Ground Floor Partners - New Years Resolutions for Start-up Businesses

Get closer to your customers. It doesn’t matter whether you are running a small pizza shop or selling components to the “Big 3” auto manufacturers: if your customers aren’t happy, you won’t stay in business for long. Set aside some time NOW to talk to your customers. Get a sense of what THEY think you are doing right and what you are doing wrong. You should expect some surprises. Your perceptions may be very different from those of your customers. For instance, you might think the “little problems” with your website are unimportant. However, your customers might see things differently: those “little problems” with the website are driving customers crazy because any time they make a mistake entering their order they have to restart the entire order process. In the end, your customers’ views are more important than yours. Listen to them.

Watch your competition. You know you’re the best, but even so, you probably have some competition out there. They may not be as good as you are, but they’re getting better every day and they’re doing it by watching you. Make it a regular practice to monitor your competitors. Are they dropping prices? Improving customer service? Finding new markets? Creating new products? Streamlining operations? When you talk to your customers, be sure to ask them about the competition. Find out what they are doing right and what you are doing wrong.

Review your marketing plan. Every business needs a marketing plan. A good marketing plan maps out who your customers are, what they are looking for, and how to reach them. As with any good plan, it is tied to real facts (“How much does a marketing brochure cost!!??”), not guesswork. Smart entrepreneurs know they will get the biggest bang for their buck by first identifying the best ways to reach their customers, then testing these to find which ones really work. Your marketing plan should allow for testing and refining campaigns.

Review your financial performance. Many entrepreneurs focus on the top line: revenue. As long as revenue is growing and the company is profitable, they think everything is ok. Wrong! A better approach is to look at revenue, profitability, and cash flow. Many businesses show strong revenue growth, are profitable (on paper), and still go out of business because of poor cash flow. Successful businesses are always working on ways to improve cash flow, and seeking ways to expand profitable product lines and services, while simultaneously growing revenue. Look at ways to improve your cash flow (decrease the timing between invoicing and payment; reward good customers and phase out or eliminate bad customers; increase pricing on some products or services; establish loss leaders to drive new business; etc.). Finally, compare this past year’s performance with your projections. Are they similar? If not, what went wrong (or right!)?

Find good partners. If you don’t have a good business attorney and accountant, start looking now. Every business has to deal with licensing and regulation issues of one sort or another, taxes, and employee issues. If you don’t have a good attorney and a good accountant you are setting yourself up for trouble. Talk to some friends and colleagues, check the phone book and the Internet, and find two or three candidates. Interview them and hire one of them (or start over again if none meets your needs). The most important factors are trust, competence, and fees. Make sure your attorney and accountant are people you trust, understand your business, and provide quality service at a rate you can afford.

Find the bottlenecks. Most startups are extremely efficient at some things, and less efficient at others. Take a look at all the steps involved in making your products (or delivering your services), getting a customer, and serving your customers. Map out how much time and effort is involved at each step. Are some things taking extraordinary amounts of time and effort, while others appear effortless? Once you have found the bottlenecks, try to eliminate them, or at least reduce them. This is usually done through streamlined internal processes, automation, outsourcing, or a combination of these.

Delegate responsibility. The hardest thing any entrepreneur will ever do is give up control. But if you are successful, that is exactly what you will have to do. In the early stages of running a business, you can do almost everything, or if you can’t, at least you can “touch” every aspect of the business. But as the business grows, this gets harder and harder, until finally you reach a breaking point. The first place to start is to look at areas that take the most time and require the least amount of skill --- secretarial and administrative tasks, for instance. Look into hiring an administrative assistant, a virtual office service, or a temp. At the other extreme are tasks that require highly specialized skills that you don’t have. These might include website development, bookkeeping, accounting, legal work, or marketing. When you start your company you don’t have the money to pay experts to do these things for you. So you learn the basics and muddle your way through. But as the company grows, these tasks become more and more time consuming and require more specialized knowledge. That is when you need to consider delegating some of these tasks, either to an inside resource, or an outside expert.

Identify Strengths and Weaknesses. Every business does some things well and others poorly. Spend some time going through every aspect of your business analyzing its strengths and weaknesses. Some businesses are great at marketing, lousy at sales. Others have great products, but don’t know how to sell them. Others have great products, great sales and marketing, but poor customer service after the sale. What are you (and your business) good at? How can you capitalize on your strengths and shore up or minimize your weaknesses?

Develop a plan. In order to grow your business you need short and long term goals, and a roadmap of some sort. Anyone can say “grow the business by 20% and achieve 30% EBITDA”, but this is almost completely useless for strategic planning. First of all it is not specific. It isn’t tied to market realities. Secondly, it doesn’t say anything about how you will achieve the objectives, or how much effort, money and resources are going to be required. The key to a good plan is to set specific, measurable, realistic goals and define achievable ways to realize those goals.

Focus on execution. Once you have done the analysis and developed a workable plan, you need to focus on getting results. You need to get things done quickly and efficiently. Everybody involved in your business has to be working toward the same goals, and you need to make sure this is the case. As the leader of your company, you need to set the standard and push people to achieve their goals.