The reason why so many start-ups fail is because they operate like small businesses.Your invoices are rarely filed, you know you’re making a profit, but you’re not sure if it’s enough, your staff have no employment contracts, never mind performance appraisals and the processes in your business are detailed in your head, and your head alone.
Related: The Smarter Start-Up
There are good reasons why big businesses actually become and remain big – they document their learnings, everyone in the business understands how things should be done, and people understand what output and behaviour leads to reward and continuous employment.
Start-ups on the other hand often use the excuse of “There’s never enough time,” or “I’m my business, and know exactly how to run it and what’s happening (and no-one else can fill my shoes).”
On one hand, yes, you know everything, but that’s pretty useless when you get pneumonia and you can’t get to work for the next eight weeks. Second, if you are your business, then no one will want to buy your business.
Did you start your business because you want to work 20-hour days for the rest of your life, or do you want to sell an asset of value one day? If the answer is yes to the latter, then you need to run things like a big business from the word go.
Investors buy big ideas, and they like big business thinking and discipline. Even though I have opened a small coffee shop as my start-up, my staff have performance and employment contracts, all processes and risk are documented, I scrutinise the margins I make on every single product and monitor my biggest pockets of costs and revenue on a weekly basis – and most importantly, although I’m part of the business’s success, I’m not the only reason for its success. That’s all down to systems.
Related: 7 Life Lessons for Start-up Success
What ‘big company’ habits will you be taking on going forward? Tell us in the comments section below…