The excitement of seeing your “baby” grow also has rewards beyond just money. I think most entrepreneurs feel this way… I have to believe that most do.
Why? Because growing a business is just too hard to only want mediocrity. Besides, any firm that grows its bottom line into “the black” (aka profitable) has to shoot as high as it can, even if it falls short.
After working for many years with start-ups, and seeing many fail, I think there are at least 5 major attributes that separate the successful start-ups from the ones that seem to fail.
Like any ship, a vessel needs a capable captain. In rough seas, the captain maintains calm and order. His experience and wisdom brings the crew through all obstacles. When it needs to change course, the captain makes an unwavering decision and executes.
Do you think it’s any different in business? Of course not!
The attributes that are desired and needed are too many to list here, but I have found that you can take a great idea, and if your CEO does not have the skill sets to deal with the business side, then he better bring on someone who does. You will not be successful without a capable business leader in charge.
I have seen great IT ideas, started by engineers that failed miserably because the CEO was a code writer. The same goes for some fantastic restaurants, started by brilliant chefs. I promise 3 out of 5 fail, within 5 years. Being a great chef does not require the same skill set as a business owner.
Clear definition of business.
Ironically, this can work both ways. By this I mean it can be defined too narrowly. Fed-Ex was founded by promising overnight delivery of letters by 10:30 a.m. the next day. 20 years on, they handle all types of shipments from the smallest, to things like tanks for the military and other heavy loads. They understood shipping was shipping and to utilize their planes in any way it made sense.
On the flip side… you can’t be everything to everybody.
When my father took over his costume jewelry firm in 1970, he learned quickly. He found that every line, style, and size of jewelry that the company represented was held in inventory because the salesman demanded it was necessary–in case someone ordered it. This happens often, where the wants of the sales department clash with the other departments (like finance). The end result was a massive inventory, with enormous amounts of capital that was tied up in non-moving items.
My father also knew that if you give your customers too many choices they end up making no choices. Upon taking the reins, he immediately decided what each division would carry, liquidated much of the inventory, targeted a theme, and said goodbye to the salesmen who complained. In five years, he sold his firm for 10 times what he paid for it (back to the original founders)!
Constant oversight and analytics.
If you know your numbers, you can immediately identify problems. Since most start-ups are on “bootstraps,” where funds are tight, failure to identify problems or the inability to change when a problem is identified can be financial death.
Our corporate project, Store-A-Tooth, are experts at watching, analyzing, and acting on data. When their closing ratios (conversions of interested clients, who want to store their stem cells from their child’s baby teeth) of leads from dentists dropped from 70% to 30%, they knew something had to be wrong.
They identified that a few of the newer front desk receptionists inside the dental offices, who were responsible to briefly tell the patient about the service, were just asking the people to fill out their contact details and then faxing in the information.
To make matters worse, they sometimes waited a week to send in the forms. The solution was to be able to control the message. They purchased electronic tablets, produced a short info-video on the tablet, and asked the patient to fill out a form, electronically, of their desire to know more.
All this happens while waiting to see the dentist. In addition, the dentist mentions the service in the examination. This eliminated the faxing of sheets, controlled what was being told, and saved the office staff time, while simultaneously improving the quality of the lead. The end result: sales have been growing at an incredible 100% month-over-month basis.
Know that it is a marathon and not a sprint.
“Anything worth doing is worth doing well and takes time.” Ever hear that one? One must understand that most businesses are not the Holy Grail and have true life-cycles. In short, businessess are like babies that must learn to walk before they can run.
This is where I hear the two scariest words in private equity… the “Serial Entrepreneur.” When someone tells me they are that, I run the other way. It tells me in most cases that the person has never seen the business to fruition or that he or she loses interest. I know that some people have been able to do it like Elon Musk, but very few people are Elon Musk!
Capital is the life blood of any business. One would do well to plan carefully, follow their business plan, and not grow too quickly. With moderate success, there is a tendency for the entrepreneur to take additional risk. My favorite guidepost is to tell myself to “think like winter in summer…and summer in winter.”
When things are good, keep an eye open of where you could be unexpectedly caught. Likewise, when things are down, as long as your plan is solid and you have done your homework, winter won’t last forever. Be careful not to fool yourself though. Be honest and candid in your analytics.
In closing, growing your start-up can be the most rewarding experience in your professional career. It’s not easy, and not for everyone, but for those who can master “the beast” there are no limits.