How many business owners do you know that opened a business with the intention of that business failing? Hopefully that figure is low--like zero percent low. But failure is often a part of starting a business, whether it's intentional or not. I have failed several times in my life, several of which were epic failures.
I've learned 20 different ways not to start a company. If you want to avoid failure as much as possible, then you need to learn from other people's mistakes. It' helps to start off with with a bang. Starting a business correctly won't just help its chances of survival, it will also determine how profitable the business can be.
Here are a few things that I've learned along the way that will help you to starting a more profitable business.
1. Build a Strong Foundation
Before you get too invested into your business idea, ask yourself why you're starting this venture in the first place. How is your product or service going to help your target audience better their lives? How does this idea align with your core values? Do you have a solid business plan to make this dream become a reality?
Answering questions like these will help ensure that your business has a strong foundation. From that starting point, you can continue to build a strong, reliable, and profitable business. While there will continue to be times when you have to adapt to changes in the market, you can always fall back on your strong foundation to help keep you in a straight line to success.
One of the strongest foundations I recommend that every entrepreneur has is to have a passion for what your'e doing. Be willing to work for years without being paid. Not saying you won't be paid, but I find when you have that foundation... you increase your chances for success significantly.
2. Perfect Your Elevator Pitch
No matter what industry you're involved with you should be able to clearly and concisely describe your business to family members, friends, and investors. You need to perfect the 1 sentence pitch. Meaning, you should be able to explain everything your startup does in 3-5 words. If you can't do this, work on it and perfect it. Remember, 3-5 words to explain everything your business does. Think Airbnb: Find a place to stay.
When working on your elevator pitch you should stay away from flaws such as asking the wrong questions to those who have taken the time to listen to you, not making the pitch relevant to the listener, only talking about yourself, using industry jargon that makes your message confusing, and taking too long to get to the point. At the very least, each of these flaws makes your listener nervous, or bored.
3. Surround Yourself With the Right People
You've probably come across the phrase, "It takes a village to raise a child," at one point. Oddly enough, that quote can even be used to describe a successful business. Without the talented individuals working with you, do you honestly think that your business is going to survive? I personally like to surround myself with amazing friends and successful business owners.
Whether it's a co-founder, business partner, or team members that you hire as your business grows, these people possess different skills and knowledge that you may not have. When you team pulls their talent together, your business will be rounded out and able to thrive since it doesn't have any weak links.
Richard Branson has stated on the American Express OpenForum that the success of his Virgin businesses were due to building a great management team, "that had a vision, passion and a real sense of ownership," as well as being able to listen to feedback from employees and customers.
4. Know Your Enemies
That may sound a bit harsh. But, your enemies are your competitors. While you're obviously not going to war with them, they are still a serious threat to your survival. However, that doesn't mean that you can't learn a thing or two from them - both good and bad. Remembering that you can learn as much from a poor or weak example as from a good one. For example, how have they been able to turn a profit? Have they made any social media blunders or mistakes?
Don't hesitate to analyze your top competitors with tools like SEMrush, SimilarWeb, or even just setting up a Google Alert to stay updated on any news regarding the competition.
5. Get The Cash Flowing ASAP
The lifeblood of each and every business is cash flow. Without it, you can be 100% certain that your business will not survive. That's why you need to start bringing in the cash as soon as possible. I know I say a lot about passion, but if your passion never makes money, you need to find another passion.
Depending on your business - bringing in cash can vary. For example, if you are a service based business you can start doing consulting work as you build your brand. You may also want to consider asking clients for a cash advance prior to starting a project. For my company Due, we give away our product for free. We do however work with several larger companies providing their back end services. In the beginning we were paying for our services using Adsense. Do whatever you have to, to survive.
If you are selling a product, then you can consider pre-selling the item (on Kickstarter or Indiegogo) or allowing your first customers to become a beta member. Not only will this help your cash flow, your early customers can provide valuable feedback that can make your business more appealing to other customers. I've done this with several products and it's worked VERY well. Keep in mind if you do this... you should make sure to deliver on your work.
