Want to start your own business? Rich Donovan, a disabled entrepreneur based in New York City who has started several successful businesses, shares an article with Disability Horizons on his 12 top tips for making an enterprise successful.
So you want to be your own boss, eh? Let me give you some free advice… stay with your current boss. Why? To be a successful entrepreneur, you will have to be the toughest, hardest working and most results driven boss you will ever have. It all comes down to one thing… as an entrepreneur, you must deliver results or you don’t eat. It’s really that simple.
Now that we’ve scared away those who aren’t really up for starting a business, let’s talk about the hardest and most rewarding thing you will ever do… start a successful business. I’ve structured this article to both inform and entertain. It is intended to show you the ‘dirty bits’ of starting a successful new venture from nothing but a concept. I’ve done it three times by flinging myself into the open market and letting myself either sink or swim. I’m still swimming, and I think there are teachable reasons why. Here are some of them:
1 – The Monetised Idea – This is everything. You need a simple, robust and actionable idea that somebody is willing to pay you enough money for to sustain your life. If you don’t have this, you are not ready to start a business. If you don’t know if you have this, keep researching until you do. The hardest part of launching a business is finding the right idea that will make enough money to be sustainable over time. Time spent in this phase is worth it, as it allows for test/trial without capital loss or external eyes. If you are like me, and your last name is not Rockefeller, the best way to do this is while you still have a job. Put in the hours ‘after dark’ to develop the idea while someone else pays your bills. Start by writing the idea down, no matter how silly it sounds. Come back to it constantly. Soon you’ll put numbers to it, and BAM! You’re hooked! I started two businesses that way. It took me 20 years to find that idea, don’t be that slow…
2 – Cash = Oxygen – Whoever coined the phrase ‘One must spend money to make money’ was clearly spending somebody else’s money. Cashflow is the essence of survival and growth for any business. From IBM to the mom and pop grocery, without positive cash balances and cashflow a business dies. During a startup, cash is always scarce. Even when you think you have enough cash, you don’t. Things always cost more than you think, not less. Sales take more time to close, not less. Customers take more time to pay, not less. Slower cash in, plus faster cash out means less cash tomorrow. Therefore, to avoid running out of cash, protect it as if your life was at stake. I learned this the hard way. I didn’t need a Park Avenue address on day 1, home office was fine. I didn’t need a swath of the latest gadgets, my clunky PC was fine. I didn’t need to hire an ‘expert’ to back me up, I should have trusted myself and my partner. None of these led to zero cash, but the money wasted on these ‘luxuries’ could have been better deployed elsewhere.
3 – Aim to be the dumbest person on your team – When you go out to bring people into your start-up, find great people. Smart people. People that are better than you at what they do. When it comes to executing on your vision, it is highly probable that you cannot do it alone. Whether it’s an equity partner, or a paid employee, an A-team beats a B-team every time. Invest the time in finding and hiring great people. Give them the space and leeway to own their work. Your work is done once you hire them, and holding them accountable to measurable objectives is how you manage their (and your) success.
4 – NEVER sell yourself short – You are running a business, not a charity. Your time, ideas and products are worth something to somebody. Once you’ve established that value, do not go under it unless doing so builds future value. A 50% discount is fine if in doing so you create the opportunity for a stable customer over the long term to cover basic operating costs. A 50% discount to a tiny, one-off customer is a customer that does not value your services. Walk away. A vendor/employee who is constantly underperforming needs to go… there are better people out there. Your customers will fire you if you fail to deliver, hold your people to the same standard. I don’t care how ‘nice’ they are… no bankruptcy judge accepts ‘nice’ as payment for anything. If you use equity as payment to attract partners, have high expectations of those partners. Equity is far more valuable than cash, but remember 70% of something big is generally more valuable than 100% of something small.
5 – Teach yourself to enjoy being uncomfortable – Launching a new business means you are going to do things that you have never even thought about before. It means that you are going to be wrong… often in spectacular fashion. You are going to fail, at least once a week. Human beings generally do not like these things. Successful entrepreneurs not only revel in these things, they actively seek them out. The ability to trust yourself enough to walk through dense fog in the knowledge that value is on the other side is key. Of course, learning how to do this without walking off a cliff helps too.
