As someone who has been called a serial entrepreneur, I've had more than my fair share of experience starting new enterprises, turning around under performing enterprises or re-vamping operations. During that time, I've learned a thing or two about some critical factors you absolutely need to know before you jump into the proverbial entrepreneurial waters.
Better options to become a self employed global entrepreneur
AWE's driving force and core mantra is: 'Each one, help women.' “If they have a business idea, we help them develop it. We help them grow it.
In the majority of cases, start-up success or failure is all about knowing the both the how and the why of taking action, and always being clear about which steps to take next.
To help this process, here are 10 essential things you need to know about running a successful business. Use it as a checklist to make sure your thinking and your business plan are on the right track, or if you need to get more information, strategic education or clarity for yourself on your overall vision, your market, or your product or service.
Offer what people want to buy, not just what you want to sell. Too often, people jump into a business built around a product or service they think will be successful, rather than one that is already proven to have a market.
What do I mean?
Instead of creating and selling a new sports shoe with the latest trendy design and materials, you'd be much better off from a business perspective to focus on shoe category generally (a proven category because which people buy shoes every day) and then focus more specifically on the niche of high performance sports shoes, (which you may even sell in a section of a shoe retail outlet). Better to have a small slice of a large category than a large slice of no market at all.
Get cash flowing ASAP. Cash flow is the lifeblood of business, and is absolutely essential to feed bottom-line profits. So you need to find ways to jump start cash flow immediately.
How do you do that? In a professional services business, you can ask for deposits on work up-front, with balances due on delivery.
You can do the same in retail, especially on high-ticket or specialty item and position it as an added value and a way to insure delivery by a specific date.
You can also add value to generic items by creating private labels, and develop continuity programs where customers pay an up-front monthly fee to insure delivery or availability of items they will buy on a repeat basis. Of course, the key is to make sure there is little or no gap between when you pay for labor, stock inventory and when you actually get paid. Ideally, you'll find ways to get money up front, and your cash gap will never be an issue.
Always find new ways to keep costs low. All the cash flow in the world is worthless if it's not positive cash flow, which means you have to bring in more cash than you pay out.
To do this, you need to keep your costs and expenses low. We've touched on this before, especially in terms of outfitting a startup. The main idea is to never pay retail , and look for used or gently used items to furnish your office or your retail space.
Paying vendors up front also gives you leverage for negotiating better prices. Especially in this economic environment, where credit is at a premium, vendors are more willing than ever to find creative ways to finance transactions, and that is a trend will likely continue over time.
So do some extra work and research now to discover how owners and vendors are finding ways to work out deals, and you just may hit on whole new ways of doing business.
When planning, always overestimate expenses and underestimate revenues. I was trained as an accountant, so the numbers side of business is part of my entrepreneurial DNA, and was also a big part of my early business education.
That said, I've never seen a startup business where expenses were at least 30 percent more than initially planned or anticipated, and revenues are at least that much less.
Being conservative in your numbers doesn't mean you are willing to accept those numbers, it just means you are arming yourself with information you can work with and work over. It means you can gauge the kinds of efforts and activities you will need to put into sales and marketing.
Focus on sales and marketing manically. In business, nothing happens until a sale is made. From the jump, you'll need to find a good way to get leads, convert leads into sales, and make sure you keep getting repeat sales from your customers.
The way to do this is to find or create a marketing and sales funnel system that you can work, test, measure; one that anyone in your company can utilize.
Too many entrepreneurs focus on getting their brand right before they start to generate leads. That is exactly the wrong way to go about business. Leads are always more important than your brand, so don't waste money getting your brand right at the expense of spending that same money to buy new customers.
Soon, you'll discover you can build your brand from the ground up, versus spending years and hundred of thousands of dollars building it from the top down. Don't presume you'll even survive that long, because without leads, you won't!
Find ways to exponentially increase profits. In business, there are five drivers that impact profits. If you can master them while keeping your costs in check, you will run a successful business.
It's as simple as getting more leads, converting more leads into customers, increasing the number of times those customers buy from you, increasing the average price point of your sales and increasing your profit margins.
