Connect with us

Start-up Advice

8 Milestones You Need To Reach Before You’re Ready To Scale

Is it the idea? The team? The will to keep pushing forward? The money? It’s all of these things, working together.

Published

on

dodging-a-business

The rapid uptick of the hockey stick on a high growth start-up can look spectacular from the outside as you watch the company grow. It all appears so easy, but it’s the classic story of the five-year overnight success — when you just see the last few months.

Building a start-up is tough. They’re full of high-intensity stressful periods, scattered between drawn out frustrating spells of not growing fast enough, inadequate revenue or problems with your team. Building a start-up that’s poised for high growth is even harder, and the emotional roller coaster flies higher and drops lower as the pressure increases.

Customer apathy kills more start-ups than anything else and getting over that to grow the company takes a lot of trying new things and learning. There will always be a few years of drudgery before the rocket ship takes off.

Here are some things you need to have in place before you try to scale:

1Have the right team

It all starts with the right people. Picking trustworthy co-founders with complementary skills is paramount. Beyond that, you need to have key support structures in place both internally, with domain experts who know more in their field than you, and externally with a network of advisors and mentors to rely on for solid guidance.

Related: 5 Books To Read Before Starting Your Business

2A culture of learning

learning

You’re going to have inaccurate assumptions about your product and market. There are things you can’t know at the beginning, and your market is going to shift and evolve over time.

Building a company culture that embraces learning by studying the data around you and experimenting with new and better ways of doing things will help you weather these changes and emerge stronger and more resilient. It’ll also help you adjust to internal change as you grow.

Having open communication and tight feedback loops is great to increase and share team learnings.

As Darwin said: “It’s not the strongest or fastest species that survives, but the one most adaptable to change.”

3Focus on your customer’s needs

One of the easiest ways to evolve with your market is by being focused on the needs of your customers and continuously finding better ways to fulfil these. If you focus internally on your product, you’re likely to miss outside changes, but if you’re focused on how you are solving your customer’s problem, then you’ll be the first to notice external changes, threats or opportunities.

Also don’t try to solve every customer need. Rather do one thing ten times better than ten things only slightly better. Focus is key and that means saying ‘no’ and doing less.

4Control your core value proposition

It’s very tempting to find partners to help launch your idea, and it can be a very favourable way to get started. But over time, as you grow and prepare for scale, ensure you have complete control over the business core that delivers the value proposition to your customers so their satisfaction is not reliant on other parties.

You can outsource many things, but if you’re a software-as-a-service company you should have your own developers working on the code. Or if you’re an online retailer, ensure you manage your own customer service — even if you use partners for warehousing and deliveries. Whatever the essence of the value you provide to your customers, you’re going to need tight control over it, which is very hard if it’s not in-house.

5Don’t raise too much (or too little)

If you plan to grow faster than your organic revenues would typically allow, you’ll probably have to raise some capital. Raising too little is the obvious mistake as you’re going to prematurely run out of money. But, raise too much and it can dilute your shareholding so much that you’re disincentivised, or you lose control of your board and direction.

Having too big a war chest can also mean you’re pressured into doing wasteful things you wouldn’t have done otherwise and can distract from the critical focus you need to get the growth you require. Being over-funded can also force you into decisions you don’t want to take, as investors push you down more risky paths for their required returns, but which increase your odds of failure. It’s a careful balance to achieve, so weigh your options carefully.

Related: 9 Answers You Need About Yourself Before Starting Your Own Business

6Know your exit strategy

business-exit-strategy

Building something with huge potential to scale can be really exciting, but it helps to start with the end in mind. What you’re working towards will be the litmus test you apply to thousands of smaller decisions.

If you’re driving for sustainability, you’re going to hold back on over-investing in growth. If you’re aiming for an acquisition, then pushing for user numbers or partners might be the most important. Or if you’re going for an Initial Public Offering, growth with at least the option of huge profitability and dividend yield will be the most important.

You also need to ensure you and your investors are aiming for the same outcome. If you’re not clear on what you’re hoping for, you’re less likely to achieve it. As Zig Ziglar says, “If you aim at nothing, you will hit it every time.”

7Know your metrics

Linked to the above point, you need to understand the numbers in your business and what levers you can pull to change them. Track as much data as you can from as early as possible — it’ll help you dive into the nuts and bolts to see what’s really going on.

But no two metrics are equal and looking at too many makes it hard to prioritise. It helps to have a high-level dashboard with three to five of your most important actionable metrics or KPIs (avoid non-actionable vanity metrics). What are the top three metrics for your business, that if they go up, you know you’re succeeding? These are the things your team will prioritise over all else and will be the standard to which they compare their actions. Make these visible to everyone in the company so they know what’s most important.

