Brett Cooper, an Entrepreneurs' Organization (EO) member in Atlanta, is the founder of BlueFletch, a leading software development agency focused on helping retailers migrate to modern mobile technology to improve employee and customer experience. We asked Brett and his business partner, Richard Makerson, what they learned from starting a business in the Great Recession of 2008. Here's what they shared.
You started your company during the Great Recession of 2008. What lessons did you learn?
Starting a company in 2008 was a scary experience; it felt like the bottom dropped out, then it dropped out again--and then it got even worse. Our two most important takeaways are related to cash and relationships.
1. Cash is king. When the economy is good, companies throw money at new and interesting concepts. When the economy gets bad, money gets tight. Customers will only pay for services they are confident will make money and solve problems. We focus on problems that people are willing to pay us money to solve. At the same time, you need to be very knowledgeable about cashflow. Aim to have day-to-day cash visibility at least six months' out.
2. Relationships are queen. As a B2B company, one of our primary goals is to make our stakeholders look like rock stars. Our loyalty is to the individuals who bring us in to solve their problems. Procurement teams at most big companies don't care for their vendors and will view what you do as a commodity--something they can shop around for a lower price--no matter how well you do it. The best strategy to protect against commoditization is to make your stakeholders look so good that they will go to bat to keep you around.
What other strategies would you share with today's startups?
3. Niche Down as much as possible. If you can clearly articulate your niche, it not only makes it easier for you to sell, it makes it easier for people to refer you. For the first six years, all of our customers came through referrals.
4. Focus on hard problems that need solving. If it were easy, it would have been done already by someone less talented than you. Identify problems that create value for your end customer. An experienced entrepreneur once told us: "If you charge someone $1 million for a project that saves them $5 million, then you have given them $4 million for free."
5. Downturns give companies the green light to innovate. In some industries, changing customer patterns create opportunities where smaller companies can help larger companies move fast. As a small and agile company, this may be your chance to compete with larger incumbents who can't move as quickly as you.
6. You're in this for the long game. You don't need to swing for the fences every time you get up to bat. Be conservative and build a business model that will be sustainable for the next 25 years.
Have you made any missteps? If so, what did you learn?
7. Invest in your sales process. We were lucky early on to know a lot of people who trusted us enough to give us a chance. As we grew, relying on the individual partners' relationships no longer scaled, so growth stalled. If we started again, we'd invest more in our sales process earlier.
8. Don't get distracted by shiny objects. As humans, we're always interested in the new and novel. Early on, our company's 80/20 rule meant that we spent 20 percent of our time exploring new technology and exciting startup projects. However, Google and other highly profitable companies have more money than we did to explore such initiatives. As a small company, we spent too much time on unproven technology that would've been better spent on our core, fundamental drivers of success.
9. Define guiding principles. After a few years in business, Richard and I bought out our other two partners because we didn't have a consistent vision of where the company needed to go. In the early days, we did a poor job of defining our guiding principles and vision. Had we defined them, it would've helped us navigate problematic conversations later.
As leaders in your space, where do you turn for inspiration?
Technology has made opportunities for learning, growth, and inspiration easy for everyone to access. Here are three core areas that we leverage:
Listen and learn in the golden age of audio. Growing up, I saved my lawn-mowing money to buy books on tape, and listened to them repeatedly on my walk to school. We now live in the golden age of audio in the form of informative podcasts and audiobooks. There is an incredible amount of value to be gained from free podcasts across almost any topic. Audiobooks are relatively affordable and sometimes free through local libraries. When walking, riding, or traveling, I listen and learn. Our leadership team typically designates a book we're all listening to at the same time.
Join a network of entrepreneurs. In 2014, I had grown disheartened by business events where everyone was trying to "pitch me" on something. Over beers with another business owner, he suggested I attend an EO meeting. I was blown away by the diversity of businesses and the conversations/learning opportunities. I immediately signed up. I wish we had known about EO Accelerator, a business accelerator program that helps startups grow and scale, when we started our company. If you're a new founder, I highly recommend looking into EO.
Mentorship, formal or informal. Mentorship programs through your school or business organizations can be invaluable. Or, reach out to smart people who you respect and ask if they would share their experience and advice. Both Richard and I have informal mentors who we meet with to chat about business and life. Participating in business organizations, boards, or non-profits is a great way to find like-minded people with whom you can have meaningful conversations.