What can you sell now?

Whatever your business plan says the reality is that it will take longer and cost more than you think.

In other words you need to make some money as soon as you can.

Is there something that you can sell now?

Is your basic product ready for sale? Does it have a place in the market as it is?

If your answer is yes, then go selling now.

You may not be cash flow positive but you can stretch your savings (foundation equity) for longer.

The basic failing of many business plans is that there is this seemingly orderly and linear process in which you will work with your team and piece together an amazing world beating product that will make you all instantly rich.

Yep, maybe you can, but the odds on a Lotto ticket are likely better than shares in your company.

Ultimately cash is king and without it you won’t get far. Also, investors are very reluctant to invest in companies that can’t sell their own product. This point is the one that surprises many a self-appointed entrepreneurial genius.

On a personal level, there needs to be a point where you stop taking on personal debt to keep your business going and get in other investors. If you genuinely need more cash before you can make more sales then you should think about bringing in investors. As the old saying goes, “1% of something is worth more than 100% of nothing”.

How to replicate a successful team

Your business is going great. You have managed to pull together a team that delivers your services to your main clients and now you want to grow.

You are thinking of setting up a new office in another city, or putting together a second team in your existing office.

Here’s where it gets hard.

A successful team is usually led by a few great individuals who have worked out how to get on with each other, work as part of a larger team, and how to deliver to customers.

It is naïve to think that you can just hire a totally new group of people to replicate the same phenomenon.

This is the point where you need to start capturing some of the team’s operations in systems and processes. This shouldn’t be overdone. Work with them to recognise some of the key areas of their work processes which should be replicated.

You can also split the team and add new people to both the new teams. However, this is potentially disruptive to the existing team, and your cash flows if they start failing to deliver because of the disruptions.

You can also start rotating people through the successful team before moving them to the new team. This might involve taking the No. 2 or 3 from the original team into the new team as well. Also set up a mentoring/collaborative arrangement with the existing team.

You can hire in successful individuals or teams from other companies. This needs to be accompanied by ensuring that they really do know their field of expertise as well as the say they do. Also, you need to ensure that there is cultural and values compatibility otherwise toxic relationships may form with the existing team.

If you are setting up in a new city or town, you definitely need to get some of the new team to come to the existing operations and vice versa.  If you don’t do this then you can end up with a strange ‘us and them’ type culture that can become quite adversarial. You really need to send legal, marketing and finance types to spend time with the new office to keep all of you aligned.

Replicating a successful team is possible, just accept that it can take some time and quite a bit of effort.

Don’t try to build a market as well as your product

This feels counter to the conventional wisdom. I mean, just look at Google, Facebook, Amazon, and eBay after all. They all did it didn’t they.

Well, in a word, no.

Google improved on internet searches and took out the competition. Facebook is largely a new phenomenon, but is still largely bankrolled rather than paying its own way (the buy high sell low strategy I talk about). Amazon consolidated the mail order book catalogue business.  eBay took the essentials of community auctions and ‘For Sale’ sections of newspapers and put them on line.

Microsoft didn’t invent computers or operating systems – they made it more user friendly, so I’ll give them, IBM, Radio Shack/Tandy and Apple co-credit for actually helping create a market. Mind you, consumers and businesses were ready to adopt 40 years of computer based automation for their own benefit, so the market was ready in many ways.

So, if we put aside the above examples the other 99.999999% of us are scratching round trying to sell our products and services.

An attitude of “build it and they will come” is a particularly good way to lose money.

If you want to build a business in a conventional way then you should pick crowded business sectors.

Put that another way, competition is usually thickest where most of the money is.

Find a way to do the same thing as everyone else, but better, and you will grow rapidly. The market is already primed to buy your product and is cashed up, so you just have to take out part of the market share from your competitors to make a profit.

Employees are not your servants

Maybe I’m just destined for mediocrity, but I really can’t stand spending time around people who have an overdeveloped sense of self importance.

You know the ones I am talking about. They are destined to greatness, and walk into any given room with an air of authority and control, however, they often lack any meaningful experience in the business they are in.

This is a reborn aristocracy, not capitalism.