8LTV > CAC

Of all the metrics you can track, ensuring your customer Lifetime Value (LTV) is greater than your Customer Acquisition Costs (CAC) is possibly the most important. If it costs you more to get a customer than you ever make from the person, then you’re scaling a loss-making machine. Tweaking the systems and processes in your business to get LTV > CAC should be your biggest priority before you try to scale.

You can experiment with automation, different pricing models, customer segments, marketing channels, ways of billing, set of product features and a number of other elements to get this right. But don’t try to scale or raise money to scale before you master this point.

A solid foundation will give you the best opportunity to create a fast-growing success story, and getting these eight things in place will take you a long way towards achieving that. So dream big, but make sure you have the basics in place so those dreams can become a reality.

Roger Norton is the CEO of Playlogix , the author of Start Here, as well as the creator of the Lean Iterator methodology, which has been used by the likes of UCT GSB, Idea.org, Alan Gray Orbis Foundations and Standard Bank Innovation.

Continue Reading
Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Start-up Advice

Selling To A Corporate: The B2B Battlefield

If you can apply some of these, you may be able to stop your hair from going grey or halt that premature baldness more effectively than me.

Jordan Stephanou

Published

on

corporate-business

So you’re running a start-up that targets corporate clients. All you need is a few corporate signatures on that paper, and all of a sudden you’ll have a sky-rocketing business with an exciting guaranteed revenue stream every month, right? Right… But it’s not quite that easy.

Maybe you decided against a B2C (Business to Consumer model) because the marketing spend to win over one consumer at a time was not worth it, or that the South African consumer market is not big enough in your industry, or that it’s better to get 10 paying corporates rather than a million paying individuals. You’re not alone, and you’re not wrong.

Both models have their major pros and their major cons. Trust me, I know. But here are some of the learnings I’ve had by pursuing the B2B model.

The pitch: Anything other than a resounding ‘yes’ is likely a ‘no’

First step is to get the pitch. There is a huge temptation to go about it as passively as possible, hoping that the deal will fall in your lap with a well written email. Reality is a little different however. To secure most pitches, a combination (or all) of in-person approach, phone call, linked-in message and email could be required. Once you’ve secured the pitch, book it in both parties’ calendars and hope that there’s no last minute cancellation. The exciting part awaits.

Related: Beauty Of Failure: The Art Of Embracing Rejection

The sad fact of human nature is that people don’t always say what they mean, or mean what they say. Possibly it’s because we don’t like to hurt each other, or it’s because we avoid uncomfortable discussion as if it’s the plague.

Whatever the reason, it’s quite rare to receive “hard no’s”. The reality is that after a pitch, anything other than a resounding yes, or a “when can we start”, or “where can I sign?”, is likely to be a soft no; they have no interest in doing business with you. The entrepreneurial spirit is one that looks at the positive in everything, so it could be very dangerous for a glass half-full entrepreneur to receive a soft no, because this person will very much believe the deal is still alive.

Once again, trust me, I know. I recommend tempering the enthusiasm by looking out for any sign of an excuse during the pitch, and addressing it then and there. You know how hard you worked to get that meeting – so make sure you leave with no question unanswered, knowing that you did everything you could to win that business, or learnt everything you could to enhance your product, service or pitch to win future business. If you don’t get their business, it just means you didn’t get their business right now. Extract the positives and move forward.

1. Balance patience & momentum: They don’t operate like start-ups

It’s often said that a corporate is the most important thing to a startup, but a startup is far from the most important thing to a corporate.

As start-ups or SMMEs, we just have to accept that. Where we would respond to an email in a heartbeat, it may take our corporate contact 2 weeks to respond; especially if they are decision-maker. They don’t need our business, but we need theirs. As such, it’s important to remember when following up on a successful pitch that they are big, they are busy, and they have multiple balls being juggled at once. It’s likely that our proposition is the least important to them, and may be seen as a luxury.

Remember, they didn’t pursue you, you pursued them. So we have to be patient. But this is the difficult part; we have to balance patience with the desire to keep momentum. It’s an oft-said phrase that “time kills deals”. As start-ups, we need to be respectful that our prospective client is busy, but also very direct and honest with them in terms of our position and our goals and objectives.

If we are direct about when we want to conclude a deal and why, it could scare them away, or it could lead to them prioritising the deal as a priority. Either way, it’s better to know where you stand rather than have something drag on in that mythical pipeline for months or years as false hope.

2. Their emails are not their priority

emailsAfter the pitch, it’s easy to get in an unhealthy pattern. That pattern could look something like this: Send follow up documents directly after the pitch; hear nothing back from the prospective client; send a follow-up email the following week; hear nothing back; send another follow-up email the following week; hear nothing back; send another follow-up email the following week etc. into perpetuity until you go crazy and re-apply for your old job.

