Sustainability Consultant | Business Coach & Educator | Founder of The Academy of Human Potential.
Launching a new venture is exciting and filled with great promise, especially when you think you have something valuable and innovative to share with the world. But the reality is, you could have the most original, creative product or business concept and still fall flat if you’re not aware of what it actually takes to reach success.
As a business coach and systems consultant, I frequently see entrepreneurs make the same mistakes, but I believe all it takes is a conscious effort to complete some very critical steps before fully embarking on the next stage of their business journey. Below is a short summary of actions that are oftentimes ignored by entrepreneurs when starting a business. If you’re getting ready to launch a company, you’ll want to pay close attention to the importance of each of these steps and consider the most effective ways of addressing them.
This will always be the first step before starting any business. Before even considering other required steps, it’s essential to take the time to make a concerted effort to investigate your target market, customer needs, competition, product and/or service requirements, and legal obligations. The last thing you want is to be invested a year or two down the road only to realize that certain barriers to entry will prevent you from moving forward with product development or expansion. Oftentimes, new entrepreneurs fail to validate service demand or market fit and end up having to shut down altogether because there wasn’t a need for their business product or service.
Acquire sufficient capital.
It cannot be understated how critical it is to get adequate funding to launch and sustain a business until it reaches its break-even point. According to research by CB Insights (registration required), 38% of businesses fail because they run out of money and/or don’t raise enough capital. If you haven’t determined how much runway you have before running out of cash, it won’t be long until you realize you’re in hot water. Unless you’re personally fronting the money needed to keep the operation going, you’ll need to lock in investors for each round of funding to reach your milestones.
Entrepreneurs also sometimes fail to realize just how long it actually takes to raise capital. Under modest scenarios, it can take at least six months to acquire funding. This means that you’ll need enough money in the bank to float the company’s expenses until you have access to that capital.
Hire the right team.
Plainly stated, it’s not practical or wise to do everything yourself. Unless you’re a solopreneur who chooses to deliver professional services yourself and do not plan on expanding the business, you’re going to need the right people around you to help grow your company. Like everyone, you likely have limitations, and building the right team to supplement your shaky areas will position you better to achieve success.
Now, it’s tempting to hire interns and inexperienced personnel in order to save on expenses. In many cases, as long as the candidates are reliable and can follow instructions, this is a viable option, given you also have good standard operating procedures in place and a solid training program.
But, for higher-level positions such as management and executive functions, or for very specific skill sets, proper vetting for experience and work ethic is extremely crucial. Also, if you plan to seek funding from investors, you’ll need to have a management team that demonstrates relevant experience and proficiency in what is being asked of them.
Develop management and leadership skills.
If you’re one of the owners, regardless of your level of involvement in daily operations, you’ll need the proper management and leadership skills to evaluate the performance of your company and steer the helm in the right direction. You’re a decision-maker, and the right decisions can’t be made with knowledge gaps or a lack of sound judgment.
Areas that you’ll need to develop proficiency in are financial, data and execution functions. It will also help to hone your leadership skills so that you can delegate properly and build a positive, encouraging company culture for your executive team and anyone else you oversee. Ongoing leadership development is recommended for all owners, executives and managers. And if you’re able to provide leadership training to the rest of your personnel, it will likely lead to higher productivity and engagement, which then translates into better business operations.
Create a winning business model.
In reality, this is the first step to launching a successful business since the research phase is included in this endeavor. And, ultimately, the only way to really accomplish this is by going through the business planning process. When done correctly, you’ll have a clear understanding of how much funding is needed, what kind of team is called for and whether your product or service is a good market fit.
You’ll also actualize suitable business systems for your industry and create an appropriate operational model. The business planning process gives entrepreneurs an opportunity to get granular and grants clarity around the details of the bigger vision and long-term game plan. It also helps to provide a framework to start building on to map out strategies for achieving milestones. This is also the perfect opportunity to take it one step further and create a business model that is socially conscious to drive even better performance.
The bottom line is that it’s easy to get carried away in the excitement of starting a new business. Many entrepreneurs think they can wing it, but building a successful business is a vigorous undertaking and should be treated as such. This isn’t to say that you can’t have fun and enjoy the journey. As a matter of fact, it’s equally important to make sure what you’re pursuing is in full alignment with your passions and core values. That is essentially a tenet of being a conscious entrepreneur. Ultimately, if you’re able to harness your initial burst of enthusiasm into these top five actions, then your chances of succeeding will far outweigh those who fail to address them.