The revolution in industrial relations over the last century was the recognition that there needs to be a system or set of rules that both the employee and employer can turn to in order to assert their rights.

Employers expect a certain set of behaviours and productivity in return for payment.

Employees expect boundaries on their personal lives and dignity to be respected for their hard work.

It is not just the small or family owned businesses that do this. Many construction, consulting and professional services companies also treat their staff as expendable servants. How many great people burn out and are sidelined from a career they would otherwise do well in for their whole lives due to the insane pressures these companies put on their people.

I have seen some truly great small companies that take people who from these industries when they are burned out and treat them with dignity and respect, and go on to great things.

It’s amazing what happens when you treat people as if they are human rather than your servants. Welcome to the 21^st century.

Prevent Self-Sabotage

One of the key traits of most people who are successful in starting a business is that they find it hard to hand their baby over to a group of professional managers.

It is easy to understand in some ways.

You have spent a few years of your life going through all the hardship and stress of fighting every single day to have the business stay alive. Now that it is going well enough to grow rapidly you bring on board more and more staff.

These people don’t know what it took to bring the company to where it is. They don’t appreciate the effort.

The best of them are excited to be joining a fast growing company, but they need to be led. The worst of them clock on and clock off to collect their pay cheque. They all look to you for the answers.

Meanwhile, the founder(s) feel that they are being left out of decisions and they aren’t kept in the loop on everything. This breeds resentment.

Recognise yourself in here? I have met many who do – guess what, it just means that you are human.

If you recognise yourself forcing the company to take risks that no-one else is comfortable taking, then pay attention.

If you find yourself actively damaging the business in order to regain control or to just make a point, then it may be time for you to step out.

Many of the more successful entrepreneurs recognise this stage and step back by appointing a CEO and spending most of their time on launching a new company. They own most of the company after all, and if it grows strongly then they can reap the rewards.

You may not think that this will ever happen to you, but it happens even to the best. Watch your own feelings and if you feel like sabotaging your business go on a holiday instead.

Buy low sell high, everything else is an explanation or compliance

It never ceases to amaze me how many company failures are caused by forgetting this.

A great way to go bust - just give away your profits.

There have been some spectacular failures in the business world where a kind of group think effect takes over and suddenly millions are lost in the name of gaining market share – buy high, sell low – if you like.

Industry specific explanations about business are all about this same principle.

Complying with regulations is an important aspect of maintaining a ‘licence’ to operate, however, regulatory compliance is not actually your business, it’s a cost of doing business.

When you take into account the cost of goods, labor, buildings, machinery, office space, insurance, IT systems, marketing, distribution, etc. you have a pretty hefty lot of bills to pay.

I only wish it were as easy as charging your costs plus a margin – that would make life easy. However, your market likely has pricing points for the service you are offering.

So the sell high part of the equation is pretty much set for most of us. So the only part you can play with is the ‘buy low’ part. This is where as a startup you need to get creative.

The key point for most startups is cash flow.

• If renting equipment is cheaper than buying, then rent.
• When looking at office space, look at your total outgoings per year, not just the cost per square metre.
• Pay for delivery as needed until you can afford a truck and a driver.
• Focus on making sales and delivering at first. Setting up better systems and processes can come in the future as you go through a consolidation phase.
• Can you work from home and use a hire by the hour office when you need to meet clients.
• If you need to visit clients often, consider paying for a dedicated parking space, it may well be cheaper than renting an office.
• Meet clients at a local café – a lot of the time they may be happy to just get out of the office for a while.
• Use temps where you can to save on total costs.
• Can you buy an off the shelf IT system that reduces the administrative burden for your business?
• Instead of making everything yourself try buying parts from larger manufacturers who can provide economies of scale and better pricing.

You get the picture – have some fun, and keep buying low.

Get your hands dirty

In a small company there is no such thing as a supervisor or an ideas person. Sure you can do elements of those things, but no start-up can afford to pay for such roles on a full time basis.

Let me give an example.

Recently a great café in my town changed owners. The new owner likes to stand around and watch his waiters and then scold them when they do things wrong. It never occurs to him to actually be one of the service staff and help with the customers. Needless to say, in the space of 6 weeks the restaurant went from always being full to being almost empty except for pensioners cashing in their coupons.

