We all want our start-up businesses to hit that coveted R1 million per year in revenue. The unfortunate truth is that only 4 percent of us actually make that goal.
This past year my company scaled LeadQuizzes, our lead generation software, past the R1 million mark in less than six months. Having hit that sales mark, I now know how important it is to maintain an awareness of where you are in your business.
That means really understanding: 1) The stage of business you’re in; 2) the fears and limiting beliefs holding you back; and 3) the keys to growing into that next sales bracket. Having this awareness creates more confidence and allows you to prioritise and take action.
Here are the five stages I believe that you and your start-up must go through to reach that understanding and hit that R1 million in sales.
Stage 1. Searching for product market fit
Your goal at this stage should be finding a product market fit. You’re likely excited at this point, but scared. Now that you’ve jumped in to starting your business, your plan for how to grow isn’t as clear as you’d thought. What’s more, you’re not making much money yet, which is scary.
You’re also starting to get distracted by lots of different opportunities for making money. Don’t let that happen; focus on your plan. And when talking about your business don’t feel you have to “fake it” and act more successful than you actually are, even though you’re worried whether things will work out.
Daniel Tyre of HubSpot For Startups told me that the key to success is to start by proving your value and attracting customers. He recommended offering discounts or doing work for free to create case studies and a track record of results.
Focus on the lowest hanging fruit, he said. And ask friends and family for referrals.
Stage 2. Moving from a part-time to full-time business
You made it out of stage one. You’ve built a small reputation for getting results. Most importantly, you’ve got customers.
At this stage, you’re most likely becoming overwhelmed from having to sell and fulfill those orders. You’re finding it difficult to keep up.
You know you need to bring on some help, but you’re barely paying yourself as it is. You’re not sure how long that steady stream of referrals and sales will continue. You also worry you’ll have a hard time letting someone else take over because you haven’t yet established repeatable systems.
Loren Howard of LLH Development and Real Estate told me that the key to graduating from this stage is to push through. Things will feel uncomfortable, he said, but if you can spend 70 percent of your time on sales-generating activities, you will feel more confident and able to bring on a virtual assistant, then, potentially, a full-time employee.
As your expenses and reputation increase, you should be able to increase the pricing discounts you offered your first customers, Howard said.
Stage 3. Establishing a scalable business model
If you’ve made it to stage three, your primary goal now is to establish a scalable and predictable business model.
At this stage, you’re most likely still feeling overwhelmed. You may have employees, but you’re personally wearing many hats. You need to hire more support, but you’re worried about generating enough consistent work, as you are still mostly reliant on referrals.
Related: 21 Steps To Start-Up
This makes it difficult to see the path ahead where you can scale. At the same time, you’re not extremely happy with your team’s performance because you haven’t created effective training procedures or clearly defined employees’ job roles and how they are to be held accountable.
To make it out of this stage, Emily LaRusch of Back Office Betties told me, you should make a major effort to shift from a referral basis to a predictable and scalable source of leads and sales. To do this, she said, use a tool like advertising. This is likely going to be one of the most difficult transitions in your business to date, she told me.
Continue to spend 70 percent of your time on sales-generating activities. You will need to set up basic tracking and systems to manage your sales and team around your new scalable business model.
Stage 4. Building systems and infrastructure for growth
If you’ve made it to stage four, then you need to start establishing better systems and infrastructure for growth. At this stage, most decisions are emotional ones because your tracking and metrics haven’t yet been established.
Now that a scalable business model is in place, you can focus on moving into stage five. Chris Ronzio of Organize Chaos told me you should focus at this point on creating job descriptions, standard operating procedures and key performance indicators for each role.
Once those things are in place, he said, you can begin to hire and increase your capacity. At this stage, you should improve your lead and sales tracking. You should also optimise your sales model and increase the amount of revenue you make per customer. As you improve, you will be able to scale your advertisements and hire sales reps.
Stage 5. Scaling your team and proven systems
Once you make it to stage five, it’s time to scale your team and proven systems. In stage five, your growth is probably limited by your technology and your people. Cash flow is still a stressor as you make more expensive hires and invest in technology and infrastructure to grow.
Once you gain clarity around what you need to do, and understand your finances, the stress will be reduced.
Scott Oldford of Infinitus recommended that you will most likely shift more focus toward hiring and training new team members at this point. That means more of your time will be spent on management. You will need to improve your technology to handle more advanced reporting and tracking. You’ll get the opportunity to finally accelerate and scale what is working.
