Successful Business Startups Focus on the Details
There are at least a couple of hundred individual steps in starting up the most basic
business the right way. Though none are particularly difficult individually, very
few first-time entrepreneurs are knowledgeable about every aspect of a startup. Often,
the knee-jerk response is to "hire out" those weaker areas, or just overlook them
altogether. Neither of these options is ideal. As a business owner with plans to
build a thriving company, it is important that you know and understand the details
of each aspect, even if you elect to hire outside or in-house professionals to handle
some of the workload.
Often, entrepreneurs have a great idea for a business and know the operations side
-- what the business does -- inside and out, but are less sure about the business
side (accounting, marketing, business planning). So, they hire an accountant to set
up the books, hire a marketing consultant or ad agency to develop some advertising,
and forgo business planning altogether. While "leaving it to the professionals" seems
logical, not knowing the details from the beginning will lead to big problems down
the road. What happens when that professional is no longer available, or worse, if
they didn't do the job right? How will you know? In most cases, the owners are forced
to learn the ropes anyway when something devastating happens.
One entrepreneur definitely learned his lesson the hard way. When he launched his
hi-tech installation company, he already had an excellent reputation regarding his
skills in designing and setting up intricate home-theater systems. He decided to
hire a large, reputable accounting firm to handle the books and trusted that they
knew best. After several years of extraordinary success, the current recession hit
his business hard. Unfortunately, the way the accounting system was set up did not
accurately reflect the financial health of the company. Future contracts were going
on the books, incorrectly, as current assets, so the financial statements the owner
reviewed showed plenty of cash available. The recession hit, contracts were canceled,
and suddenly the bank account was empty, even though the financials provided by the
professional accounting firm showed that the company was in good shape.
Ultimately, the owner was forced into bankruptcy, both professionally and personally.
Had he understood how the future contracts were being booked, he would have been
able to cut expenses and manage the finances in time to prepare for weaker sales,
and would, by his own estimation, survived the downturn, ready to grow again when
the economy improved.
Understanding your business's marketing efforts is also critical. You should know
exactly who you expect to buy your product and the best way to reach them. You should
be able to analyze the outcomes of each marketing effort and make sound decisions
about what works and what doesn't. One small business relied on an e-mail marketing
professional to get the word out about their new product. After dropping nearly ten
grand on this firm, a networking contact showed her how to evaluate the cost-per-customer
outcome of the effort. Turns out she was paying nearly $100 for each customer gained
through this method, and her average sale was around $75. Of course, she was stunned
to learn that the business was losing money with each email blast, especially because
the professional had been providing statistics that indicated a far more successful
outcome. Now, this entrepreneur schedules time each month to evaluate each marketing
campaign by the numbers, making changes as needed. She has cut her marketing budget
in half while cutting the cost-per-customer to under $5 each!
These are just two painful examples of the downside of relinquishing responsibility
of your business to someone else. Successful entrepreneurship does take a lot of
time and requires a willingness to become comfortable with all aspects of business
ownership. By understanding the details from the beginning, you give your venture
the best chance for success and avoid many of the most common pitfalls small business
owners face.
About the Author
LaunchX.com is dedicated to training entrepreneurs to turn their good ideas into
great companies. The LaunchX System provides step-by-step education in the mindset
and skill set entrepreneurs need to succeed. Our program includes intensive seminar
training, key business software, and specialized workbooks that teach you the fundamental
skills you need to achieve your financial and worklife goals through entrepreneurship.
Register today for our introductory course and see what LaunchX can do for you!
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