Tipping the Odds for the Entrepreneur: Big Ideas on Success for the Small Business Owner
Tipping the Odds for the Entrepreneur
Kevin C. Maki
Provident Business Press; 314 pages; $24.95
With a combination of storytelling and clear advice, Kevin Maki succeeds in entertaining as much as instructing in Tipping the Odds for the Entrepreneur. In addition to sharing his own experience as an entrepreneur, Maki describes strategies used by dozens of small business owners, as well as owners of multi-million-dollar corporations such as Berkshire Hathaway, General Electric and Starbucks. He also pulls in relevant facts from consultants and researchers who have identified traits and behaviors associated with success and failure.
Maki does not believe in luck so much as he believes that success is the intersection of preparation and opportunity. His book, as he clearly states in the introduction, does not cover the mechanics of starting a business but concentrates on insights and strategies used by other successful entrepreneurs.
Interestingly, Maki is one of the few scientists that have chosen to become an author in the genre of entrepreneurship books. An epidemiologist, Maki spent years studying the factors associated with diseases in human populations. He writes: “In preparation for writing this book, I have tried to apply my training as a ‘medical detective’ to investigate the ‘causes’ of business successes and failures ….”
Lifetime Customers
Maki believes in the concept of lifetime customers. He recommends staying in touch with customers via thank-you notes, newsletters, and blog entries and articles on the web.
One of the most effective aspects of Maki’s book is his level of detail in describing how to carry out strategies he regards as successful. For example, he recommends getting back in touch with former customers to find out why they have not recently made a purchase. He includes a sample letter that could be used by nearly any type of business owner.
He also includes sample customer surveys, in which he categorizes responding customers as “promoters,” “passively satisfied customers” and “detractors.” Then Maki outlines a convincing study that shows promoters account for more than 80% of a business’s referrals, while detractors account for more than 80% of negative word-of-mouth comments.
When Maki doesn’t have an answer, he doesn’t bluff. He clearly admits: “I have no universal answer for the question of how much of your marketing budget and resources should be spent on nurturing old relationships as opposed to starting new ones.”
Minimizing Risk
In an age where entrepreneurs tend to be defined as risk-takers, Maki talks about minimizing risk. To strengthen his argument, he pulls from face-to-face conversations with Warren Buffett. Buffett operates with policies that allow the achievement of acceptable results under the most adverse conditions, not optimizing results under normal conditions.
With regard to risk-taking, Maki sums up Buffett’s three-pronged strategy: 1) accept only risks that you can properly evaluate; 2) don’t accept risks that have the potential to threaten solvency; and 3) avoid moral risks (or writing good contracts with bad people).
Maki also urges business owners to take a hard look at how they spend their time. “Most business owners would benefit from a careful, detailed review of how they spend their time over a period of a week or two,” he writes. “An honest evaluation is likely to reveal any number of activities that, if eliminated completely, would have no negative impact on the business whatsoever.”
Maki also doesn’t shy away from talking about happiness. “Findings from research on success and happiness show that the relationship tends to be relative rather than absolute. People do not judge what they have and have accomplished versus an absolute standard, but rather relative to those to whom they compare themselves.”
Maki’s Crystal Ball
Maki’s scientific approach to analyzing entrepreneurial success and failure not only has resulted in a very informative book, but it also has worked him into notoriety as a predictor of business success in his own hometown.
In one shopping center close to his home that has 18 restaurants ranging from fast food to higher-end, his record has been 100% for predicting which establishments will last longer than two years. “In the 9 years that we have lived in the area, I have counted 26 restaurants. In each of the 8 cases of a restaurant closure, I had put the establishment on my ‘likely to fail’ list after visiting once or twice.”
Maki points out that businesses that are able to retain loyal customers tend to retain loyal employees, too. “One critical aspect of maintaining low turnover is to be sure that your business is run as a meritocracy.”
The author concludes that entrepreneurs should ultimately stick to what they know and resist the temptation to move too far afield in seeking success. “Each of the entrepreneurs profiled has resisted the temptation to diversify into other industries where they lacked the necessary skill and experience to compete effectively.”