Likewise, you need to be able to actually contribute to doing the work. If you just want to provide money then be an investor. If you just want to contribute ideas then go work as a consultant. If you want to supervise people all day then go get a job somewhere.

If you are doing the business as a lifestyle choice then jump in and learn as much about the job as you can – you can’t afford to pay people to do everything.

Always be prepared to get your hands dirty – and as a company owner you will probably need to do more crappy jobs just to keep things going for the first year or so.

Communicate, communicate, communicate

Lack of communication is the main cause of conflict in organisations and with customers.

Let’s be clear on something here – talking is not communication.

Communication within a company about keeping people informed about the following.

• Expectations of their work
• Changes to targets or deadlines
• What the other members of the team are up to
• What is happening in terms of KPIs, resourcing and budgets
• Setting and reminding people about priorities.
• False rumors
• What is happening in the wider organisation
• What is happening in terms of new work coming in, and
• What is happening in the broader economy

Communication with a customer is about keeping them informed on progress, cost, requirements for more information, and so on. Think about when you’ve been frustrated at a lack of communication and you will understand. Think of it like tweeting – you don’t need feedback, just to let them know you are still there.

Yes, too much communication is possible. This occurs in two main ways. Firstly it can take up too much of people’s valuable time. Secondly, it shouldn’t be used to transmit excessive uncertainty to your people.

Smart businesses don’t rely on the smartest people

I am always wary of companies that say they only hire the smartest people because it indicates a complete lack of understanding of both people and business.

If you make this claim are you really saying that you only hire people in the top standard deviation or two of IQ Bell curve for the general population.

The smartest people often get bored quickly, don’t like routine, don’t like process, and will constantly look at improving or changing things even when they are working just fine. On top of that many of the smartest people have a healthy sense of self-esteem and a potentially high conflict personality.

Put that another way, throw a few seriously smart people into a room at a small startup and you can almost guarantee conflict. Disruptive behaviours can become the norm and you need to be on top of them constantly.

Also, if you aren’t at least as smart as them then you won’t be respected.  And as they will be highly marketable they need to be paid more than average, and you have to question the ability of anyone that smart who will work for a lower paying startup like yours. Is something wrong with them?

Not a recipe for success.

From a business perspective you need trailblazers and operational delivery people.

You and your start up team are working in a highly fluid environment that has high uncertainty and high risk. 

You are the trailblazers. You work out through trial and error what needs to be done to make the business work.

Once you start getting solid business coming in the door then you need to ensure that the business can be delivered by normal people who enjoy working there but don’t feel the need to invent new ways of doing things all the time.

That is, they just get on with the job delivering for customers and follow the rules and processes that have already been set up.

Of course for high end consulting or engineering you need smarter than average people, but you don’t necessarily need the smartest.

So, too many of the smartest people will slow down your growth and may adversely affect your sales. 

Momentum is more important than optimization

When your business is starting to take off you will find that all you don’t have the time to implement your plans for improving your business, your product, your website, your sales process, and so on.

Then you start feeling guilty. You have this unfinished business weighing on your mind in your spare moments and the feeling of guilt slowly gets worse.

Guess what, this is great news.

When you are that busy it means you are doing great. With the extra money coming in you may actually have a bit of time to take on employees or seek some help from professionals.

When you are on a roll, keeping the business going and servicing your customers is your number one priority.

Time to let you in on a secret. I have worked in and with some well-respected large and global companies and most of them are flying by the seat of their pants. They are fixing things up when they need to.

The common unspoken philosophy tends to be “if it ain’t broke, don’t fix it.”

Basically any company is a group of people doing the best they can with the time and resources that they have. Yes, things could always be better, but if improving things gets in the way of delivering on the business outcomes, then it the improvement doesn’t happen.

Keep in mind that it is the ongoing and growing income and business that enables you to have the opportunity to improve things.

Keep moving and forgive yourself.

The home office

Starting a company means spending only on what you need to advance the cause of the business.

Setting up an office is one of the most costly, and for many early stage start-ups, unnecessary things you can do.