6 – Collaboration is a positive thing – There is nothing more frustrating to me than the cagy entrepreneur who thinks everyone is out to steal their stuff. Competition is a good thing, and if it scares you, it’s a sign that your ideas/products/services aren’t good enough to survive. Being the best is done by improving yourself, not stomping on others. Invite others as close as you can without giving away the secret sauce. Learn from others to make what you do better. It’s always better to eat a bigger pie together than beat the crap out of each other over a tiny tart. Just remember, at the end of the day you are responsible for your sales growth and cost reductions, so be smart about collaboration. Keep your edge behind the moat.
7 – Be provocative – Great entrepreneurs never sell slow and steady… even if that is what you ultimately deliver. One must paint a picture of a state of the world that excites the imagination of the customer. Virgin Industries sells mostly commoditised products… airline, phone, bank… but Richard Branson sets a vision for his customer that excites their view of what is possible. Virgin Galactic says “We’re gonna haul your ass into space… someday.” – paraphrasing. Hell, that makes me giddy! That is a state of the world bigger that a mere flight or checking account. Play in the world of possible, but deliver in the world of probable.
8 – Simple facts trump complex stories – I can generally tell when people are full of crap by the level of complexity with which they tell their stories. Credibility comes from simplicity and robustness. Ground your stories in facts that are widely accepted or verified by somebody other than you. Pay for that verification, either through time or cash. If xyz is true, then I present to you 123 as the answer. Your success depends on the customer agreeing that 123 is the answer, and you have it for sale at the right price.
9 – Learn the word NO… you will hear it, and say it, a lot – Your are going to be rejected… far more than accepted. Think about it – if everyone needed your product, and knew they needed it before you created it, it would exist already. You need to sell, and part of selling is rejection. A ‘no’ could result from price, product immaturity, customers not wanting to be first or you wearing that stupid tie you insist on. ‘No’ means make it better, and try again. On the flip-side, you will be approached by opportunities that have nothing to do with your business. Some will be good networking opportunities; other will suck time/resources/energy with no benefits to either party. It is ok to avoid these while you are in start-up mode. You have to be successful first, then you can ‘give back’. You owe it to your family and business partners to say ‘no’ to things that are not going to make your eyes wide with excitement… and even then, make sure it is core to your objectives (see #2).
10 – Give it 2 years – If an idea is not showing signs of interest after 2 years of 24/7 building, pitching, refining and executing you must re-evaluate the fundamental nature of the idea. You will know if interest exists from conversations you have with potential customers, vendors and influence peddlers in your network. The best interest is a paying customer. Interest also includes media, vendors who want your business, and academics who like the idea. You need to gauge whether or not demand exists, and assess the viability of building a profitable business model around that demand. Don’t walk away before you’ve changed everything that could be ‘off’ about the idea, but don’t ride an anchor so deep that you drown swimming to the surface either. Only you can decide when/if to say ‘Uncle’, but 6 months is not fair to your idea.
11 – Be positive, candid and to-the-point… all the freaking time – I know it sounds frou-frou, but it actually works. Everything you project must be presented with a plan for success, with a practical outlook that presents both the opportunity and the risks. If you have bad news, present it as fact with a plan to rectify or exit. Don’t be overly-optimistic, show conservative estimates and own what you produce and who you support in good times and bad. How you do this is your biggest professional investment… there are very few sequels to lost reputations.
12 – Promise what you honestly believe you can deliver, and then go two steps beyond – There is one sure way to spot a hack. ‘Under-promise, and over-deliver’ is the mantra of someone that is managing you, not someone that is prepared (or equipped) to deliver greatness. Over-delivery is fine, under-promise is deceitful. I have always believed that to be great, one must set goals that go beyond today’s set of expectations. ‘Stretch goals’ must be the norm, and delivery beyond those goals becomes your reputation. You will miss sometimes, but the collected deliverables and the value you create trumps honest misses.
By Rich Donovan
Rich Donovan is the managing partner and founder of Integrated Process Solutions and chief investment officer at WingSail Capital LLP.