Building a Solid Business Foundation to Weather Any Storm. In the early days of conceiving and starting a business, we can be filled with excitement for what is possible and also the stress of venturing into the unknown. We want to be successful and see our vision come to fruition, even in the face of the inevitable “storms.” If we take a systematic approach and keep a 30,000-foot perspective, along with a few fundamental steps noted below, we can reduce the uncertainty of leaping into the unknown.
A lot of us who start a new business do so without a plan, and can even be successful without one. Most people hear the words “business plan” and their eyes start to glaze over, no energy to do the “work” of planning. We want freedom, independence from old norms, we don’t want to have to follow any rules.
So here is a framework for building a solid foundation:
Identify Our Reason for Being
Why does this business need to exist? Who are we, what do we stand for, what are the values most important to us that we will not sacrifice? As the day to day of the business inevitably grinds away, having clarity and knowing your purpose and core values will get you through the tough times.
Get Clear about the What the Business Does
Budding entrepreneurs tend to focus on what they are good at and the myriad ways to deliver their expertise to prospective clients. Instead, they should be thinking, “what problem can I solve?” Then you can go about figuring out how to be the best at solving that problem to distinguish yourself from your competition.
Know the Products or Services You Sell
What products or services are needed to solve the problem that you have identified? Make sure that you are super-clear about connecting these dots. With so many moving parts, it is important to understand fundamentally what you are delivering and why, so you can speak to what your customers want.
Find Out Who Needs What You are Selling
We have a saying in the movie business, “If you make a movie for everyone, you’ve made a movie for no one.” It’s the same for business. We’d like to think everyone can benefit from what we have to offer, but that isn’t really true. There are definitely specific, targeted groups of people who consider the problem you solve as the most important problem they have. Those are the people to go after, and for whom we build our product suite and channel our marketing efforts. If/when it takes off beyond that, then you have a windfall, maybe even a unicorn.
Be The Best!
Never stop learning and improving. Whether you have invented something new or are entering an existing market, the best way to excel is to have total clarity about the problem that you solve, keep constant lookout for ways to innovate and distinguish yourself from your competition. What sets you apart is a willingness to never take your achievements for granted and regularly investigate your customers’ ever-evolving needs.
Know How Much Money You Will Need
Statistically, more than two-thirds of all businesses fail in the first 5 years, often caused by a lack of money. Establish good practices, discipline and oversight from the outset to make sure you understand the numbers – how much you need, where will it come from, how long it will last, when it will come in. Don’t let a lack of affinity for numbers keep you from paying close attention. Having a good handle on your financial performance will help you weather any storm you encounter.
Know Where the Money Will Come From
Without a trust fund or a rich uncle, we have to raise money for our business from the outset and possibly along the way, whether it is to test your market, launch or expand with new initiatives. You may try to self-fund from your own pockets, the pockets of friends and family, or out of revenues, if you have them. Realising that, you will need to be very mindful about creating a fundable business. Keep a clean set of books and records, know your numbers at all times, recognising that you become answerable to your investors when you take their money.
Start Building a Team
As entrepreneurs, we have to wear a lot of hats – CEO, COO, CFO, HR – especially in the beginning, while also servicing clients. Naturally, with growth you will need to build a team of people most suited for their roles to free you to keep your eye on the future growth and opportunities to take the business where you want it to go. Focus early on to find the best people when you need them. Also remember that in the beginning when cash flow is tight, you may be drawn to giving away equity for services. That is the most expensive form of compensation and can mess with your capital when you are trying to raise money later, leaving people holding equity who no longer have anything to do with the business.
Reaching The Target Customer
No matter how extraordinary your product or service, you still have to find and tell your ideal target customer what you have to offer. Creating a solid marketing strategy is critical to getting to market and staying viable. Many entrepreneurs think tactically, throwing a bunch of ads at the wall to see what sticks. It can be a black hole of spending that you cannot afford, if you use tactics that aren’t part of a strategic plan.
“Begin with the End in Mind”
That famous quote from Stephen Covey is an important reminder when starting a business. We need to keep in mind the end result we envision for the business – is it a sale to a bigger competitor or a complementary enterprise, taking it public, transferring to a younger generation? Take actions from the outset and throughout the life of the business that are consistent with that end result to facilitate that goal.
As entrepreneurs, we are seeking a bit of freedom. The goal is to not become a slave to our own company. With the right plan we can stay the course to achieve success in any weather.