If you don’t have an awareness of where you are in your business, and follow this framework to break into what the next stage is for you, then the chances will be greater that you’ll give up, not realising how close you actually were to achieving success.
This article was originally posted here on Entrepreneur.com.
Should Entrepreneurs Lie? It’s A Tricky Question
In the hustle of the startup world, entrepreneurs often drop little white lies – and don’t even consider them to be lies. Where’s the ethical line?
Gary Hirshberg knew the exact amount of money he needed to save his company: $592,500. It was 1988, and his fledgling yogurt brand, Stonyfield Farm, was near collapse – rocked by the closing of its third-party manufacturer, hemorrhaging money as it struggled to fulfill orders and unable to find new investors. But with that exact amount of cash, Hirshberg and his co-founder, Samuel Kaymen, calculated, they could open their own facility and regain their footing.
So Hirshberg drove down to his local SBA office with an informal proposal. “We’ve got a bank willing to provide the loan,” he told an officer, and he said his shareholders agreed to put up $100,000. All he needed from the SBA was its 85 percent loan guarantee, which would make the bank comfortable executing the financing.
The SBA liked what it heard, and that positive response set in motion the funding that would save Stonyfield Farm and enable it to grow into one of today’s most recognisable yoghurt brands. But in truth, the SBA didn’t know the whole story. Hirshberg didn’t have a bank lined up. His investors hadn’t committed the money. All he had was a vision for his company, a plan to save it…and, ugly as it may sound, a lie that would pull it all together.
Let’s put it bluntly: This is common. Entrepreneurs lie. It’s not like they regularly drop Theranos-level falsehoods to defraud customers and investors, but the scrappiness of entrepreneurship inevitably leads to some kind of deception. People say their company is bigger than it is, that they’re more prepared than they are, that they know how to do something they don’t. They spot an opportunity and they lie to get it, and that becomes part of their story – an origin that may one day even be celebrated, like how Steve Jobs famously faked his way through the first iPhone demo at Macworld even though the device itself was a buggy mess.
But here’s a question the entrepreneurship community has been struggling with for centuries: Is it OK to lie? And when does a lie go too far?
It’s tricky, because most entrepreneurs don’t see their deceptions as lies at all. Hirshberg doesn’t. “I mean, look – you beg, borrow, steal, stretch. You do what’s necessary,” he says today. In truth, the editors of Entrepreneur can get drawn into this logic. Just recently, this magazine ran a series of articles on bootstrapping, which featured a number of stories about entrepreneurs stretching the truth. One of them, for example, was about Anthony Byrne, the CEO of a Dublin-based company called Product2Market.
In the start-up’s early days, Microsoft considered hiring it but first wanted to conduct a site visit to make sure Product2Market had the necessary manpower. In reality, it didn’t. So in advance of Microsoft’s site visit, Byrne brought friends, family and neighbours into his office, having them pose as employees to make his startup seem twice its size. It worked. Microsoft signed on.
After that story ran, an Entrepreneur reader emailed an objection. “I don’t think the magazine should be promoting people who got ahead by lying as an example for others to follow,” he wrote. But Byrne doesn’t think of his action as lying; he sees it as a simple act of survival. In a crowded industry dominated by big players, he needed to look larger and capable.
“As soon as we got our first big deal, I did in fact hire the right number of people to fulfill the contract,” he says.
This is also how Hirshberg of Stonyfield Farm sees his own circumstance. Rather than lying, he was creating an opportunity he knew he could fulfill. True, he didn’t have a bank or his investors on board with his plan. But he knew a banker that was interested in his brand and figured that if the SBA seemed on board, the bank and investors would follow. And that’s what happened. “It’s OK as long as you ultimately do deliver,” Hirshberg says.
But context is also important, he thinks. If entrepreneurs lie for the sake of lying, or for their own personal gain, that’s a problem. But what if it’s for a common good? Consider his plight, he says: Stonyfield Farm may have been small at the time, but it was employing people and supporting their families. Hirshberg’s wife was pregnant, and his mother-in-law and other family and friends had put significant money into the company. He’d tried repeatedly to save it by more direct means. He even found a potential manufacturer that promised to step in and help – but at the last second, the manufacturer tried changing the contract to steal the brand away.