Put that another way, if you have an office at home and a rented office then you are paying for the same thing twice.

Yes, having a team together is important for productivity. However, with current internet/web based tools you can have as much interaction as you like with your co-workers (e.g. working off the same screen, video conferencing, teleconferencing, messaging, email, shared workspaces, etc. ).

If you need to go to the middle of town for meetings a lot then consider paying by the month for a parking spot. That way you can come and go as you see fit without fully paying for an office in town.

An e-commerce site no longer even needs a physical presence. Work from home as long as you can while the logistics of it all work.

There are also many shared/serviced office businesses that provide phone answering, and address for mail, and meeting rooms for people just like you.

There are many solutions – get creative.

I guess in a large part this discussion is aimed at those coming out of larger companies where a lot of the benefits of a good office including parking, IT support, meeting rooms, photocopier/fax,  and other perquisites are part of the job.

When you think about your startup try to separate in your mind what you are used to from what you really need and spend your money where you really need to.

Prepare for failure – don’t plan to fail

True entrepreneurs minimise the risks that they bear personally.  Yes, I know this goes against conventional wisdom about entrepreneurs.

What the most successful entrepreneurs have is a vision and a determination to make something succeed. This is actually pretty rare and economists nowadays include entrepreneurship along with land, labour and capital as the drivers for an economy.

What this means is that others often recognise this ability and are willing to take a risk on them.

Take a property developer as an example.

The land owner will be paid an option for purchase, with monies payable as the land is sold to buyers.

Architects, planners and many of the other suppliers to the industry will take risks on the right people in providing their services, either for free or at a great discount tied to a later bonus.

Companies may be willing to provide their goods on a lease basis, meaning that they bear their own costs of design and construction. For example, lifts/elevators can be supplied on a lease basis, reducing that cost to the developer and shifting it to tenants.

Bigger companies will be willing to place small bets, so to speak, on the success of entrepreneurs.

You need to learn to think like this – as this both maximises your cash, and also shifts the risk of failure onto a lot of other shoulders.

Even if you do everything right, things that aren’t in your control can still destroy your business. Business partners can lose the plot and pull out or sue you. Your main customer may become bankrupt. The economy may slow down and your target market shrink. All these things can happen.

In this context you need to think about how to minimise the collateral damage to your employees, investors and your family. Some upfront accounting and legal advice is vital.

The legal system is built on hundreds of years of experience on what can go wrong in business. The conventional company and ownership structures are generally the best practice that society has found to deal with most situations.

Please don’t ignore all that stuff just because it costs money. You may find in a couple of years that thousand dollars or so not spent may cost you a hundred times as much when things go wrong.

Think of it as buying insurance upfront.

Make something you like not something you hope everyone will like

Interviews with successful entrepreneurs tend to have some common themes. One of the major ones is that they the product or service they sell is the one that they themselves wanted.

Doing business is a bit like being an inventor. You are often looking at the way things are done and imagining better ways of doing them. You might be driven by efficiency, a desire for moderation, or even for aesthetics.

Once in a while one of your ideas will really stick. You won’t be able get it out of your head. It begins to haunt you.

You start to work on some of the practicalities of making it work. You check out the market for similar ideas. You look at the legal and process issues. Ultimately you refine your idea after testing the concept on people and pretty soon you have a potential business waiting to be born.

This is the key point for most people – the leap of faith.

Are you willing to take the step out of what you are doing now to back your idea?

Most aren’t – and that is kind of what this blog is about – to show that you are about to head down a well-trodden path. There are plenty of us out here and you don’t have to learn everything from scratch.

Back to the original point, let’s take an analogy from the world of art. Big name artists tend to be the ones that do things to their own taste because they understand that if they like their own work then maybe other people will too. This is the point. When you do things to appeal to everybody they often end up appealing to nobody.

So, when you look at setting up your business do it for something that you like and are interested in. If you are already in business and feel like you have lost your way then ponder this idea further.

Product, service and price – pick which one you’ll do

A great product sells itself. It matches what the clients want. It is a quality good that lasts for the intended period. It is well designed, easy to use, and so on.

