13 core tips on building a successful business.
Setting out on your journey to building a successful business is both exhilarating and exhausting as well as nerve-wracking, challenging and rewarding. There is no end to the many financial, legal, staffing, marketing, and customer issues that will come up as you launch your business. Unfortunately, there is a lot of conflicting advice out there for the aspiring business owner. But here are 13 core tips to help you begin navigating the startup landscape:
1. Make sure you know about the business you start
Not only should you know something about the business you start (the more you know, the better), you should be excited and motivated about the products or services it will offer. Don’t pick a business you know little about or are just doing it because it’s “the hot thing.” It may take too long to become the expert you need to be. Or, it may “cool” before you’re up to speed and able to generate a profit.
2. Do your homework: make sure your business has a Big Market
To help you make sure you’re choosing the right business to start, do your homework. Do some research to see what kind of market there is for your product or service. Is it big enough to sustain a business? Is there enough of a revenue potential to generate money from investors—if you need them? What are the barriers to entry? Is it easy to copy?
3. Raise as much startup funding as you can
It’s almost always harder and takes longer to raise financing than you think. That’s especially true if you are a startup. You must ensure you have a cushion for all the product development and marketing expenses incurred. In an ideal world, you will have sufficient capital for your operations to break even. Don’t worry about diluting your percentage ownership in the company. Developing a great product takes time and money.
4. Constantly monitor your finances
A recent study revealed that 90% of businesses that fail do so because they don’t pay attention to the financial detail. You must keep on top of all of your expenses, income and balance sheet. Maintain a low overhead. Be frugal with expenses and avoid unnecessary costs. Learn to live on a shoestring budget until meaningful revenues start to flow in.
5. Know your competition…in all ways always
Make sure you thoroughly research competitive products or services in the marketplace when you start and as you move forward to keep on top of new developments and enhancements from your competitors. Look at their websites, learn about their product/service offerings, get on their mailing lists, talk to their customers…do whatever you have to do to know what they are doing…and hence what you should do to keep up or stay ahead. Another way to do this is to set up a Google alert to notify you when any new information about your competitors shows up online.
6. Talk to other entrepreneurs and business owners
Advice from other entrepreneurs and business professionals (such as lawyers and accountants) can prove to be invaluable. Consider putting together an advisory board, and don’t be afraid to motivate members by giving them stock options in your company. Find mentors who can give you advice on hiring, product development, marketing and raising funds.
7. Be able to describe your company in 30 seconds or less
You should have a succinct and compelling story about what your new business does and what problems it solves. Have this ready for potential customers and investors (although you will need to tailor it to specific audiences). Keep it to 30 seconds or less. Articulate your mission and goals, and why your product or service is compelling and unique. And if an investor is interested, be prepared to follow up with an executive summary about the company or a PowerPoint “deck” that dives into more detail about the company and the market opportunity.
8. Hire the right people
Hiring the wrong people is one of the biggest mistakes made by entrepreneurs. You need to bring on employees who have the relevant background and experience. They need to fit into the company culture you are trying to build. They need to be hard working and flexible, as employees in startups often have to function in multiple roles. You must do thorough reference checks on them. Make sure your offer letter says they are “at will” employees and can be terminated at any time. Don’t forget the old quote: “Hire slowly. Fire quickly.”
9. Never stop networking
Networking can land you a new investor, a great employee, a new customer, or a great mentor. Attend industry and startup events. LinkedIn can be a powerful tool to help you network, so make sure both you and your company have profiles on LinkedIn and that you are constantly adding new connections. When someone does a Google search on you, your LinkedIn profile will usually show up at the top of the search results, so be sure you’re making a good first impression.
10. Give great customer service
Why do companies succeed and others fail? Customer service. Take some of our successes: Zappos, Virgin America, Amazon, Nordstrom’s. All provide terrific customer service. In the past year, Time Warner Cable has lost over one million subscribers. Why? They are rated among the worst companies in terms of customer service and pricing.
In fact, today I was riding up in the elevator and saw a neighbor of mine with a Time Warner Cable bag. I asked him if he was still a customer. He said he was just using the Internet service. He cancelled everything else, as they were too expensive.
You want your customers to give referrals and sing your praises to their friends and colleagues. Thank your customers personally by email. Go the extra mile to show your appreciation.
11. Hire an experienced attorney
You need a savvy business lawyer for your company, one who has regularly formed and advised many other entrepreneurs and who specializes in startups and small businesses. An experienced startup lawyer can help you:
- Help you establish the right kind of business (DBA, LLC, Corporation, etc.)
- Draw up contracts
- Prepare key agreements for the business
- Set up a stock option plan for employees
- Prepare protective offer letters to prospective employees
- Prepare an employee manual with rules, regulations, rights, etc.
- Help you negotiate terms with prospective investors
- Limit your potential legal liabilities
- Protect your ideas and inventions (through copyrights, patents and non-disclosure agreements)
Get recommendations from other entrepreneurs and venture capitalists. Make sure you have a good rapport with the attorney. Meet with several potential attorneys before you make a final decision (those first meetings should be free).
12. When building a successful business, you can’t take forever to launch
Your product or service has to be at least good, if not great, to start out with. It has to be differentiated in some meaningful and important way from your competitors’ offerings. All else follows from this principle. Don’t dawdle on getting your product out to the market, as early customer feedback is one of the best ways to help improve it. As Reid Hoffman, venture capitalist and co-founder of LinkedIn, said: “If you are not embarrassed by the first version of your product, you’ve launched too late.”
There is never a perfect time to launch a startup, so follow that famous advice and “just do it.” Take the first step to building your business, even if it’s only part time while you still have a paying job.
13. Market and then market some more
You continually have to be attracting, building, and even educating your market. Make sure your marketing strategy includes the following:
- Build a professional looking, up-to-date website.
- Learn the fundamentals of SEO (search engine optimization) so that people searching for your products and services might find you near the top of search results.
- Use social media to promote your business (LinkedIn, Facebook, Twitter, Pinterest, etc.) if it’s appropriate. Not all businesses need all Social Media. Don’t get caught up in the “I have to be everywhere” syndrome. Takes too much time and energy for zero return.
- Develop a marketing plan, along with your strategic plan, so you know what you will need to do to achieve near-term goals and which tactics you should use (traditional marketing or new age digital).
- Create a database of customer from the first sale you make. There is software available that will allow you to enter and analyze your customers’ behavior. This will enable you to send targeted messages to the right clients/customers about new products, product specials, etc. If you wait too long, it will be a monumental task that is not only time consuming but expensive as well.
I hope you found this blog helpful to you. At The Marketing Garage, we work with small businesses and startups to get them on the right path to their journey to success. If you need help building your business, get in touch with us. You can email me at firstname.lastname@example.org. We offer a no-charge initial consultation to see if and how we can assist you.