Everyone in the startup world has heard the adage: “Launching a business is not a sprint; it’s a marathon.” But really, the comparison isn’t kind to entrepreneurship. A marathon at least has an ending point, a place you know you can reach and then rest.
A business just…keeps going. (If you’re lucky!) But here’s one way in which a marathon really is like a business: Without proper training, you’ll definitely fail. Shin splits from the marathon, employees splitting from your business. Stress fractures from running, stress from ruminating. You might even puke from both.
Passion and adrenaline will only get you so far. Way too many entrepreneurs show up at the startup starting line without so much as a stretch, and those folks may barely make it past the first mile marker.
Seasoned entrepreneurs and advisers agree: Before you jump into the race and hope to go the distance, you need to go through basic business training. Here, your guide from a wide range of coaches.
Step 1: Train in your off-hours
You know the saying “Don’t quit your day job”? OK, seriously, don’t quit. New businesses can seem instantly promising and exciting and full of potential, but they are almost never going to pay you a living wage immediately.
“So often people say, ‘We had this bit of momentum, and we all quit our day jobs and jumped into the company,’” says Duncan Logan, CEO of San Francisco co-working space RocketSpace.
“And then the momentum died off and they realised they’d made a terrible mistake — that it wasn’t a business yet. It was still a hobby.”
Logan’s advice: The best way to prepare for a launch is to run your new business as a side project and stay in your current job for as long as possible.
Sure, this means you’ll be juggling two jobs and potentially stressed out of your mind – but that’s good training for when your new startup takes over your entire life anyway. (Of course, this also means you may be building your business on your current employer’s dime, so be mindful of that: If you keep your day job but are too distracted to actually focus on it, you’ll quickly lose it.)
Step 2: Know why you’re launching
Do you know why? It sounds like a stupid question, but take a moment to really ponder it. Why are you about to devote your life to this startup? Why is this a business the world must have? Do you believe that strongly in it – not just in its potential, but in what it stands for?
If you don’t have a good answer, stop right now. Don’t restart until you’ve figured it out.
“When you have a decision to make and you don’t know what the right answer is from a financial or traction standpoint, you’re supposed to lean on your values,” says Blake Smith, CEO of Cincinnati-based online personal stylist Cladwell. But in the early days of his business, he says, he realised he’d never fully clarified his values. “Instead, I would ask other people what they thought and lean on them, which really caused me to spin my wheels in my business.”
Eventually, he says, he figured it out: His core business values were about authenticity and a desire to represent transparency in the clothing industry. That was his north star; every decision he made could be based on staying true to those ideals. “You have to be able to lead from your own values,” he says. Clarify yours at the start.
Step 3: Write it down
The written-out business plan: It used to be a standard part of launching a business. But many ’treps today are dismissive of it, says Donald F. Kuratko, executive and academic director of the Johnson Centre for Entrepreneurship and Innovation at Indiana University’s Kelley School of Business. They tell him that a business plan is old-fashioned and ineffective, a holdover from a simpler economy.
Wrong move, Kuratko says. No matter the business and no matter the industry, every entrepreneur needs to study the market problem they’re addressing – and that means understanding the market, and developing a concrete strategy for how they’re going to land that first customer. There’s no room to wing it.
“If you can’t articulate those things clearly, you’ve got a problem right off the bat,” Kuratko says, and the exercise of writing a business plan reveals those issues. “You want to make sure those points are addressed before you start, like making sure you have the right shoes for running a marathon.”
Step 4: Take your benchmarks seriously
You don’t begin training for a marathon by running 26.2 miles. You set your goals more modestly — start with a few miles, work up to 16, and so on. The same principle holds true behind the desk: Begin by laying out your interim goals, to ensure that you grow in a timely manner (you know, before the money runs out). These can be quarterly, six-month or even annual goals; it doesn’t matter, so long as you decide what success looks like and are realistic about whether you’re achieving it.
And that’s the easy part. Now you’ve got to stick to them.
Logan, the co-working-space CEO, is a cautionary tale in what happens if you ignore your benchmarks. When he started his previous company, he set some hurdles for the first year – and decided that if he missed them, he’d fold the company. Then he missed them…and instead of taking action, he says, he created excuses.
He set new benchmarks and gave it another six months. Those weren’t met, either. Ultimately, he dragged the company along for two miserable years before finally shutting it down. He could have saved everyone a lot of time and just quit when he knew things weren’t working.