I have learnt that busy decision-makers in the corporate environment don’t just sit at their desk all day reading and responding to emails. They’re on the move, in important meeting after important meeting, flying to London followed by a quick trip to Doha and then 10 days in New York. They’re not setting the wheels in motion in response to your proposal in that spare 30 minutes in the airport.

Related: 4 Social Media Tips For B2Bs

As such, when they are available, you need their full attention and you need to get them to commit to the next step. Either a phone call or in-person visit is effective with this. Getting through to them and asking them the difficult questions about the next step is the only way to be top of mind, and to find out if they are serious about this deal or not.

From my learnings, I recommend emails as secondary to the phone call as a way of confirming what was discussed over the phone in terms of next steps.

3. Improve the product / service – become irresistible

With all else said, there is only one way to consistently increase chances of getting a deal over the line. That is, simply, have an incredible product or service that solves a real problem. If you have pitch after pitch where the response is luke-warm, you should ask them before leaving “what would this product have to do / look like for you to sign up right now?”.

Once you’ve had a few meetings like this, you will understand exactly what your market needs. If you build that product or service that the market craves, you’ll be turning away clients because the demand for your business will be so high. Become indispensable. Build something so good that your clients would be crazy to say no to.

4. Build a pipeline

Your business should never rely on one client saying yes. Putting too much emphasis on one deal will make you desperate, and desperation is the easiest way to scare someone away – relationship, business or anything else. Your market should be big enough that a rejection here and there is water under the bridge and simply a learning.

Closing one deal will provide a proof of concept and credibility that can be leveraged to close the next deal. Each subsequent client should, in theory, be easier to win than the previous one.

Finally, if the product or service is constantly being enhanced according to the market’s needs, if there are enough clients in the pipeline, and if the follow-ups after a great pitch are being done effectively, deals should go through systematically. At the end of the day, closing a deal shouldn’t feel like hard work. The best way to win business is by building a great business that solves real problems.

Continue Reading

Start-up Advice

How to Name (Or In Some Cases, Rename) Your Company

Naming a company is hard, and founders often get it wrong.

Jason Feifer

Published

on

business-name

Jennifer Fitzgerald is co-founder and CEO of Policygenius. But in 2013, when her company was starting out, it had a different name: KnowItOwl.

“We thought it was a clever play on the term know-it-all,” she says. The company helps consumers find the right insurance policy for them, so she wanted a name that suggested wisdom and guidance, with a friendly animal like the GEICO gecko.

“Then we started talking to investors, engaging our first users and talking to vendors and insurance company partners, and we just kept having to repeat the name — spell it, explain it. Pretty soon we were like, We’ve got a problem.”

And it’s not an uncommon problem.

A name is one of the biggest early decisions a company founder will make, and many get it wrong. Best Buy was first called Sound of Music. Nike was Blue Ribbon Sports. Google was BackRub. Each was a mistake in some form — too narrow, too generic, too evocative of the wrong thing. (BackRub?) For Know­ItOwl, the problem was being too clever.

Related: The Do’s And Don’ts Of Naming Your Business (Infographic)

So how should a company pick a name? Fitzgerald did some research and came up with this process.

Step 1: The big name dump

Fitzgerald created a shared Google Doc for her five-person team and over the course of a few weeks sent out prompts to focus people’s creativity — asking for portmanteaus (like Microsoft, the merging of microcomputer and software), names with numbers (like Lot18), themes like references to trees and more.

Step 2: Structure brainstorming

One Saturday, she invited friends in the branding and marketing industry to join her team for pizza, beer and what she calls “structured group brainstorming.”

She’d put up a word that related to her business — say, protection. Everyone in the room had 10 minutes to write down 10 protection-related names.

Related: What You Need To Know About Naming A Start-up

Then they’d pass their list to the person to their left and take seven minutes to create seven names inspired by the other person’s list. They repeated this a few times.

Step 3: Cut the crap

Between the Google Doc and the brainstorming, they had hundreds of names and started eliminating them in phases.

First: “Can you imagine saying your company name to a Wall Street Journal reporter?” That wiped out many. (Bye, “Harmadillo”!)

Then they nixed any similar to competitors’, names that could come off as unintentionally wrong (a classic of the form: Pen Island) and names they couldn’t get a dot-com domain for.

Step 4: Judge by colour

The surviving names were evaluated based on various criteria, including brevity (shorter is better), evocativeness (does it convey meaning?) and searchability (is it unique enough that when searched for, it won’t get lost?).

Related: Checking the Availability of a Company Name with CIPC

Each criterion was marked as red, yellow or green. The name Policygenius, say, got a yellow for brevity. Too many reds meant elimination.

