Entrepreneur’s Must Get This!
“Businesses start from passion and the ability to solve specific problems, but rarely do they survive just on that”
In fact, if entrepreneurs, founders and startups, fail to grasp this, then their destiny is certain!
You see it is perhaps the less exciting aspects of the business which are critical but often overlooked by most entrepreneurs and founders.
For example, did you start your business (or are starting one now) because you love administration, processes, legal structures, accounting, and risk management, or was the real reason for starting your business more something like a passion, or a big dream?
Well I am sure it was for the later reason, but these commercial aspects cannot be ignored, in fact they are essential in any business.
Because Entrepreneurs Want These Three Things
When I sit down with entrepreneurs, they say to me that they want to grow their business.
When we unpack this, it typically means three things. First, they want to increase REVENUE, second maximise PROFIT and finally they want to be SUSTAINABLE.
I then explain to them that they can achieve these objectives in several ways…
- Doing more of the same – i.e. increasing the volume of current offerings [REVENUE]
- Positioning current offerings at a higher (premium) price [REVENUE & PROFIT]
- Reducing the cost base [PROFIT]
- Introducing new offerings as add-ons [REVENUE, PROFIT & SUSTAINABILITY]
- Introducing completely new unique offerings [REVENUE, PROFIT & SUSTAINABLITY]
However, I also tell them it’s not just about working harder, as what got them to where they are today is not what will take them to the next level in their business journey. Because they need to start looking at their businesses differently.
Now, you might be thinking that you know nothing about legal structures, or very little about raising funds!
No problem, because increasing your business acumen does not mean you need to go out and get an accounting degree. What it does mean however, is that you do need to educate yourself more broadly and expand your “commercial smarts” and you can start doing this in five ways…
The Five Ways To Increase Your Business Acumen
Get Organised by implementing systems to manage your information.
We live in the age where information is so accessible, however we need to be able translate that information into insights to make better decisions. At The Startup Business we help our clients by implementing The Five Imperatives Of Highly Successful Businesses™ which allows them to chunk all aspects of their business intelligence into five categories, whether this be emails, cloud storage or paper based storage archives.
Get Legal by making sure you have created the right business structures.
It is highly desirable that you do speak to a qualified source to ensure you have structured your business the right way. Of course, finding that right “source” is not always easy so the tip is to seek alignment in which they are able to provide examples of similar client businesses that you can relate to – then you know there is a greater fit, and they have experience working with businesses like yours.
Get Financial to not only raise funds for your business, but also to manage the finances ongoing.
You do not need to become the expert here, but if you feel you are not strong in the financial aspects, we do recommend you focus on building your skills here. Then when you sit down with your accountant or financial planner, or need to discuss finance to your bank, then you are more equipped to understand the commonly used concepts and practices.
Get Risk Aware by reviewing the threats to your business such as compliance and security.
This is important because when you do have an adverse event occurring in your business, it is often the case you need to act fast to prevent further impact which could range from financial to reputational. So make sure you understand your risks!
Get Talent because as you start to scale and grow your business, you want to make sure you bring on the right people at the right time.
There are several elements to this, with the basic administration of employees the most obvious. However, leadership is key and you as the entrepreneur or founder, are both responsible and accountable for this, as high performing teams do not happen by chance, you need to nurture them.
The Profitable Business That Failed
I have had the opportunity to work with thousands of businesses over many years and each have had their own unique circumstances requiring some sort of intervention. Sadly, though not all of these businesses are still around today. Some have been sold or taken over, whereas others have just closed and the original founder has moved onto other things.
However, there is one business that I never forget and that is the profitable business that failed!
The business was a technology startup in the telecommunications sector. Things were moving very fast – meaning that the typical growth of new customers and revenue each month, was averaging around 15 to 20% – in other words, 180 to 240% per year!
It was so crazy because this startup just was not equipped to handle the growth and while they were making money, they were spending like there was no tomorrow! They were also doing deals with other companies without appropriate due diligence and as they brought on more people, there was less focus on the quality of the applicant and more about just filling vacant roles.
Unfortunately, it was a ticking time bomb and finally imploded on itself in a very ugly way, impacting on many hardworking individuals and losing a lot of money for its investors.
In retrospect, there just was no focus on being organised, on the legals, on the financials, on risk management or on talent development.
Are You Up For It?
That’s why I always share this story to my clients facing a similar situation as their businesses start to grow, because I fundamentally believe as simple as these five ways are, once you start to become more commercially aware and increase your business acumen and not just focus on your passion, it is less likely for you to experience a similar fate as that tech startup.
Your Mission Possible!
So start implementing these 5 ways into your business today. Even if you are a business of just one person! Go through them step by step. Ask yourself these questions:
“Do you have a handle on your administration?”
“Are your legals in place?”
“Do you know where you are financially?”
“Have you put in place actions to minimise your risks?
“Are you developing talent for today’s needs and tomorrows growth, including your own development?”