Get that cash flowing and then start focusing on turning a profit.
6. Discover Ways to Keep Costs Low
Positive cash flow is essential, but it isn't going to help much if you're just pouring money down the drain. That's why you need to be frugal as much as you can - as you build your business. For example, you can use free apps and software instead of purchasing software - no need for Microsoft Word when Google Docs work just fine.
You may also consider outsourcing some work instead of hiring full-time employees, renting out unused space in your office, renting or purchasing pre-owned equipment, or even splitting costs with another business - such as co-hosting an event together. Remember that there are 53+ million freelancers out there, that's a lot of people to help you create the company. When I started my company Due I had 14 different freelancers and only 2 full time people for the first 6 months. It's ok to use contractors, they can help you save money.
7. Embrace Creativity and Innovation
Think about brands like Apple or IKEA. They've been able to stand the test of time and earn loyal followers because they succeeded at changing with the times, differentiated themselves from their competitors, and welcomed innovation. Despite what you think of either brand, both are very innovative and in very different verticals.
Don't dismiss new ideas from your team members or those which your customers share with you. Don't allow yourself to become afraid to use these new ideas and innovations and don't allow yourself to think that there's too much risk involved with new creative ideas. Try not to be worried that each new idea will cost too much. Offering new products or services or developing a clever marketing campaign not only gives you a competitive edge, being creative and innovative can help increase your profits as well.
8. Brand Yourself
The name of your business has to get in front in the eyes of your audience. Whether it's networking in the industry, writing blog posts, guest contributing on leading industry publications, hosting a webinar or podcast, or interacting with your customers on social media, you have to promote yourself. It will not only spread brand awareness and increase your visibility - connecting with your audience will assist you in generating leads, which can convert into sales.
When your establishing and promoting your brand, make sure that you are consistent across all channels and create high quality content that your audience will want to share. Go back to your core values and business plan if you need guidance on how you want your brand to be perceived. If you need help branding, I put together a personal branding guide to help.
9. Test and Measure
Have you validated your business idea? Is your marketing campaign increasing sales? Is your social media content driving traffic back to your website?
If you notice that a marketing campaign isn't generating sales, then why stubbornly continue to invest in it? Remember, you want to keep your costs down. That's why it's essential that you test and measure everything. Google Analytics is one of the best leading tools that you can use to dig into the data of your marketing campaigns. Unbounce is a useful in testing out different landing pages.
10. Empower Your Staff
Whether you have just one employee or fifty, you should always empower them by letting their voices be heard and contribute to business decisions. Be transparent with your team and applaud them for their successes - give them the freedom to work, and let them proudly announce that they're part of your team. When you have empowered employees, it creates passion and enthusiasm and of great importance, it creates energy that is easily picked up by customers.
11. Consistently Learn
Have you already launched and managed a profitable company? If not - and don't take offense to this - you really don't know what it takes to start a successful company. Take the time to learn the fundamentals of starting a business. Learn skills that can make you more of an asset to your business. Stay on top of the latest industry trends. Work on strengthening your weaknesses.
Whether it's taking a class, reading an instructional book, finding a mentor, or hiring an expert, successful business owners are always looking to expand their knowledge and skill-set in order to better serve the business.
According to Ryan Blair on Forbes, CEO of ViSalus and New York Times best-selling author, the secret behind successful entrepreneurs is compartmentalization. Blair describes this concept as the way that "our minds deal with conflicting internal standpoints simultaneously." For the aspiring small business owner, you have to learn to sometimes separate yourself from your business. That may sound challenging, but if you try Blair's five-step system, you may be able to overcome the excuses that many entrepreneurs make when it's time to shutdown.
Focusing on what matters and separating unrelated issues can be an effective way of taking your startup to the next level.
Finally, don't forget that you're going to need to be patience and committed. You're probably not going to be successful overnight (though I would love it if you are). Stick with the business at hand until you're absolutely certain that it's not going to succeed.
By sticking with your values and business plan, you may find that you really can - and did - start a profitable company.