Step 5: Test people’s memories

Will people remember a name? Can they spell it, if they hear it? To test this, the team recorded someone saying the finalist names, posted the audio to Soundcloud, and embedded it in surveys that they paid $2,000 to have sent to 1,000 people.

They also asked respondents to write down any emotional associations the names created z- “just to make sure nothing was offensive or conjuring up any emotions we didn’t want to conjure up,” she says.

After this, Policygenius had its name. It now employs 130 people and helps a million people each month find insurance, either through its service or content — success that (ahem) owl started with a great name.

This article was originally posted here on Entrepreneur.com.

Continue Reading

Start-up Advice

How To Develop A Unique Brand Name In A Global Marketplace And Protect It

A helpful How-to-Guide on developing a unique brand name and conducting trademark searches.

Julian Diaz

Published

on

company-name

As a marketer, I know just how important it is to choose the right name for a company or product. It needs to be easy to spell and pronounce (in various languages if you’re going international). If possible, it should have some positive connotations (definitely no negative ones) that can be associated to your company or product. And above all, it must be distinctive and unique.

The question is how do you work out what is unique, beyond a URL search, and then how to protect it? The answer is trademarks. I know what you are going to say…

Do I really need to worry about trademarks?

Yes, for two reasons.

  1. You might be a small business already trading under a name that already exists in the market. And maybe the other company that has trademarked that name in your industry classification won’t ever issue you with a cease and desist letter when you enter their market, because they are nice people and just don’t feel there’s any harm in letting a company by the same name trade in their market. Or maybe they do. It’s a decision that is totally out of your control. Do you really want to take that chance as you build a global brand?
  2. You’ve invested tonnes of money into building your brand in your market and then all of a sudden another company enters the market with the same name. Trademarking your name protects your brand from being copied or from another company riding the wave of your brand awareness you’ve invested so much into building.

Trademarks are important if you want to build a brand on a solid foundation and protect it in the long-term.

Related: When do I register a trademark?

How hard is it to successfully trademark a name?

According to the US Patent & Trademark Office, there have been 182,000 trademark registrations and 312 000 applications in the past 5 months alone. That’s more words than there are entries for in the Oxford Dictionary!

You can imagine how hard it is, and how much harder it gets with each passing month, to dream up a name for your product or company that is unique and distinctive enough that it can be successfully trademarked and protected in large markets like the US or Europe – especially in the technology industry. But there are a couple of routes you can try when developing a new name if you find your chosen one is already trademarked.

How to come up with a unique company name

When coming up with a company or product name, you can either go with:

  • an acronym (IBM, SAP),
  • a family or person’s name (Ford, Dell)
  • an existing word (Amazon, Apple, Salesforce)
  • a misspelled word that looks or sounds like an existing word (Xero, Google), or
  • a completely new word either made up of a combination of existing words (PayPal, Instagram, Accenture), or
  • a completely new word entirely made up (Skype).

Related: (Infographic)Top 10 Reasons To Rebrand Your Business

How to make sure it’s available

Try Google first. If you don’t get any companies coming up that are using that word as a name in your industry, you’re off to a good start. Keep in mind that even if another company does come in the results, it doesn’t necessarily mean they’ve trademarked it.

Check the national trademark search database for the country or countries you want to trade in and search for your name within your industry classification:

If you don’ t come across any trademark registrations for that same word in our classifications, then contact a trademark attorney to conduct a more thorough search using their local experts in those markets and advise you further. You don’t need to work through an attorney as you can register a trademark yourself, but working with one can save you a lot of time and increase your chances of getting your registration through the first time.

In conclusion, some advice

My advice to any company already operating and with ambitions to grow globally is make sure your brand name is trademarked and protected.

If it is not, you should

  • conduct your own search in any of the national IP or trademark offices’ databases (some of which are listed above, others can be found through a simple Google search);
  • hire a credible trademark attorney to either register your name or advise and guide you along the process of registering a new name.

Related: What You Need To Know About Naming A Start-up

If you MUST change your businesses name, then

  • hire a brand development agency for the creative process of developing the right name for you. (We didn’t do this but only because we had no idea how time consuming and difficult it would be. Although it worked out well in the end and we love our new name, it did take up a lot of time and perhaps more importantly “headspace.” I could have been focusing on other pressing things requiring that required this level of strategic thinking or creativity;
  • hire a change management agency or consultant to help with the communication and roll-out process of the new name to all stakeholders: staff, partners, customers, and the market. We managed well on our own, but if you don’t have the internal competency for this, or the time, rather outsource this very important and often neglected step;
  • and finally, just pray to whatever god(s) you believe in that whatever name you finally come with gets the green light from stakeholders and your trademark attorney. (Yes. Seriously.)

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending