In short: owners who look only at costs and quick returns often sacrifice the long-term business for short-term gain. Owners who focus on creating value for customers tend to find the money comes on its own.
Buffett's rule
Warren Buffett has a simple principle: invest only in companies that love their business more than money. People who treat their business as a calling, and care for it and its customers for a lifetime, are the ones he trusts with capital.
Two kinds of owner
- Owners who love the business ask: does this create value for customers? Will this equipment help more of them? Will training staff improve the service?
- Owners who love money ask: what does it cost? When do I get it back? Can I skip it for now?
Both questions matter, but which one you ask first sets the direction. Decisions made on cost alone tend to be short-term, and often end up achieving neither goal.
Staff can tell the difference
Owners often complain that staff are not loyal. Look closer and half the problem is with the owner: staff are trained, improve, sell more and make the owner more money, but the owner will not improve their pay or benefits. Losing them then is not a sign that staff expect too much.
How to be an owner who loves the business
- For every important decision, ask first whether it is good for customers
- When staff create value, share the results with them
- Spend your time working out how to create value, not how to charge a little more
To earn more, find ways to create value, not "ways" to make more money.
Adapted from Dave Tan's book How High Should Your Customer Retention Rate Be? (2014, in Chinese), updated for today. About the book
Author: Dr. Dave Tan, DBA — Founder of Vital Design, Doctor of Business Administration (DBA). A business consultant to salons and SMEs since 2003, and author of a book on salon management.
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