Simple Rules in Business
Business is not simple. That's one reason that we who enjoy complexity gravitate into business. However, there are often some simple rules that will get a business into the ballpark of success. Too many people are trying to be pioneers when there is a well-traveled, proven trail not far away.
Outsourcing to China brought up that thought, thanks to a post in the China Law Blog. Dan Harris proposes four simple rules:
1. Choose a good factory….
2. Use an OEM Agreement suited for your situation….
3. Set up a Quality Control System….
4. Register your trademark in China ….
That struck a chord with me I enjoyed beer last week with an excellent China business consultant who told me a story of a company that had failed to follow at least one of those steps and was now at substantial risk.
I see the same thing in bank lending in various niches. As I commented about bank lending to franchisees, there are rules of thumb to mitigate risk in every bank lending niche. In talking to a veteran of equipment leasing, he said there were just four rules that banks had to follow to substantially reduce risk in lending to his kind of business. It's amazing, he told me, how many banks don't learn those rules, or learn but fail to follow.
Is there room for creativity, for blazing one's own trail? Certainly, but here's how I would approach that: learn the rules first. Then test your own variations in a controlled way. So, for example, suppose you don't like Dan Harris's suggestion for how to set up a quality control system. Fine. But don't just ignore the whole question of quality control. Instead, weigh costs and benefits, consider the reason for the rule, and conduct a test in a way that limits your risk. Maybe you'll come up with the next best practice. However, I can pretty much guarantee you'll fall flat on your face if you just ignore the rule with no thought to how to accomplish the goal implied by the rule.
Finally, I regularly meet authors or would-be authors who ask me for advice on getting their books published. Getting a literary agent and a publishing contract is difficult and different from many other business tasks. I tell them how I got Businomics published: I bought a copy of a book on writing book proposals and I took it as my Bible. I followed its instructions and soon had three agents vying for the right to represent me, and a few weeks later an offer from a publisher.
After I tell this story, the person talking to me often tries to explain that his or her unique circumstances don't seem to fit the usual publishing mode. A year later I'll run into the person, ask about the book, and I hear that the search for a publisher continues. Gee, it's not a hard process if you follow the rules.
