Last week I began a discussion of the three keys to success for any business as related to me by one of Alabama’s most successful entrepreneurs. His first key to success is, “Stay close to your numbers”, meaning that it’s imperative that you watch your money very closely. The ‘tools of the trade’ include a Balance Sheet, Cash Flow Statement and Profit and Loss Statement. The context for last week’s and this week’s column is ‘start-up’ entrepreneurs…those of you who are ready to start your own business and want to make certain you succeed. However, the lessons are valid for every business. To review last week’s article, visit the Resource Center at www.welchgroup.com; then click on “Stewart’s Column”.
This entrepreneur’s second rule for success is, “Stay close to your customers”. Well, as a start-up entrepreneur, you don’t have any customers yet but you do need a detailed written plan of who is your ‘ideal’ customer. Further, you’ll need to develop a plan for how to serve these customers better than anyone else along with a plan for reaching your new customers (your marketing plan). You might even consider creating a focus group with a handful of ideal customers to get their input regarding your proposed product or service. Finally, you’ll need to develop a process for getting customer satisfaction feedback on a periodic basis. One final note. Generally, the worst marketing strategy is one that attempts to drive business growth by becoming the lowest price leader. Eventually, someone will figure out how to compete with you and you’ll see your profit margins shrink and your demand for aspirin rise! The most successful businesses build growth based on a product or service niche. How can your create a unique customer experience?
The final key to success is, “Stay close to your employees”. In the beginning, you may serve as the president, secretary, treasurer and janitor but soon you will need to develop your team. Start by developing an organizational chart based on a successful business five to ten years into the future. What ‘positions’ would need to be filled between now and then? Look for people whose strengths counter-balance your weaknesses. For example, if you excel at sales and marketing, hire someone who is excellent at operational details and managing financial systems. One lesson I learned in building my businesses is to hire the very best people…people who are smarter than you and who are self-starters. They will be more expensive, but they will be worth it. Once you have great people in place, the best way to keep them is to set up a communications system that allows you to give and receive feedback regarding expectations, progress and ideas for improving the business environment.
Start your team by engaging ‘experts for hire’ including an accountant and business attorney and perhaps a financial planner. Another excellent source of business talent that you can access for free is through SCORE. SCORE is a nonprofit association dedicated to helping small business owners succeed. Both working and retired executives and business owners donate time and expertise as business counselors. For more information about SCORE, go to www.score.org.
The ultimate key to success will be your passion for your chosen business. When you find yourself at a low point, it will be your passion for your business and your passion to succeed that will sustain you.