Great service is about helping the customer work out which product matches their need. Your staff take pride in helping people. Your follow up service after the sale is remembered and your customer’s rave about you to their friends and family.

Great price means giving people what they want at a low price. They can’t believe the good deal they are getting and will come back for me.

Now pick one of the above for your business. You can’t do all three. Maybe you can do part of a second one, but never the third.

It is a big mistake to try to be all things to all people and here’s why.

A great product usually means higher cost. You invest more time in the development of the product and you make it out of better materials so it lasts longer and is more aesthetically appealing or easy to use. This is incompatible with great price – with the possible exception of a large multinational which can manufacture in very high volumes and sell in bulk.

Great service usually means higher overheads. Not only do you need more people, but you need to retain the good ones as they are the heart of your business. Also, you need to set up your business systems to allow your people to provide excellent service. Many organisations can’t bring themselves to trust their staff that much. A lot of customers are happy to pay though.

Great price means that you need to cut out all unnecessary costs in order to exceed the customer’s expectations. Cutting costs can be done through lean operations, large scale manufacturing or moving large volumes of product. This approach is pretty much incompatible with great product or great service.

If you look at your competitors, or even other industries, you will notice these differences exist and that they each have their own customer base which look what they value.

Think about your own values, and also about the values of the customers you want to deal with on a daily basis, and if there is a profit to be made go down that path.

Patient Opportunism

Good business opportunities are rare. The ability to take advantage of opportunities is even rarer.

On the other end of the scale are a lot of average to poor business opportunities.

This humdrum, day-to-day business is what allows you to pay your staff and suppliers to keep your business at that critical mass size necessary to take on more work.

I have seen good examples of this in some engineering companies. Most of the time they find long term assignments for their people at clients at a rate that is effectively salary plus on-costs plus a small margin. That is, they pretty much break even plus a bit.

This allows those companies to keep their staff busy ready for deployment on to larger projects. It also impresses potential clients when they see how many people work for the company (let’s leave out the fact that most of them can’t be redeployed rapidly to the client’s project – it’s a good image to have.)

Additionally, by having your people with different clients you will hear of good opportunities early and be in a position to make an offer to help.

This is a good overall analogy for business.  Sometimes simply staying in business is a valid business strategy. On top of this you add growth opportunities, and you position yourself through people, processes, physical capacity and money to take advantage of them.

Stick to your core business, but when an opportunity comes be prepared to quickly take it.

If they can’t find you they can’t buy you

Seems kind of obvious, but we all make this mistake now and again.

Marketing and sales often feels distasteful, especially for those with a technical or professional background.

However, without marketing and sales your business will soon cease to exist.

The starting place for any business is to go to people you already know and also word of mouth. You need sales coming in the door as soon as you can.

For a bricks and mortar presence or shop you need to be near or at street front with prominent signage. If foot traffic is important take a shop where there is a lot of street traffic, not down some side street just because it is cheaper.

If you just need an office space, then be where most of your customers are.

Make your website great, and make it easy for your customers to buy from you. Make the contact details prominent. Also, think about what it is you want them to do – is it email you for a follow up, register for a quote, call you, or what? Whatever it is you want them to do, make it easy for them to do it.

Make friends with a journalist or two and agree to interviews for their articles. This is a win-win situation – you get quoted in the paper and they get to fill in the inch columns they need to for their job.

Trade magazines are good for a lot of businesses.

Conferences are pretty good too. You can spruik the stand areas for a lot less than paying for a stand yourself. Also, go to a conference of potential customers and go and introduce yourself.

TV ads are expensive and for most startups are a good way to lose a lot of money for almost zero impact.

Google ads or similar will work if you are the kind of business people will search for.

Put stickers/decals on your car so when people are driving they see the message.

A final point to remember is that you should sell the product, then the brand. Again this seems obvious but many advisors put branding ahead of the product, but customers are buying the product not the brand. Brand building is actually the process of supplying customers with the product they want and growing the customer base.

Have fun, get creative, but most of all, let people know you exist.

Logo designer Vs Web designer – getting your branding right

Getting your branding and website right is important.

It is even more important to spend the time and money on it up front as one of the basic principles of marketing is to keep your logo and branding the same. No radical changes  please, or you will lose customers.