Hirshberg and his co-founder nearly gave up. Then they made one last-ditch effort — going to the SBA. “I believe that determination is the most undervalued and essential ingredient for success,” he says. “More than a great product. More than financial acumen. More than great marketing. It’s just absolute determination, and as a corollary, believing in yourself when no one else does.” If they went out of business, lots of people would lose. He was determined for that to not happen. The lie was worth it, he says. It was just an entrepreneur doing what was necessary.
Not everyone is going to accept this. Purists will surely say Hirshberg and Byrne and others are just liars justifying their actions. But Tomas Chamorro-Premuzic, a professor of business psychology at University College London and Columbia University, who has written about lying in entrepreneurship, thinks they’re onto something.
“If you can somehow measure harm to others, that is the limit,” Chamorro-Premuzic says. He believes most entrepreneurs tell lies when they think the falsehoods will do no harm. Had Hirshberg failed to get bank financing, the SBA simply wouldn’t have offered the loan guarantee. Had Byrne been caught, his deal with Microsoft would have fallen through. They were largely victimless crimes, wasting little more than someone’s time.
The way Chamorro-Premuzic sees it, the greatest lie we all tell is that we don’t lie. “There’s a reason why we have to all pretend the world is more honest than it actually is,” he says, “and that’s because we’re part of the same world that thrives with at least a certain level of getting away with some deception.” And he says creative people — the kind of fast-thinking, big-dreaming people who often become entrepreneurs – tend to lie more than others. The truth, he says, is that people in business expect some kind of transactional lie – whether it’s from a job applicant, a potential partner, or someone else.
“The system is encouraging at least some form of fact distortion, and rewards it,” he says. “If you ask an interviewee if they enjoy working with others and they say, ‘Most of the time I don’t,’ they won’t get brownie points for being honest. You’ll say, ‘This guy is antisocial.’”
So what’s an entrepreneur to do? Simple, says Chamorro-Premuzic: Treat lying as a tool to be used in very particular moments. It cannot result in harm to individuals. It must lead to an opportunity you can genuinely succeed in. And very critically, it cannot become a foundation you build on with other lies. “The brands that people trust, the products that people trust, clearly are created and run and owned by cultures that respect the customer,” he says. “Long-term focus requires honesty.”
Seen this way, a lie is a gamble – a slight tilting of the odds in a critical moment. But what follows must be truthful, because, as our liars say, that’s the only way to build an honest company.
This article was originally posted here on Entrepreneur.com.
The ‘Anything’ Entrepreneur
Most entrepreneurs are told to ‘stick to their niche’ but what happens when you make diversification your key to success?
Traditionally, entrepreneurs are told to stay focused and stick to their niche. But what if this advice isn’t always the right thing to do? What if this isn’t the perfect plan for your business, especially when you are facing a mercurial economy and a complex market? The instructions to build a thriving business aren’t set in stone, they’re as fluid as the customers and markets that inspired their creation in the first place. So, instead of hugging that niche rut, here are seven steps to intelligent diversification that could make a huge difference to your business…
1. The price tag
Having a niche business can become expensive, especially if you purchase stock from a specialised or niche supplier. They tend to charge a premium as they have the expertise and market position that allows them to do so. If you instead look to selling a variety of products and solutions, you can reduce the prices for your own bottom line as well as that of the customer.
Often, you are paying for a brand and not the deliverables so ensure that you’re investing into solutions that add value to your business not weight to your bottom line.
2. Variety is key
To survive in this economy, small business owners can no longer afford to only offer single product lines. By adapting and diversifying, you ensure your business isn’t the one left behind. Your competitors may very well be planning on introducing complementary products and services that boost existing offerings or add value. Don’t be the business that hasn’t been paying attention to the customer’s need for more bang for their buck.
3. Bolt on is bolting in
Offer your customers bolt-on extras where you can. This furthers the value you can add to your service and the value that the customer perceives you are offering to them. Extended warranties and value-added services not only add value, but they add longevity to your customer relationships. This means that you build depth with your customers as opposed to a hit and run sale.
4. Build a fence
When you diversify into a variety of solutions and services, you are giving yourself the opportunity to ring fence client spend. They won’t need to go to a multitude of suppliers as you will become their trusted one-stop-shop. You can then use this as an opportunity to showcase other products and services and to use your relationships to pitch clients into new areas of your business.
