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Success is no accident. Success leaves clues. You can create success on purpose.

Let's say you pick 100 people at random. How many of those people do you think could bake a great chocolate cake? A few? Many? Most?

Wouldn't you say success depends on whether they have a good recipe? Without a recipe, most people would not be able to bake a chocolate cake!

"94% of failure is due to lack of a proven system."

A good recipe is a proven system that "works" every single time. Obviously, cook does actual work.

============================================================ Can you develop a recipe for success in business? ============================================================

Here's problem (I mean, challenge): 95% of all businesses fail within 10 years of start up. The primary cause is management incompetence. The solution is for management to build success into business by developing a "recipe" to make business work.

In round numbers, let me show you business failure statistics.

40% fail in first year 80% fail within 5 years 95% of all new businesses fail within 10 years

Still, small business is, and always has been, backbone of our US economy.

Today, about 33 million (1 in 4) Americans run solo practices or micro-businesses with a max of 9 employees.

Further, mill'ions of other small businesses employ ten or more people.

Surprisingly, small businesses employ MOST of workforce, create MOST of new jobs, and produce MOST of private gross domestic product (GDP).

Hard to believe, right? Typically, we hear about BIG business in "news"!

Why do most business fail?

Compelling research shows repeatedly: "management incompetence."

Many people who start businesses make this fatal assumption:

"I am an expert in doing technical work of a business. Therefore, I will be an expert in managing a business that does technical work."

However, knowing technical work of business becomes new entrepreneur's biggest liability! Why? Because most entrepreneurs snap right back into doing technical work (tactics) and forget about strategy (as I discussed in last week's PVT).

They get so busy baking chocolate cakes that they forget to build company, innovate, and watch market. They forget BIG IDEA, and their Entrepreneurial Dream turns into a technical nightmare!

Doing technical work of a business is way different than managing business of doing technical work! For example, I have seen very few great salesmen make good sal'es managers.

============================================================ 14.3 million more business failures? ============================================================

Economic forecasts predict that self-employed people will increase by up to 50% by 2010. Why? Corporate downsizing and human desire for independence.

But, more people going into business means even more business failures.

Everything an individual or company does or produces contributes to its reputation. Reputation is an intangible asset, but a very important one. In some ways it is even better than having money in bank, but not as easily quantified.

A good reputation is its own advertising and quality seal. It can engender loyalty in customers that can cross several generations and time zones. A good reputation can bring in more customers in good times, and be a protective buffer in bad times.

The author has delineated what he calls the, “18 Immutable Laws of Corporate Reputation.” This book holistically deals with topic of reputation management in three parts: establishing a good reputation, keeping that good reputation and repairing a damaged reputation.

Law One: Maximize Your Most Powerful Asset Reputation is an intangible asset yet it is arguably most valuable asset to manage and maximize. A good reputation can attract and keep customers, investors, and employees. Because of this, a good reputation is like a reservoir of good will (towards company) to help it weather bear markets, scandals, or natural crises. Conversely, a lost or damaged name can scar a company and provoke boycotts or drive off new capital.

Law Two: Know Thyself – Measure Your Reputation Before you can manage your reputation you must first measure it and keep score. Measuring reputation is easily done through standard public opinion or market studies; but as each corporation has different stakeholders (target markets, shareholders, etc.) it is necessary to customize. Less than half of corporations have custom research programs. There are no clear methodologies so it is important to identify stakeholders (from local to global) and relevant attributes or quantities to be measured: same company may rank differently in different surveys/studies. Law Three: Learn to Play to Many Audiences No company is an island. Everyone has opinion on everything. You can never please everybody. Stakeholders are everybody involved with corporation. The group is as diverse as: customers, employees, investors, market analysts, shareholders, government, special interest groups, local communities, retirees, etc. Know who are important and play to them. It is helpful to think of stakeholders in terms of a hierarchy or, graphically, as a pyramid with most influential at peak and others following in descending order. However, it is important to keep in mind that stakeholder influence is a dynamic relationship and same model or model is not necessarily applicable to other markets/locales.

Law Four: Live Your Values and Ethics Studies of America’s largest companies show that a strong reputation for moral and ethical conduct performed better financially in terms of their returns on investment and equity, and their sales and profit growth. One study cites that on average excess value beyond shareholders’ investments comes up to $10.6 billion more than companies without a clear code of ethics and supporting behavior.

Law Five: Be a Model Citizen At Timberland, social responsibility is an integral part of company’s identity and is a significant component of its reputation. Aside from activities like monitoring their contractor’s overseas facilities, improving energy efficiency at facilities, and minimizing chemical wastes; they encourage volunteering for community service by considering it as paid leave. Law Six: Convey a Compelling Corporate Vision What is this corporation trying to do? That is question answered by Corporate Vision and guiding principle of its leaders and personified by CEO. The vision and leaders motivate stakeholders, who in turn have enormous impact on reputation.

Law Seven: Create Emotional Appeal Emotional appeal is difficult to quantify or define; but it is what engenders passionate customer loyalty and strengthens reputations. It is mostly shaped by sum of people’s long-term interactions with company’s employees, products, services, and even advertisements.

Establishing emotional appeal is more than just satisfying customers. It is also about getting customer to identify happiness or contentment with product. In fast paced electronic world it is also helped by a personal touch or special treatment.

Law Eight: Recognize Your Shortcomings Examine your reputation and assess if your current business practices still build that reputation. Only by first recognizing discrepancies and problems can you take steps to fix them. The sooner you come clean, sooner you can fix them and do “damage control” before it reaches a crisis situation.