Do any one of those, while also keeping costs down, you will see more profits. Do all of them and you will see your business really take off.
Test and measure everything. You can't change what you don't measure, and you can't tell if a program or strategy is working if you are not faithfully testing, measuring and tracking your results.
Another way to look at this is to think in terms of doctors. Most like to get baseline stats of your heart rate, blood pressure and breathing before they delve into identifying symptoms or recommending corrective courses of action.
The same is true in your business. Why keep literally throwing money away on an ad campaign that costs thousands of dollars but doesn't bring any people through the door?
Accept that learning more equals earning more. If you've never run a million dollar business, you don't know how to start a business--simple as that.
But you can learn to run one, even if it is your million dollar business you are building from the ground up.
However, you need to accept right now that learning always comes before "earning" (except in the dictionary). You'll need to be committed to learning as much as you can about sales and marketing and operations if you want to have a truly success business.
Once you do that, however, the sky is the limit. Knowing and applying those simple fundamentals in a highly leveraged way is one of the reasons many top executives and entrepreneurs earn so much.
Identify those areas and you then can decide to learn it yourself or hire an expert and learn as much as you can from that person--because you never know when you can run across a distinction in thinking or a strategy that can really take you and your business to a new level of success.
Don't discount, add value. Whenever you discount, you are taking money directly out of your pocket and directly from your bottom-line profit. So don't do it. Instead, create added value propositions all the way up and down your product or service line.
Whatever the industry is, look to hold your price points, increase your margins with the low-cost or no-cost extras and any kind of freemium offerings.
In the end, those little things won't cost you a lot, but will build up tremendous goodwill and word-of-mouth with your customers and customer base.
Get a coach. Even if you don't get a business coach at first to help you and guide you in your planning and operation, get someone who is objective and outside of your business you can rely on for nitty gritty business advice and to hold you accountable to getting results.
Too often, we think we have all the answers and are the only people who can really get things done. The reality is that another set of eyes can work wonders for how you operate both on and in your business. An outsider can also make sure you are getting the numbers you need both on the top line and the bottom line to survive.
I hope this initial checklist will be valuable in helping you clarify your thinking and helping you prioritize some activities in your planning and start up mode.
I like to say there are no mysteries in business or in life, there's just information you don't know yet.
So prepare as well as you can, knowing you will need to make changes and corrections. But armed with the right strategies up front, you can cut the time it will take you successfully get to your ultimate destination--wherever it is that may be for you and your business.
We speak to two leading consultants and two successful entrepreneurs – Laura Tenison of JoJo Maman Bébé and Will King of King of Shaves, who have both steered their businesses onto phenomenal success – to find out the secrets of growing a small business into a much larger and more profitable venture.
The Consultants Gerard Burke - Your Business Your Future LtdGerard Burke, director of Your Business Your Future Ltd and Senior Visiting Fellow at the Cass Business School "Businesses of all types in every sector are capable of significant growth. The constraining factor isn't the business model – it's the ambition and capability of the owner-manager, although it may take longer to grow in some sectors and some business models can be scaled more quickly than others. "Many owners simply don't want their business to be large. Most owners want their business to be better, but that doesn't necessarily mean significantly bigger. Also, the level of ambition an owner has tends to vary over the life of their business – and there's nothing wrong with that.
"Some owners with ambitious growth plans don't have the management and leadership capability to achieve them. The more far-sighted recognise this and invest in their own development. "If you are to achieve significant growth, your processes and systems will need to change. And people who were right at the start may not be right as the business grows. The owner will have to change his or her own behaviour and move from 'hero' to 'strategist', which is a great challenge and often one of the biggest barriers to growth. "To achieve significant growth, the owner must be passionate. They also need to be clear about their own personal goals and drivers, and be prepared to change their own behaviour and invest to make that change if necessary. They must also be able to articulate a vision for the business that inspires others and have a clear plan of how to get from where they are to where they want to be.