5. Client retention
When you have a rich pool of resources and strong client relationships, then you build trust and you prove to your clients that you have what it takes to get them what they need. When you’re trapped into single product lines you can’t offer this level of depth to your clients and they will simply go elsewhere.
6. Communication and collaboration
Diversification also offers you the opportunity to communicate more regularly with your clients. Instead of only selling to your customers seven or eight times a year, you can talk to them several times a week. Instead of just supplying products, you are helping them to deal with their day-to-day challenges and requirements. This allows for richer upselling and even more opportunities to engage.
Read next: 21 Steps To Start-Up Success
How To Forge Your Own Path In Business
Finding your own way doesn’t require reinventing the wheel.
You don’t need to be a visionary to forge your own path in business.
Honestly, you don’t even need to be a business owner to forge your own path. It’s more about a state of mind where you’re able to think for yourself professionally. To clarify, that doesn’t mean you’ve got to be a lone wolf: ideally, you want to be able to to work with and even for others, but without being a follower.
The ability to balance being an independent thinker yet simultaneously remaining accountable for your actions will make you a much more valuable worker, no matter what field you’ve chosen. The good news is that with targeted effort, anyone can adopt this mindset. Here are some of my tips for how to forge your own path in business, and why it matters.
Learn the rules first
This might sound out of place in a post about how to forge your own path in business. After all, aren’t we talking about independence?
Here’s the thing. Before you want to break the rules, you have to actually learn what they are. Take the time to learn the “rules” of your trade before you start trying to reinvent the wheel. You’re likely to pick up wisdom that will serve you, even if you intend on using the rules to inspire new and creative ways of breaking them.
Once again, you might find yourself thinking: Why should I seek out guidance if I want to forge my own path? Picture a cliche movie scene of a parent teaching their kid how to ride a bike. There’s that magical moment where the parent lets go of the back of the bike, and the kid is doing it on his own.
In business, you often need that initial helping hand before you can ride smoothly on your own. Before you can think for yourself, it can be helpful to absorb all of the wisdom you can from others.
One powerful way to do this is to find a mentor, or someone established in your field or a similar field who can give you words of advice and help you avoid making mistakes. Another is to make sure to take part in networking groups and to engage with other entrepreneurs. The more people you connect with and the more knowledge you gain, the better!
Set realistic and specific goals
If you want to gain confidence, become an independent thinker, and a better problem solver, do this one thing: Set realistic and specific goals.
Say that you want to increase sales for your business. It may not be realistic to say that you want to double your sales, but to simply have a goal to “increase sales” isn’t specific enough. However, setting a goal of increasing sales by 20% this year might be more realistic and is definitely more specific.
A goal like this is motivating, as it gives you something specific to work toward. It also allows you to break it down into actionable steps. You can begin to problem-solve, making specific plans for ways in which you could make your goal a reality. As you reach these milestones, you’ll gain more confidence in your abilities, which can help you move forward more confidently in your career.
Observe, but don’t copy
It can be very helpful to look at what your competitors and other entrepreneurs are doing. It keeps you relevant, gives you ideas, and can help keep you nimble in your chosen field.
However – this is important – you should never copy what others are doing. For one thing, it doesn’t work. Say you see someone killing it with a brand new hummus restaurant start-up. You can’t just start crushing chickpeas and expect success. There are lots of inner workings to the business that you’re not privy to, so even if you were to try, you couldn’t quite replicate someone else’s success.
Further, by the the time you copy, you’re already a follower and behind the curve. It’s better to use the information you observe as data, so that you can gain insight on things like effective marketing techniques and aesthetics, and apply these things to your own original ideas.
Think for yourself
You probably already guessed this one, but to forge your own path in business, you need to learn to think for yourself. So…how do you do that? Education is key. You need to absorb all of the knowledge you can, talk to as many people as you can, and observe as much as you can.
It’s almost like you’re forming your own personal library of data and resources. As time goes on, you’ll become better able to use this knowledge that you’ve gained to put your own unique ideas out in the world. You’ll be better able to generate ideas and to come up with intelligent solutions.
Let yourself grow over time
Ultimately, if you want to forge your own path in business, you need to be patient. Expertise, independent thinking, and autonomy won’t all happen overnight, so take the pressure off of yourself.
Remember: Patience is a trait of some of the most successful people. Focus on progress, not perfection. If you want to be successful for the long haul, allow yourself to learn and grow and continue to improve over time. Slow but steady, right?
This article was originally posted here on Entrepreneur.com.
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