Does Your Business Really Need That?

A new business owner was excited about realizing their dream.  After a few minutes on LegalZoom, a 3-day session at their local Technical School and the advice of a great person they had met there, they started their new business.

In the first few months, they had rented an office, bigger that what they needed yes, but they intended to grow.  They purchased a website from a well known local website development business and on the advice of this company commissioned a video, complete with a script and actors.  Their new office needed a sign so a well established local sign company was hired to design and provide a sign for the business.  Feeling the excitement as this business developed the owner signed on with a local TV station for ads.  After all, they had that new video being made for their website why not use it on TV.  The owner joined the local Chamber of commerce too.

They were on a roll.  – Or were they?

Yes, they were on a roll.  They were on a roll to disaster and another failed business.  Startup businesses fail at a 90% rate (Forbes Magazine).  That means 10% make it, for awhile.  Half of those will fail too.  We’ll discuss what you can do about that in a moment.  First, let’s complete the story.

In a few months, this new business had spent over $100,000.  Why do I know this?  I know this because this is a true story and is a situation regarding a business I not only helped but made quite profitable.

First and foremost startups need revenue.  Sales, revenue, money, call it what you want, if they are in business they need to be selling.  It is rare for a startup to obtain a loan and when they do it can be expensive.  That means other forms of investment or collateral must be offered.  Some use their house…I never recommend that but that is another article.

The business in my story spent all of that money without having a single customer.  In fact, they were a web-based business and didn’t need an office, their mentor told them it gave them legitimacy.  They didn’t really understand their customers so why were they advertising on TV?  Why the expense of actors and scripts when a brief self-produced video would have been more than adequate, or one prepared by another startup or friend?  The bottom line here is this business needed very little of what they bought, had a limited idea of how to use it even with the help they had already received and didn’t have a single customer.

So, what can a business do to prevent this?  The answer is simpler than you might think.

  1. Have a plan
  2. Execute your plan

Those really are the only steps but as they say, the devil is in the details.  Let’s get the details:

  1. Have a plan
    1. Business Plan – yes you need some form of a business plan, but it doesn’t have to be 97 pages long filled with data no one will read. A simple one-page plan can be developed.
    2. Understand your Mission and Vision Statements fully. If you don’t have them, take the time to develop them.  If you don’t know why you are in business and how you will achieve your mission you are wasting your money.
    3. Execute your plan.
  2. Use the business plan, along with your mission and values statements every day.
    1. Understand who your customers are (based on your business plan, mission, and values statement, and where they come from.
    2. Understand you are not a Fortune 100 company yet so don’t buy all the fluff. If you think you need that fluff think again and again.  After a few days of thinking about it you may need it, you may not.  Any doubt means no.
    3. Network, Network, Network… Joining the Chamber of Commerce is good but you have to participate, they won’t do it for you but they will help you.
    4. Understand you are the face of your company, not an actor, not a website, not a brochure. It is you.
    5. The Internet, even if you are an e-commerce company, is not the holy grail for your business success. That means SEO alone will not grow your business.
    6. Understand your business numbers. What does it cost, what do you charge, how much can you spend, etc.
    7. DO NOT BE AFRAID TO ASK FOR PROFESSIONAL HELP. That also means you get what you pay for.

Those two simple steps, accompanied by that detail, will help you gain success, profitability, and sustainability.  You need all three to truly be successful with your business.