I once worked for a digital consultancy that developed web sites for UK and USA top 100 companies. The company's portfolio included some of the most prestigious companies in the world. But despite this valuable asset, the company was always struggling with to grow and to increase profits. Problem was: the company spent 90% of its time pitching for new business instead of building long-term relationships with its existing customers.

Here's another example of how important it is for you to build long-term relationships with your customers and employees:

DD is a bit of genius. When it comes to thinking about business, he has few peers. This natural gift has given him an advantage over his competitors. He can often find brilliant, money making solutions where others find obstacles.

DD makes a lot of money as a business development consultant. In all the years I've known him, there's never been a 12-month period during which he's made less than a million pounds. And I've known DD for 15 years.

So you'd think he was in the "too-rich-to-worry" category of wealth, wouldn't you? Oddly enough, he's not. He's still struggling to earn a living. In his fifties - still youthful but on the declining slope - he must work as hard to support his lifestyle as he did when I first met him.

This is not the way it's supposed to be. As you get on with your career, everything should gradually become easier. It should be easier to get the work done, easier to handle the problems, and easier to make the money.

So what is DD doing wrong?

In a nutshell: He is not able to develop productive, long-term business relationships.

This wasn't always apparent to me. I used to think that DD's problem was some version of attention deficit disorder (the modern psychological plague). While it's true that he has never been great at staying focused on one subject for any length of time, he could have overcome this problem by surrounding himself with people who could.

That's what a smart small business person does:

1. Identify what it is that you do well and put 80% of your efforts into doing that better. Make that skill your major contribution to your business. (In this case, coming up with marketing solutions has and would be LC's contribution.)

2. Identify what you do poorly and align yourself with people who do that well. (In DD's case, that would mean people who could handle details and follow through on projects that he initiated.)

When successful business people accept awards, they invariably thank their team. I used to think such gratitude was political. Now I believe it comes from the heart. Because to achieve anything of importance, you must not only possess a spark of genius and a ton of drive, you must also be smart enough to surround yourself with people who can do well what you do poorly.

DD is aware of his shortcomings. And he has attempted - many times - to find people who can help him build his small business. But, for some reason, those people never stay around very long. Instead, they stick with him till they have learned enough to make it on their own ... and then they seem to disappear.

That leaves DD in the worst possible situation: with a deflated small business and the unhappy prospect of having to find another potential superstar and start all over again.

If this had happened only once or twice, I could rack it up to bad luck on DD's part. But it's happened consistently for years. Which has led me to the inevitable conclusion that, despite his personal charm and intellectual faculties (see Word to the Wise, below), DD doesn't know how to maintain long-term business relationships.

Think of it this way: DD has spent his life as a high-income earner, but he's never built a small business. What is the difference? In a word, "equity."

In the context of this conversation, I think it is fair to say that one purpose of a small business is to establish equity. Equity is a form of wealth. It is stored value. The equity in anything (a business, a car, a house, etc.) is, roughly speaking, its net worth - the difference between what you can sell it for and what, if anything, you owe on it.

If DD had been able to train people to convert his talents and skills into products and services that other people could produce, his businesses would have equity.

But that's never happened. His small businesses continue to depend on his ongoing work to produce income. Almost as soon as his good people figure out how to do what he does, they leave him.

From DD's perspective, it may appear that his proteges keep "stealing" his equity from him. And there is certainly some truth in that. But the real problem is that DD lacks the skills to maintain long-term relationships with his key employees.

There is nothing I'd like better than to see DD sail into an easy retirement, with his proteges running his small businesses for him and sending him fat monthly cheques. That is not going to happen, however, unless he figures out what he's doing wrong - what is driving them away - and adopts a new strategy to keep them.

DD needs to study the theory of compound returns as they apply to his knowledge. Here, I'm talking about the effects of compound returns with people. DD never enjoys the benefits of compound returns on his relationships, because they don't endure.

That doesn't have to happen to you. If you want to become rich and continue to get richer and richer with less and less effort, make it a priority to not only find superstars ... but also to develop long-term relationships with them.

David
Small Business Resource