(Photo by Mona Parikh)
It’s tough to start a business and survive. The statistics have not changed dramatically over the years; according to the U.S. Small Business Administration, 33 percent of startups will fail within two years, and about 50 percent will fail in five years! But it doesn’t have to be that way. Being aware and being prepared are a great way to start. Assistance and resources are available to entrepreneurs, and with a little work on their own, they can enhance their chance for success.
In Delaware, there are great resources available to help startup and small business owners succeed, like the Emerging Enterprise Center’s New Castle County Open for Business. From an economic development standpoint, legislators and investors have come to recognize the need to create a vibrant entrepreneurial culture that encourages businesses to start and stay in Delaware. While these things are great news for entrepreneurs, there are some things the entrepreneur can do to help themselves!
Many entrepreneurs spend more time planning their vacation then they do planning their business. They’ll plan vacation a year or more in advance, figure how much it’s going to cost, where to go, what to do, how long it will take, where to stop along the way. Starting a business follows the same process. Here are a few things you may want to know before you start.
Ideas are a dime a dozen!
Ideas are worthless until they are converted into an actionable, feasible solution to somebody’s problem. Figure out how to bring an idea into reality.
Nobody cares about you or your idea!
Customers care about how it will help them solve a problem. Investors and lenders care about how to get their money back with an acceptable return. Communicate clearly. Inspire confidence about how the idea will deliver what the recipient wants
Begin with the end in mind!
Answer two questions for yourself. “What do you want to be when you grow up?” and “Why should anyone buy from you.” That sets the stage for the vision of the company and the unique competitive advantage. Hint: Low price and the “best” customer service are virtually never unique.
There is a place for both the traditional business plan and the lean startup methodology!
If the business plan is the roadmap of the business, then lean startup is the pre-flight checklist. Lean startup validates that you have found a solution to a real problem for a set of potential customers that will pay you money for that solution. The business plan should be your daily bible, a way of life that encompasses every aspect of the business, the summary of each aspect, how it all fits together and at the tip of the business plan pyramid, the elevator pitch.
Be clear, concise, compelling!
Boil the message down to the essence. Continually refine the pitch so the message gets through. Remove any words that aren’t absolutely critical.
Practice the pitch!
Take every opportunity to practice: to customers, investors, at pitch and business plan competitions, in person and on video. Pitching validates the message, creates awareness and builds a brand.
There is NO free money!
Undercapitalization is one of the biggest reasons startups fail. They run out of money before they really get started. How do you get the money to start? Start saving money. If you’re not willing to invest in yourself, why should anyone else? Next is people who have faith in you: family, friends and fools! They would like to get a return but are more interested in seeing you succeed. Bankers and lenders are interested in what you need the money for, what results it will produce and how you are going to pay them back, plus a return on their money. Grants are few and not available to most for-profit businesses.
Know the financial statements!
The financial statements help make decisions. Reviewed monthly, helps spot trends, make mid-course corrections and take advantage of unanticipated opportunities. Cash is king! Understand the timing of the flow of your cash.
Process, process, process!
Scaling up means more of everything; customers, employees, inventory, vendors. Consistent, replicable processes create leverage in the business, which means doing things faster, better and cheaper.
There is no right or wrong answer in business … as long as you are aware of the situation and the implications of the decision!
You may not like the situation. It may not be fair. But by being aware, then it’s just problem solving, and if you have enough time, money and people, anything can be solved.