franchises That Are Good Deals .............................................................................284 The Problems with Franchises..................................................................................285 Evaluating a Franchise .................................................................................................293 16 Sell Services, Not Goods You Can Keep Start-Up Costs Low ........................................................................300 You Can Keep Marketing Costs Low ......................................................................303 You Can Set Prices at Profitable Levels ..................................................................306 Retail and Other Nonservice Businesses That Work .........................................309 17 React Quickly to Bad News Act Quickly on Bad News .........................................................................................318 Fix the Problem,
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