"Nearly 90% of successful growth businesses grow by selling more of their existing products and services to existing customers and others like them. Most businesses grow organically. You need to invest in the best people and master key numbers – cash and then profit. "Growth puts strain on cash, that's why more businesses fail when growing than when shrinking, so having a rigorous cash flow forecast and monitoring it closely are key. You must also be able to fund your growth, of course. "People are another vital part of it. When we ask successful owners what they would do differently if they had their time again, consistently they reply 'invest in better people earlier'. Growth is difficult, so, you really must want it passionately, understand why you want it and think through the implications fully."
Robert Craven - The Directors' CentreBusiness consultant and author Robert Craven, managing director of The Directors' Centre
"Some small business models just aren't scalable, while some owners simply don't wish to grow. It's a myth that all businesses have the potential to grow. Most are lifestyle businesses, owned by people who are content to earn enough money, pay the mortgage and send their kids to a half-decent school. "And few owners have the skills or aspiration to be 'business growers'. The growth mindset is very different to the 'business as usual' mindset. You can divide business owners into 'lifestylers', 'business growers' and 'business harvesters'. "As well as high-demand products or services, to really grow your business you need to take advantage of scale and often that requires working with a larger partner who has the required footprint and resources. "To 'jump-start' one's growth usually requires significant additional resources – usually cash – but caution is advised. Many high-growth businesses go bust. The real issue is 'over-trading', when, despite rapidly growing sales, your cash flow falls apart because you can't fund the increased output.
"Running a larger business doesn't suit everyone and trying to get there can create an enormous burden on one's lifestyle. Growing a small business significantly is a major challenge and although it's something that many people aspire to, in truth – very few people succeed."
Laura Tenison MBE, founder and managing director of JoJo Maman Bébé, the multi-channel mother and baby specialist "There was no specific 'turning point' for my business. JoJo has grown organically from a kitchen table start-up with first year turnover of £30,000 to our current size with a £36m gross turnover predicted this year, 52 stores and a busy mail order business sending out up to 2,000 parcels a day. "Re-investing in the business and not taking money out for the first 18 years was key to my success. Owners need to believe that their business is the very best place to invest; be patient, never greedy; and keep innovating. Never rest on your laurels – a business needs to grow and improve each year to survive.
"Taking a small business to the next level requires hard work, perseverance, great customer service and a good product – they're all key. I'm not a great believer in over-gearing a business; I prefer the manner in which we have expanded slowly and sustainably via organic growth and reinvestment. "Having a great team is essential, too, but only invest in them when you can afford to. In the early years, have faith in your own ability and learn every area of the business. When you can afford to employ professionals, they will almost always do a better job than you did, so trust them and let them take the responsibility they deserve.
" Will King - King of ShavesWill King, founder and CEO of King of Shaves "When I started the business it was just me, a box bedroom and a computer running at 16Mhz. It was 1993. There was no web, no Google, all I really had was a phone and my brain. "My first-year sales were £300 and my losses were £30,000. I remember, early on, spending two whole weeks filling 10,000 shaving bottles at my kitchen sink by hand, but that saved my business £2,000. Then we got into Boots, which helped to contribute to second-year sales of £58,000; then Tesco, and third-year sales of £250,000. "Things have certainly changed. In financial year 2011-12, our wholesale sales reached £10.2m and we did about £22m in retail sales. Now, only Gillette and Nivea are bigger than us in the UK.
The business has 15 staff and our key markets are the UK, USA, Australia, New Zealand, Turkey and Japan. "How do you grow a business that quickly and significantly? First you must realise you can't do it on your own; you'll need a good team around you, although your knowledge of your business should be second to none. "You then need to learn the art of delegating responsibility to great people. Finding great people is the key to success. It frees you up to keep imagining where the business has to be in two-five years. And, you can't do that if you're 'head cook, bottle washer, front of house and security'!
"So, if you find someone great – hire them. And you never know when you'll meet them – I met Andy Hill, my CTO, while snowboarding in Val d'Isère in 1993. Be cautious about bringing in people from big companies. Often they miss a lot of the benefits and struggle to understand that they actually have to do things, like selling, rather than just 'driving' spreadsheets.
"If you want to move from small time into the big league, you have to constantly enthuse about what you're doing and excel at doing it. And above all else – enjoy managing and developing your business. If it's a daily grind for you, you'll wear down others and never get anywhere."