In my past life I supported aircraft accident investigations. The primary purpose of these investigations was of course to find the root cause for why the accident occurred. Equally important was the transmittal of the findings and conclusions to the entire aviation community (pilots/crew, maintenance, designers, air traffic control, etc...) in an effort to prevent the accident from happening again. (Learn from a real jet crash: “What a jet crash can teach a business owner” ).
Sadly, in my 14 years of consulting for small businesses and startups alike in Metro Atlanta I have visited too many business "crash" sites. In an attempt to prevent a crash, or better yet, improve your chances for success, I share these findings from those who faltered of failed. This list is intended to be complimentary to Mark Cuban’s outstanding 12 Rules for Startups published in Entrepreneur Magazine back in 2012.
1. Plan it on paper first.
What problem are we solving? What differentiates our solution? What is our pricing strategy? Who pays? How do we attract customers? How do we sell to these customers? How long before cash positive? These are just a few of the questions one should be asking BEFORE you create a logo, a website, or even establish a name for your company? The process of writing succinct answers that stand up to tough honest scrutiny is harder than you think but it is an exercise that is well worth it. Though this business planning process will not guarantee success it will most certainly improve your chances tremendously. (Want to know “What to Include in Your Business Plan”)
2. Start ‘soda straw’ small.
“I want to sell our solution to lawyers.” “I want to provide our services to any tech startup.” “This new CRM solution is for ANY small business.” These are real examples from start-up founders who each had a minimal sales force. The problem with this approach is the size of the customer target dwarfs the typical staff and resources available to communicate with this audience in any meaningful concentrated manner. The more effective approach is to carve out a narrow segment of the target demographic (by geography, specialty, etc...) and concentrate your resources accordingly then prove your business model can succeed with that segmented customer. Then, and only then, grow by pursuing new customer demographics in “one vector off “ increments.
Tell the team what the plan is (there is a plan - right?), who are the competitors, why are we different, how are we going to grow, what the company can/will look like a year from now, and how will we make that vision a reality. Saying that the plan is in your head just doesn’t help anyone. Worse than that, keeping the plan a ‘secret’ provides for the use of that number one of all excuses when goals aren’t met, “I didn’t know.”.
People want to be led. That is a fact. A great work environment is one where there is personal satisfaction for directly contributing to the growth of the company. I heard from one CEO of a Fortune 100 company that his leadership style was to “set expectations then inspect”. Perfect and succinct. So lead by assigning clear roles and responsibilities, set measurable expectations then inspect to ensure your plan is being followed and the team is getting the support, training and resources they need to do their jobs.
5. Have a sales process.
Place as much emphasis on the sales process as you do about making the product or delivering the service. Sales is a respected profession and critical to the success of any company. So handing the responsibility to the most dynamic person, best golfer, best joke teller, or best looking person on your team is probably not the best approach. Sales is a process - the process of gathering knowledge about your customer’s problem so that you might devise a solution to best solve it. It is therefore critical that your sales process reflects how your customer buys similar products or services. Much like other specialty roles such as operation, finance, and accounting, sales too takes skills, training, and expertise. (Learn here about “The Business Owner’s Role in Supporting a Sales Team”)
6. Measure the right things.
But don’t over measure. Taking the temperature of the company is important to gauge it’s health and how well your team is performing to the plan (there is that word again!). Here are a few of my favorite things to measure: qualified leads (marketing), win-rate/renewals (sales), defects/rework/on-time delivery/production cost (operations), operating cash flow (finance).
7. Be miserly.
Especially about “non-value-added” expenses. If you would hesitate at all to itemize the expense on a customer’s bill then think twice about spending the money. Example: new office chair, plants, company flat screen tv, ping pong table, high rise office space. Cash is the life blood of the company, especially in a startup, so treat it as a precious resource .... because it is. (Here is a good article about cash flow management: 4 Biggest Causes of Cash Flow Management )
8. Seek out advice and be coachable.
Being a good lawyer doesn’t automatically mean you have the experience to be the CEO of your newly formed law practice. Same thing holds for a gaming coder, software developer, or a doctor, engineer, or a chemist. And lastly just because it was your idea or invention doesn’t mean you are equipped with the skills to lead and grow a company. Sad to see an owner finally grasp, “You mean the problem is me?” just before the business is shuttered. Worse is everyone around him/her already knew this. Running a growing thriving company is hard and requires talent and expertise. If you have not gained that expertise through varied job experiences then seek out those experts and LISTEN and ACT on their advice.