“You need to have a very honest set of metrics and know that if you don’t meet them, you have to reevaluate before you’re broke,” he says.
Step 5: Enlist key critics
A running coach will be your greatest cheerleader – up until the point where it’s clear that you won’t reach the finish line. When you’re stumbling, a good coach will tell you to quit before you hurt yourself. Now it’s time to find your business coaches.
Logan recommends creating a “trust circle” of two or three people who can give you brutally honest, critical feedback on your business. Few people will provide that once you’re up and running – because they know how hard you’re working – so he recommends assembling this group before you start.
“As much as it might hurt, you need someone who will tell you, ‘Your baby’s ugly. We know you love it, but it’s just not going to happen,’” Logan says. “You need those people in place early on, because it’s so hard to see it as an entrepreneur.”
Step 6: Prep your personal life
Just like with marathon training, the hours spent away from home during a startup launch can wreak havoc on your work-life balance and spur resentment among loved ones. But Scott Bailey, managing director of the startup accelerator MassChallenge Boston, has some good news for you: It’s OK – important, even– to leave work and see your family!
“That feels like it goes against everything almost everyone else expects of entrepreneurs, because people – especially investors – want to know you’re full-time focused and dedicated,” he says. But nobody wants to see you friendless and alone. That’s bad for you, and bad for your business. “Sacrifice other things,” says Bailey – but not your relationships.
How? Set limits at the very start. Talk to your family about what’s most important to them. Maybe it’s your doing chores around the house, or attending kids’ ball games, or not checking your phone at dinner, or staying away from the computer while on vacation (as much as is reasonably possible, at least). When you stick to these agreements, your family will feel appreciated; you may be busy, but at least they know when they have you.
Step 7: Build a home budget
when training for a marathon, you cut back on pizza and beers. But when you prepare for your startup, well, you might just want some cheap pizza and beer. The rationale is the same: It’s time to monitor your intake — less junk food for the marathon, and less-expensive food for your budget.
Your startup may take a toll on your finances, which can put stress on your relationships. So before the business gets going, you should run the numbers on your personal finances and set up a strict budget.
“It’s OK if you don’t put a dollar into savings for a while, but you can’t be upside down a dollar every month, either,” says Walter Knapp, CEO of Boulder, Colo.-based advertising technology firm Sovrn. He knows it well: He’s helmed four startups and keeps a careful budget to make sure he’s always able to pay his fixed costs at home. Otherwise, he says, you’ll create “too much stress on you and your family, as well as your employees and their families.”
Step 8: Find your people
Like a running group that trains together, a community of other entrepreneurs can help keep you on pace. Incubators, accelerators and other entrepreneur centres may provide an accessible network. Join them.
Reach out to entrepreneurs in similar situations to yours, and try to develop relationships with more experienced people who can serve as mentors.
“You can gain a lot from other entrepreneurs, even if they’re in entirely different industries or have totally different ideas. What they’re trying to achieve and the struggles they face are so similar,” Bailey says. “It’s a great way to gain insights and spark new ideas, and everyone in the entrepreneurial community needs support.”
This article was originally posted here on Entrepreneur.com.
The 3 Blueprints For Starting A Business
There are three templates to starting a business. Get this first step right, and success will fall into place.
“One reason that America continues to do so well as a market,” an economist explained to the audience at a recent conference, “is that they are still leading the charge to do new things. In addition to pioneering new products, they are still pushing the boundaries of frontiers like space-travel and technology. They don’t merely copy the products made in other countries. They make and do entirely new things, and that matters.
“By contrast,” he explained, “many of the older economies, like Europe, are just ‘kicking the can down the road’. They don’t really have a vision for the future. They’re just trying to maintain what is, to survive a little longer.”
Grow or shrink
Companies, countries and entire economies are all broadly following one of these two approaches. One is the bold, growth option, while the other is only about maintaining what already exists. The trouble with maintaining, however, is that, in a dynamic system, you tend to be either growing or shrinking. A dynamic system rarely tolerates anything simply standing still. To stand still is, often, to shrink.
Once in a lifetime chance
Your company, team or organisation’s founding moment is a once-in-a-lifetime opportunity to get this one right. Are you simply going to kick the can down the road? Or do you want to build spaceships? Are you going to be a soulless ‘also played’? Or would you prefer to do something new and meaningful? Mission matters greatly.
