Entrepreneurs are people who dream up new ideas, and then commercialize them into new businesses. Most people believe that the hard part is coming up with the idea, and the easy part is turning it into a business. Yet, in my experience as a mentor to entrepreneurs, the majority of failures I see are related to starting and growing the business, not developing the solution.
This has been particularly surprising to me, since building a business is not rocket science. Every country has scores of good business schools, there are thousands of books on the subject, and at the basic level, the disciplines to build all business are essentially the same, no matter what the domain. In fact, I can condense the sum of my business experiences into eight key disciplines:
- Start with a total and ongoing customer focus. One of the quickest ways to fail in business is to allow your passion for a solution to convince you that everyone will want one. Don’t assume anything until you have done market research and listened to real customers. Then assume the customers will change over time, so never stop listening.
- Formulate and adopt a specific and detailed business plan. A successful business requires focus – define the customer need with a specific solution for a specific price and cost. Normally the goal is to make enough money to be sustainable and provide a return on the investment of constituents. A written plan is helpful for communication to others
- Assemble a team with the right skills and experience. Most experts agree that a great team is more important than a great product. The ideal team includes at least one expert on the solution, and at least one experienced business person. Together they set the standard for collaboration and culture that will make or break the company.
- Treat every business dollar as a personal one. New business owners are often quick to spend outside investment funding, and quick to delegate money management to accountants in the business. Successful entrepreneurs are more likely to bootstrap their own business, and use the discipline of personally validating and approving every check.
- Learn to communicate effectively to insiders and outsiders. People can’t work for you if they don’t know what you expect, and the message has to be updated daily. Customers and partners won’t find you or buy from you if you can’t tell them why, how, and what they need, and what you offer. Communication must be proactive, not reactive.
- Demonstrate an ongoing sense of urgency. In today’s world, the market evolves even faster than the technology. Time is of the essence in everything you do. The business race is not a sprint – there is no finish line, beyond which your team can relax and enjoy. Learn and incent your team to enjoy the journey as well as the destination.
- Manage the business with metrics and goals. Working hard is necessary, but not sufficient for success. Business objectives need to be quantified and measured to assess progress and positioning against competition. Metrics drive a results-oriented culture that leads to continuous quality improvements, required pivots, and recognition of success.
- Cultivate mental toughness and resilience. Every business encounters unanticipated obstacles due to economic conditions, natural disasters, and competitor challenges, so start practicing resilience early. One of the most common reasons I see for startup failure is that the entrepreneur gives up too early, rather than fight through these challenges.
I have no doubt that starting and growing a business is hard, at least as difficult as developing an innovative solution. The difference is that developing a new solution typically requires specialized skills, creative thinking, and strong passion, while starting a business is more about planning, disciplined actions, and problem solving. Don’t lose the race halfway to the finish line.