Tips from the Experts on Business Start-Ups

How to Beat the Odds and Win at Your Own Business

By David Sanders, Certified Master Consultant

Have you tried to start a business — or plan to?
Has your business declined with the present economy?
Read this fascinating true story for some practical advice.

The three partners of Silent Knight Entertainment huddled around a cherry wood desk staring at the colorful organizing board hanging on the wall. It was May 14th and they had been struggling to get their business off the ground for weeks.

Chris spoke for the group. “We are determined to produce a great computer game, have a lot of fun and make money. All of us are doing computer programming until we have the first version of the game done. Then we’ll figure out how to sell it.”

When Do You Want to Start Making Money?

“Ah ha! There’s the first mistake most start-ups make!” the consultant snapped. “When did you want to start making money — this summer or two years down the line?”

They looked startled. “We thought we would make money as soon as we have our game produced,” said Kerry bashfully.

SK Entertainment, like thousands of start-up businesses, was violating the principle of “know before you go.” You must find what is going to sell well in today’s marketplace. Marketing has to be involved in every stage of development — surveying, testing, advising.

So in any start-up, determine WHAT you want to produce or sell. Then work out HOW TO SELL YOUR SERVICE OR PRODUCT FOR A PROFIT, AND TO WHOM. If it doesn’t pencil out, change your plans before you invest much time or money it.

SK Entertainment knew it was going to take time to program a computer game. What they didn’t realize is that it takes longer to do the PR and marketing necessary to launch their product than to create it!

If your firm is a start-up or diversifying into a new area, ask yourself this key question, “When do you want to start making money from this business?” Being well capitalized means that you don’t have to sweat it for awhile, but the smart businessperson will seek to start generating income at the earliest possible time. Quite in addition to preserving one’s capital, it provides the additional benefit of testing the marketing concepts, product quality and customer interface early in the game. To wait until one’s funds are low before subjecting these points to the acid test of public acceptance is to court disaster.

WHEN SHOULD YOU START YOUR PR AND MARKETING?

“Start the PR and marketing first or you’ll starve between the time you finish the game and the time it begins to sell,” their consultant advised.

But WHO should do marketing? In this all-too-typical high-tech start-up, all three partners wanted to do programming!

Whether you have one, three or ten people, you must get all key functions done. For instance, one government study indicated that the most common reason start-ups went under is that they did not bill their customers! We made sure that’s covered.

COVER ALL THE “HATS”

They divided up the “hats” (duties or functions) in the business using the colorful organizing board on the consultant’s wall. We gave Chris the management, communication and sales hats, Kerry got the finance, computer programming, graphic arts and quality control functions and Geoffrey was elected to do PR and marketing.

Then we lined up getting them trained to do the functions they were responsible for. Most people think that because they have developed some skills to a high level, that is all they should do for the rest of their career. Factually, most people graduating from college today will change careers seven (7) times in their lifetime and a startling number will never work in the field of the college major!

There are many ways to get people rapidly trained on key functions. To that one can add strategic outsourcing to come up with a very professionally handled company.

For instance, Direct TV passed the $1 billion mark in revenue with less than 300 employees. That was only possible with an extraordinarily effective program of outsourcing.

WHERE ARE YOU GOING LONG-TERM?

The consultant also had them hammer out their goals and purposes. Many start-up businesses have the aspect of a kite without a tail. They go after any product line or joint venture and fail to focus. An art and interior decorating company in Southern California recently started to carry cosmetics and health care items — a few weeks before they decided to liquidate the business.

Loss of focus is far more likely when the business has never had good focus in the first place. So if you have not developed and published the goals and purposes of your firm, this would be something you should to immediately. Some goals are appropriate to promote to your customers or clients, while others may be more appropriate to your staff and still others to your board of directors.

You can be selective, but you MUST communicate where you are going if you expect good support. Much of the subject of leadership could be encapsulated in this simple statement of a profound business truth.

HOW ARE WE GOING TO DO THIS?

Another key element in a start-up, often overlooked, was dealt with by SK Entertainment. Their consultant had them define the policies they would operate on. Most of the problems companies encounter can be traced to a lack of definition and agreement on the policies of how the company should be operated and what every post and position in the company must produce and how they interface with others in the firm.

Having a simple personnel manual which lays out the legally-required responsibilities and benefits of working at your company is a start. It reduces disagreements which could erupt into extra trips to the labor board and paying out unnecessary fines. But if falls far short of getting everyone in your firm on the same page. Having people around for years and years being continually told what the boss wants is the usual pattern followed. But it is slow, wasteful and stressful on everyone. Intelligent policy development is cheap insurance that will open the door to prosperity.

Finally, their consultant made them put their partnership agreements in writing. Too often business break up over points which could have (and should have) been easily agreed upon in the early stages of the business. Sometimes these break-ups are catastrophic to the business, so getting all one’s agreements with key partners and personnel in writing stated unequivocally is one of the best possibly uses of your time in the early stages. Get your agreements worked out in person and then get them to your attorney to formalize and help you spot any key areas not covered, so you can iron these out, too.

Within two months Kerry, Geoffrey and Chris had implemented most of their consultant’s suggestions and had built up to 14 staff. They have avoided most of the pitfalls of high-tech start-ups and so have a hopeful future.


David Sanders is a Certified Master Consultant, writer and speaker with 33 years experience across 300 industries and professions.

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