In Exponential Organizations: Why New Organizations are Ten Times Better, Faster, and Cheaper than Yours (and what to do about it), Salim Ismail calls it a ‘Massive Transformative Purpose’. The stronger your purpose, the more you attract tribes of people, both as aspiring employees and as a supporting community of customers.
This is not to say that you are obliged to invent something brand new and original. A good deal of research is showing that pioneers in a new industry do not tend to do as well, or last as long, as the ‘settlers’ who come after them. One reason is that the pioneers have to make all the initial mistakes. The settlers get to enjoy greater leverage, by observing what has already worked or failed, then capitalising on that learning.
The idea of founding a company that thrives on meaning has more to do with how meaningful the work is, and how much of a drive to achieve goals is built into your corporation.
Elon Musk’s SpaceX is certainly not the pioneering organisation in space-travel. We have left earth’s atmosphere before, decades ago. In that sense, SpaceX is a settler, and not a pioneer. That said, it is nevertheless a strongly goal-oriented, purpose-driven organisation. You don’t have to invent something entirely new to create a mission-driven company.
The Israeli Defense Forces is highly mission-driven, because it has to be. Pixar is mission driven, because it chooses to be, and because it believes in magic.
Being mission-driven, from the top to the bottom of an organisation, changes the energy. It converts ‘mere work’ into ‘shared purpose’.
Sociologist James Baron and his group of experts led a study in the mid-90s looking at how people founded their companies, across a wide spectrum of industries, including hardware, software, medical devices, research and manufacturing.
The study asked about their original blueprints. What organisational models did they have in mind when they started?
Baron determined that there were three templates for starting a business. You might start your company based on:
- A Professional blueprint, in which you hire people with a preference for specific skills (prior to its fall from grace, Kodak hired people based on specific educational qualifications)
- A Star blueprint, in which you hire ‘superstars’ based on future potential, placing a premium on choosing or poaching the brightest hires. You look for raw potential, not current knowledge
- A Commitment blueprint, in which you believe that skills are nice, but cultural fit and buy-in to shared values is more important. You build strong bonds to the company. Employees tend to be passionate about the mission.
Baron and his experts tracked the firms through the 1990s and into the next decade. Those that used the Commitment blueprint, which prioritises a shared sense of mission and values, greatly outperformed the others. The failure rate for firms with a Commitment blueprint was zero.
Failure rates were substantial for the Star blueprint, and more than three times worse for the Professional blueprint. It seems these approaches don’t keep people going in the same way that buy-in to a mission does.
Nevertheless, the Professional blueprint, which prioritises the specific skills on people’s CVs, tended to be the most common.
There were two other rare blueprints: Autocracies and bureaucracies, focusing on detailed rules and procedures. These blueprints were the most likely to fail, and autocratic was most likely to fail out of the two. This is an important point: Rules-based organisations and dictatorships, according to this finding, are so likely to fail that investing in them is not worthwhile. But where a culture of people is part of a mission, they are most likely to succeed. Translation: Autocracy rarely ever works, and systems of intense rules and guidelines work slightly less badly.
Rules and dictatorships = likely to fail.
Mission-driven culture = 100% success rate.
Most real-world autocrats would probably agree with this finding, if they heard it. Then they would continue to run their business as autocrats, because, they’d say, “My situation is different, I happen to be right, and people should do what I say.”
When you’re an autocrat, it’s hard to know that you’re an autocrat. When you create your business to follow a mission from the word go, and you allow a degree of genuine democracy in which others can outvote you for the good of the mission, you instil the possibility of overcoming this blind spot, sometimes in spite of yourself.
Now, here’s the kicker: The Commitment culture is extremely effective in starting an organisation and ensuring its initial survival. But over time, the same study found, it is not the best performer.
The challenge is that when organisations mature, encouraging layer upon layer of like-minded people tends to discourage innovation and original thinking. Too much shared value = groupthink.
So, what’s our total moral? In a best-case scenario, we need to start with a common mission and committed people, and focus on growing. Once we’ve matured, we need to make a point of bringing in diverse thought, in order to avoid too much homogeneous thinking and yes-mannery.
In Originals: How Non-Conformists Move the World, Adam Grant shows how these findings map perfectly onto the rise and fall of Polaroid. Like-mindedness worked well to get the brand going initially, but then, ultimately, the same like-mindedness prevented them from learning, growing, changing and adapting in a volatile market.
Like the IDF, they had a strong sense of shared purpose. But unlike the IDF, they were incapable of a belief system that said ‘the only tradition is that we have no traditions’. They were not a learning and growing organisation.