The most important thing is to check your designer’s portfolio.

Designers have a distinctive style, and all their work will show elements of their style.

If you don’t like their work for other clients then you probably won’t like what they do for you. Go with your gut on that.

Some designers make their sites a graphic design masterpiece, others do corporate bland and everything else in between.

It is not untypical for logo designers to specialise in that and not be as good at websites.

Also, I have seen many web designers who aren’t the best at logos.

The career path of all the design professions is to master the different elements and then over time learn how to put it together.

A young freelancer will most likely be great at some things but won’t understand how it all needs to come together and function to support the business.

Check out their own website for an understanding of their style and if they understand business.

The key thing is you need to be very clear in your mind what it is that you want your customers to see and do when they come to your site. Check out your competitor’s websites if you are not sure.

One stop web site and hosting companies can do a pretty decent job all round, but you can be the victim of corporate bland.  But you will be at the commodity end of the business most of the time.

If you want to make your own life easy go for the one stop shop approach, but with a little more time and effort you can work with a few designers to come up with something special that will stand the test of time.

So, choose your designers well and remember not all graphic designers are equal.

More speed, less haste

In business you need to act quickly to capitalise on opportunities.

Haste occurs when you act quickly without thought. 

Haste occurs when you have a tight deadline and everyone is busy trying to meet it in their own way.

Haste occurs where there is no clear leadership or communication.

Haste means a lot of energy is wasted.

Haste indicates a lack of trust.

Speed occurs when you take a moment to consider what it is you are trying to achieve.

Your team needs to discuss the different activities that need to occur, who will do them, and how and when 

the different activities will interface/communicate.

When working in an environment with tight deadlines aim for efficiency and a coordinated approach.

Getting it right 50% of the time

As the old saying goes, if you get it right 50% of the time you are doing well.

This means that 50% of your deals or businesses will either be a failure or only breakeven.

Sounds about right.

If you are afraid of making mistakes then you won’t try hard enough.

If everything you do works out then you are probably being conservative and need to back your judgement a bit more.

To a degree everything you are doing is bet:  a bet on the opportunity, a bet on your ability to deliver, and a bet on having the right people.

Next time you are looking at an opportunity think about the most you can afford to lose and be prepared to put that in. 

Relax – it’s all good

Stress and uncertainty are your two closest companions during the first year or two of a startup.

This is yet again a public service announcement from me to you telling you that it’s all good.

When you take care of the big things (i.e. funding, marketing, hiring the right people, etc.) then it’s time to stop stressing so much about the little things.

You can’t to control everything, and you also need to learn to stop worrying about things that are not in your control.

Tell your imagination to take a break.

Learn to be careful who you talk to about your stress as many of your well-meaning friends will worry for you and keep asking you how things are turning out. They have a tendency to do this right when you are trying to relax.

Also, train your partner to not ask you serious business questions after nine at night. That will only wind you up again and will affect your sleep.

Remind yourself every day that it’s all good.

People who know you will get sick of paying you

People who know you are the best foundation customers.

You already have a relationship with them.

You don’t have to sell them as they already know what you can do and what you are like to work with.

However, sooner or later something happens and the relationship sours.

I don’t know how to explain the emotions behind the decisions but I have seen it happen to many people.

I think at first they are happy to help you out in starting your business. Maybe it is because they would like to start a business themselves and just never had the courage – who knows.

Somewhere around the 18 month mark it generally seems to change and you will be called in for what I term “the chat”.

If you are selling products then you will be asked for a discount.

If you are selling services or consulting then there are two different conversations that can happen.

You could be asked to give a discount on your fees or alternatively your client will tell you with great enthusiasm that they’d like to offer you a job.

Either way – at about the 18 month mark they don’t want to pay you as much.

The answer to this is simple to say and harder to implement -you need to find new customers.

You do this by treating the initial contract as a foundation or source of cash flow that can then bankroll the expansion of your business. When you have enough cash flow up you can afford to put on other people and take on new customers.

Not many businesses actually do this, and most stay as one man bands.

Don’t be afraid of asking your contacts for work, but be aware that it won’t last forever. Be prepared for “the chat”.