What to focus on at startup and small-business expansion
You need to grow and scale your business, for multiple reasons. I will not elaborate further in this particular post but rather highlight some of the important areas you need to keep an eye on when growing your business:
At some point, most often quite early, you need proof of concept. I.e. you need your first orders. Product and services can always be improved but dying in beauty is not the option of choice.
Sell early on, either as discounted test installations or as “the best product ever” even though you yourself know you can and will improve. Reference objects and ambassadors for your company is vital to gain momentum growing your sales and business.
In particular engineer or entrepreneur-event driven companies tend to work too much on their product or engage too much in different entrepreneur events, just because they enjoy it. Launch your product and take your orders! Leverage your sales ambition by partnering or by hiring sales people, and do follow up on the pipeline and develop your sales methodology. Even the coolest online companies need physical sales people or real world partners. The online CRM-company SalesForce has 13.000 in sales staff.
Once sold, focus on timely delivery and follow-up with customer satisfaction calls. You do not want a bad experience at this stage. And you need engaged ambassadors and reference clients that you can refer to get additional sales orders.
A popular saying is still relevant: “Hire for attitude, train for skills.”
Look for people that are as enthusiastic as you are on what you do. The job will be more than just a job and you will have full devotion to move the company forward. Do not hire people just to be your third arm or an extension of your month. You need leverage.
But do hire when needed! I have seen several dum-chary ventures not investing enough or not at all hiring for leverage. Eventually they ran out of energy, committment or cash, or all of that. Of course you need to keep an eye on expenses but you cannot build a company on your accountant only.
With regards to financial rewards attracting key employees, be careful with diluting your shareholding. Not because you as a funder is greedy, but because you most probably will need to dilute your shareholding when bringing on new investors when taking next steps in developing the company. For employees you can use cash bonus schemes based on one company metric like the sales target and two personal performance agreements for the year. To build on loyalty, some-times called lock-in, you can pay-out earned bonuses in thirds, i.e. 33% in year X+1, another 33% in year X+2 and the last 33% in year X+3. With annual bonus schemes, and continued performance, the amounts of cumulative payments will increase over the years making the scheme quite attractive to your key staff. When leaving for another employer the employee losses outstanding non-paid bonuses. Of course you can have different bonus levels for different staffs and earned bonuses needs to be based on performance.
Engage with other people. Not necessarily in the same field of industry but with people that share. It could be sharing experience, insight, contacts or specific expertise in different fields. They shall be availabe to you and be a good sounding partner even if it only means confirming what you already is about to decide. Again, this is leveraging and leveraging is how you grow your business.
Keep an eye on liquidity and working capital needs. I have seen a couple of highly successful businesses running out of liquidity because funding did not match the rate of growth. In both cases the liquidity issue was noted too late and the perception of the companies in question went from success to poor management and the notion that “something must not be working well”. In hindsight both companies were great and would have continue to be highly successful only if liquidity had been taken care of in good time. But at the point continued trust was not earned with the investors or the bank. Do not give others the benefit of doubt. Keep a good eye on your working capital needs.
Thank you for reading. Please feel free to like, comment, share, tweet, email, etc. Hopefully the Pareto principle, also known as the 80-20 rule, will apply. I.e. 80% agree and 20% challenge me constructively.