This is how Jim opens the book, with the quote, "Good is the enemy of Great".

What does this mean to you as a small business owner? Ultimately it means that any time, energy, or money that you are investing in 'good' things is preventing you from investing that same time, energy and money in the things that would be 'great'.

Not being GREAT scares some business owners. They think being great means working harder...but the reality is just the opposite. If you have great partners, great employees, a great spouse, great customers, a great relationship with a great bank, your life is easier.

I think that false belief comes from imagining your current employees handling a busines ten times your current size... now THAT's scary for many business owners.

So let's apply this principle to employees.

Which employee makes you the most money? The excellent employee, the good employee, or the lousy employee? Everyone gets that one right. The excellent employee. Good job. Now... Which is the most COSTLY? the good employee or the lousy employee? Well... if you're good at firing people, the lousy employee doesn't last long. So it's the good employee who is the most costly. But wait... if the good employee is the most costly... we should fire them too, right? RIGHT. That brings us to the second insight.

What would happen if you replaced each of your good employees (one at a time) with great employees? Now, if you don't have employees, substitute the word 'partners' or 'customers' or 'vendors' etc.

Again, what would happen? My answer? Greatness would happen. And so the key phrase in the previous section was "If you're good at firing people." The 'Brutal respect for reality' principle is the most under-appreciated principle in this book by small business owners I've met who have read it. Nobody takes this principle at face value. Nobody has the guts to look at this principle seriously, and ask "Where does this principle lead?" and then go there.

But here's the big insight... None of the other insights matter if you don't adopt this one.

So the action item here, is to sit down in a quiet room, and think. Think about the brutal reality of your business, your marketplace, your goals, your dreams, and what you want from your business. Get to the truth.

Notice that this is the exact opposite of "The Secret" -- no wait, that's not quite right. This is the complement to "The Secret". You need both faith in what you can do, AND a willingness to look at the brutal reality. If you can combine both, you're ready to take on the world. And the concept of faith leads us to our final key insight.

The "First Who Then What" principle says simply, the people are more important than the plan. This leads to two startling conclusions...

#1) Stop trying to make big plans... which is probably the opposite of your natural instinct and #2) Instead of making plans, just start raising the bar on all of your relationships. This shift in mindset changes everything and actually goes a long way towards reducing the pressure on you. If success is more about the people you work with, and less about your plans... you get to relax.

I recommend three action items here... one is to reach for the stars, the second is to sweep the floors.

To reach for the stars, I suggest you think about who do you know... or what person could you imagine... who could make your business a dream to run. Who could you partner with, hire, or what kind of customer could you get that would just change everything... the action item is to write a description of that person and why they would have that impact. Make that a goal you think about in the background until you're ready to go for it. No pressure.

The 'sweeping the floors' action item may scare you. It is to make a list of all your employees, parters, and top customers and rank them... from best to worst. This is especially hard with employees, but it's so imporant. Who would you not want to lose? Who could leave and it would be no big deal?

The extra-credit action item is to actually let go of one or more of the relationships that ended up on the bottom of the list -- at the time of your choosing. If you think that is harsh... well... think back to key insight #2 -- BRUTAL respect for reality. If you don't have employees, look at your partners, or your vendors, or your customers. The same principle applies. Those relationships on the bottom need to be let go before you will have the financial capacity to hire that awesome person you described in the first action item.

So have brutal respect for reality. Once you start cutting from the bottom -- not because you have to -- but because you respect yourself, your life, your money, your energy, and your time, and your business will change dramatically for the better.

I love this analogy. Imagine a 30 foot tall granite flywheel. You push on it for hours and seemingly nothing happens... but after days, you see movement.. you keep on pushing... eventually you build up momentum. Eventually it seems to have it's own energy, you can't even stop it. That's Jim's vision for the kind of FAITH you need to have during an intentional transition from good to great.

Most decisions you make proactively will have very little visible effect. But it all adds up. If you keep at it, if you keep pushing in the SAME direction, then amazing things happen eventually.

What does this mean to your small business?

I think it means one thing above all else, do not set financial goals -- set operational goals. If you keep improving your operations, your company will be visibly stronger and will eventually achieve financial success on its own. This is the OPPOSITE of what many small business gurus teach. They say, "Write down a profit goal" or a revenue goal. I say hogwash! All that can do is stress out your company and push it outside its capacity to manage risk. Eventually... yes... when you're fully systematized you'll be able to set financial goals. But right now? I bet you would be better off focusing on smoothing and systematizing the operations of your company. I think you'll have a happier, more capable business.

OK.. That's it for issue #1. I'll see you next week with a book-pick from Brad Fallon, the internet marketing superstar: It's Not Luck by Eliyahu Goldratt. It's a classic in MBA programs... but does it have any relevance to small business? Let's find out.