The more a company develops a culture, the more it will tend to hire for that culture, and the more resistant its own people will be to new ideas or contrary views.
So what if…?
What if you decided to be an organisation on an important mission, rather than merely a group of people kicking the can down the road?
The 7 Culture Pillars That Will Skyrocket Your Start-up To Success
Culture can make or break the future growth potential of your start-up. Are you giving it the focus it deserves?
Culture eats strategy for breakfast. Every time. This is especially true in the world of start-ups. I liken a start-up to flying a plane, and then attempting to build the engine in mid-air. The engine in this case is the team, and culture powers the plane. Without the right culture , start-up founders can quickly see their perceived Concorde unravel and turn into the business equivalent of the Hindenburg disaster.
Culture vs Strategy
The reality today is that a start-up’s strategy is often forced to adapt to shifting market conditions, changing customer needs and to an increasing extent, disruptive competition. But regardless of the strategy, it still requires a team and, ultimately, culture to drive its agenda internally and its execution in the market place.
In my interviews with some of the world’s leading CEOs and entrepreneurs, the influence of culture is often credited with playing a key role in business success. It’s ironic however, that even though a high-performance culture is a critical aspect of succeeding in business, start-up founders commonly overlook and often under-appreciate its role in building and running a successful business.
The Seven Pillars
A business culture can also be described as an expression of the dysfunction of management. The strategic management function is critical in creating and developing a winning culture. Here is my view on how to do just that.
1A Landmark Methodology
The lean start-up methodology by Eric Ries is designed to eliminate the uncertainty in the product development process by validating iterations of product developments with customers. It has become the status-quo in terms of building a new start-up. While it is an excellent methodology in the product development context, the value and impact of culture dwarfs the value that is created by the lean start-up methodology.
Let’s take Steve Jobs for example — imagine if he attempted to validate the iPhone using the lean start-up methodology. My guess is that it simply wouldn’t work. What differentiates Apple, is their innovation-led culture, and their unique approach (‘Think Different’) to product innovation and its underlying business model. It’s what fundamentally makes them the company they are today.
I recently interviewed the serial entrepreneur Vinny Lingham and he said: “If Henry Ford asked his customers what they wanted, they probably would have said faster horses!”
When start-ups are establishing a play on the edges of what’s known to be possible, it becomes increasingly harder to validate ideas. This puts a greater emphasis on the engine — the culture of the business — to redefine what innovation means and the categories within which they operate.
2A Compelling Narrative
The human brain is hardwired for stories. We find messages that are framed as stories more memorable, easy to understand, and convincing. Because of this, a brand’s story is equally important to its customers and to the staff that serve them. Seeing things through the lens of narrative can lend a start-up’s culture meaning and texture, and they can galvanise a team around a single purpose and goal.
To quote Elon Musk: “A company is just a team of people working towards the same goal.” His space exploration company SpaceX has one ridiculously compelling narrative — to enable humans to become a multi-planetary species. Besides showing that innovation is truly iterative, their attempts at creating reusable rockets is a classic narrative that they uniquely own and it’s a narrative that speaks volumes to their business culture and ambition.
3A Forward-Looking Business Model
In today’s digitally enabled economy, if the rate of innovation inside your company is slower than the rate of innovation outside it, then you’re likely to run into trouble. Disruptive competition is on the rise, and legacy traditional business models are paying a heavy price because of it.
The same can be said for start-ups. Even if you have first mover advantage, it’s likely that before long you’ll be joined on the ‘beachhead’ by a competitor who’s learnt from your initial mistakes, and has since come up with a shiny, new and improved product and business model designed with the sole purpose of eating into your existing and hard-won market share.
Future-proofing a business relies heavily on business model innovation i.e. the process of defining new ways to deliver existing products to existing customers using existing technology. A tool I’ve found helpful is the Business Model Canvas — it’s an attempt at providing a common framework that all businesses can use to create new or improved business models.
4A Powerful Belief
One of the more striking commonalities between successful CEOs and entrepreneurs that I’ve interviewed, is their unwavering belief in what they are doing in business. Successful founders and executives use belief to inspire mass corporate action, and to align organisational behaviour towards a common goal.
To quote Steve Jobs: “A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.”
5A Striking Motto
Mottos have been used to express cultural beliefs for centuries. From America’s ‘In God We trust’ to Airbnb’s ‘A World With No Strangers’, Apple’s ‘Think Different’ and Nike’s ‘Just Do it’ — they are simple but essential forms of communicating cultural beliefs. Mottos (or slogans) impart a key message into the minds of consumers and most importantly, the staff that serve them.
