There are many ways to start a business but for the company to succeed, entrepreneurs must keep certain guidelines in mind.
The first is to ask the right questions, according to Julian Young, founder and CEO of Julian Young Business Advisors.
“What problem are you solving?” he said. “Who are you solving the problem for? How painful is the problem to your customers? A pain point is something that lessens the quality of life for someone. If on a pain scale of 1 to 10, a problem is a 2, they might pay you one time, but you can’t build a business on that.”
One thing successful entrepreneurs have in common is a desire to continuously improve, to create, and gritty determination, according to Joseph Frost, founder and CMO of yorCMO and Frost Media Group and a board member of EO Nebraska.
“The first thing is to get clear on why,” he said. “If it’s just to make a lot of money then there are better ways.”
Young suggested finding a business adviser or consultant.
“They aren’t there to do all the work for you,” he said. “Advisers are like a business co-pilot — they help the entrepreneur steer the plane and navigate the journey. A consultant will help you organize your thoughts
and understand [how to execute] your creative plans. They’ll save you time, money, resources, and a ton of mistakes.”
An entrepreneur must determine whether bringing on an outside partner — be it a bank, angel investor or fund — is critical to the growth of their
business, according to Erica Wassinger, general partner of Proven Ventures, a Burlington Capital fund.
“Many entrepreneurs forget that raising money means returning that same money with some type of multiple,” she said.
When determining whether to raise money, an entrepreneur must consider alignment and the end game.
“Make sure you seek investors that add more than dollars to your account in
a one-time wire transfer,” Wassinger said. “Look for partners that will help with your scaling of sales, recruiting of employees, and coaching as you grow the business. Above all, make sure you follow the money when seeking outside investors. Know how they get paid back and ensure you’re on board with that direction.”
Young said one mistake new entrepreneurs make is not taking the time to turn their assumptions into evidence.
“A lot of entrepreneurs confuse a startup with an existing business,” he said.
“As a startup, you’re searching for a scalable and repeatable business model.
“An established business has already discovered that. [Startup entrepreneurs must do] the research to understand the market’s size and its potential. Another mistake entrepreneurs make is underestimating the amount of time, work, and energy it takes to build a successful business.”
Wassinger sees a common mistake of entrepreneurs seeking validation from anyone but their customer base.
“Entrepreneurs that carefully choose how they spend their time and money, specifically in ways that generate real growth — like sales — win every time,” she said. “Those that enjoy big crowds and bright lights often get so distracted with vanity metrics that the businesses languish.”
Growth should be based on how the market is performing, based on the firm having done its due diligence, Young said.
“Understand the size of the market as it pertains to where you are doing business,” he said. “If you’re doing an online economy business and have a
national market, you need to understand the industry and the footprint of that market. If the business is local, you need to understand the market size and opportunity of that community.”
Frost suggested growing as fast as the market will allow.
“Beware that growth is cyclical so don’t think it will always be scaling,” he said. “There will be a slow-down and cash crunch. Hire slow [and] fire fast. Determine the key roles [for employees], what you love to do and don’t. Hire others that love what you don’t love.”
Wassinger said entrepreneurs should seek scale without losing sight of sustainability.
“Growth at all costs can be damaging to a startup,” she said. “You lose focus,
and you lose ownership of the business.
“It’s so easy — and dangerous — to assume that taking capital will solve your growth challenges. Our fund values entrepreneurs that value customer-led growth, meaning, their customers are the guides to product development and their customers inform how to optimize sales strategies.”
Entrepreneurs should make sure that the values and mission of the business are aligned with the values they live in their daily lives.
“The business will always grow you before you grow the business,” Young said. “It’s not about the business you’re growing but who you’re becoming in the process. The process of growing a business is committing to the process of becoming a better person, a better leader, and, hopefully, becoming a better business owner.”