7 things that matter when starting out and building a business
10 Aug 2016
Entrepreneurs are constantly striving for success, looking for ways to make their business work. A lot is written about success, I have decided to take a slightly different approach, looking at what is often neglected.
So here are 7 things that matter but most forget about when starting out and building a business:
How you treat suppliers: that actually includes how you treat investors, your accountant, lawyer and others. Most of those people deal with a lot of other businesses, entrepreneurs and start-ups. Treat them with respect, value their time and consider their requests on your time are worth attention as much if not more than your customers. Why; if you treat them well they will generally go out of their way for you.
Manage your team: first you should build one and then try hard not to keep control of everything yourself. Delegation is hard for most entrepreneurs but failure to do so is a sure break on success. Seek staff who are better than you and reward them, but guard your shares and use options tied to targets, or bonuses on performance. Incentivise with high basis salaries and you will put off investors and probably run out of cash before you succeed. Motivate through giving responsibility and your vision and make it clear you will reward loyalty as you grow.
Hits don't equate to sales. Too many are obsessed with social media coverage beyond its impact on the business. For web-based and software service businesses, propositions hype and enthusiasm does mean you have a model that will translate to income generation. The long-tail model can work but more businesses fail to get users to buy a higher end solution having been attracted to a free and simple product.
Know the finances; well actually always know your burn rate and the numbers in terms of costs, margin and the profitability of customers. Financial control does not mean employing a good accountant, you run the business not them so make sure you control the cash flow and really understand the business. It’s also cash not accounting profit that counts, especially at first.
Know your competitors but serve the customer; it’s not as easy as it used to be to spot gaps in the market, it is easy to see who else in your market, that’s what Google and the internet has given us. You can see how your customers view you compared to the competition, but concentrate on customers not competition.
Scale and ambition; it’s up to you, but if you want or need a venture investor you will need to have both of these and the ability to grow a business of real size and turnover plus a good commercial margin over your costs. If your product costs you too much then however large the business grows you won’t attract investment. If you don't want to grow a business beyond a good living for yourself, then steer clear of investors!
Time only moves forward; a market niche as well as a product has a window of opportunity. I have seen several businesses that have a great product but fail to get it to market fast enough. It might be an inferior product but often what matters is market penetration and timing, not how good or innovative your product is.
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