6A Strategic Vocabulary
The enablement of a strategic vocabulary in a business’s culture goes a long way to driving the organisation’s collective understanding of a top-down business strategy. One could even argue that it is a pre-cursor to the strategic alignment of disparate business functions and ultimately the enablement of business performance through collaboration.
Creating and implementing strategies that ultimately create value for customers, stakeholders and shareholders, all need to be aligned with a broader business vision and communicated in a similar fashion and at all customer touch points (both offline and online).
It is also vital that executives give their staff the tools and training they need to acquire their own rich strategic vocabulary as it relates to specialised departmental functions and disciplines.
7An Open Talent Policy
Businesses with the best people win. Period. An open talent policy should creatively address the way start-ups acquire, develop, reward and retain their staff to address ‘the future of work.’ This means that employers and employees must come to terms with a new working environment in which flexibility and adaptability take priority over job security and long-term employment, structured environments, and standardised roles. A fresh approach should be adopted by start-up founders so that their staff can enjoy better work/life balance, autonomy and career control.
Early to bed, early to rise, work like hell and merchandise. But take heed of your culture — it’s important to get it right to truly enable disruption and challenge the status quo. Happy flying.
How The Sanlam Enterprise And Supplier Development Programme Is Helping Start-up Businesses
The balance between funding, business development and mentorship can make or break an enterprise development programme
165 new employment opportunities, 172 SMEs developed and 1046 jobs sustained. These are some of the numbers recorded by Sanlam as the company prepares to wrap up the fourth year of its Sanlam Enterprise and Supplier Development (ESD) programme.
The flagship incubation scheme has turned around loss-making enterprises, helped some participants get critical accreditation and funding, but most importantly, R12.6 million was spent procuring goods and services from the participating businesses by the end of 2016.
Receiving funding isn’t the secret to start-up success
Francois Adriaan, head of Sanlam Foundation says the secret to a successful enterprise development programme is not the amount of funding big corporates can give SMEs: “It’s having the right mix of mentorship; business intervention and procurement spend flowing from your corporate to small businesses.
You have to show the entrepreneur you are mentoring that you trust them enough to do business and walk the journey with them instead of giving them a once-off grant and leaving them to their own devices,” says Adriaan.
Financial support that’s timed to business need
Like in many other ESD programmes, participants in the Sanlam ESD programme also have access to funding. But what sets the programme apart from others, says Adriaan is that the amount of funds disbursed to each participating businesses is directly linked to its need, its commitment and progress record.
“Financial support is timed according to the specific needs of each SME. Those who qualify for funding are then provided with a further seven years of SME growth support through the ASISA Enterprise Development Fund.”
The Sanlam ESD programme
The Sanlam ESD programme was launched in July 2013 in collaboration with the Association for Savings and Investment South Africa (ASISA) to empower SMEs, create jobs and contribute to economic growth in South Africa. An independent evaluation shows that participating enterprises have grown their annual revenue by 19% on average.
D&P Auto participants
One of the programme participants is D&P Auto, a panel beating business based in Retreat. For two decades, the owners of the business (husband and wife) poured their life savings, bank loans and even pension policy pay-outs into the business to keep it afloat because it was not making profit. Three years of focused business incubation and mentoring under the Sanlam ESD programme resolved D&P Auto’s 20-year loss-making battle.
“Our business has grown from a non-profitable business to the extent that we now have to pay provisional taxes to SARS for the first time in 24 years,” said Pam Douglas on their business maiden profit.
Successes of the incubation programme
The incubation from the programme has helped other participants brush up their bookkeeping skills, file successfully for tenders and get accreditation that took their businesses to the next level.
G&T Auto, the only fully accredited Major Structural Repairer in the programme, bagged Mazda accreditation last year, a rare accolade that will see the enterprise repair Mazdas that are still under warranty. The owner, Thembi Sithole says the programme has given her confidence to approach bigger clients as she now understands the requirements to get big contracts. She has also become more knowledgeable about financial statements and their impact on obtaining funding.
Adriaan says enterprise development initiatives of this nature give big corporates an opportunity not only achieve their business objectives, but also impact broader South African society.
“This commitment is around impacting issues of inter-generational poverty, unemployment and inequality. It is also about aligning around public-private-civil society partnerships in sustainable ways,” concludes Adriaans.
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