You’re motivated, you have a great idea and you fancy your entrepreneurial spirit and as important as they are in launching a new business, I’m sorry to say they’re not enough.
That’s because your success will ultimately depend on having three key elements in place at the outset – an end game in sight, an appreciation of the importance of the right people and a willingness to ask for money.
The end game, of course, is your vision for the company.
When you know where you wish to end up, it’s so much easier to build the structures to take you there. So spend time on this vital aspect and only when you know you have it in sharp focus, turn your attention to people.
The harsh reality is that regardless of how much inventiveness there is or how blessed with capable people the start-up business might be, most family businesses or SMEs don’t have the resources to make the most of the great idea, to think strategically, to look for new opportunities and to manage the business and its growth.
That’s not a failing, it’s simply the truth. History tells us that most businesses will ultimately outgrow the skill sets of those who established them and there will be a pressing need for input from the outside. But history also tells us that with the right people in the right positions, we can achieve anything…so embrace rather than resist the need to bring in outside expertise.
Liberate yourself to see the full picture, even if that means accepting that perhaps you’re not the best person for the often jealously guarded CEO role. And congratulate yourself for your wisdom and foresight in creating the right structures and governance at the right times.
Of course, people mean money and how you go about it will depend largely on available funds. The fastest and most cost-effective – though not always easiest – way to meet the complex growth challenges is to move to a formal board with non-executive directors.
Invite people with the knowledge and experience you lack but brace yourself for enormous change and a bit of a roller-coaster ride, at least initially, as a formal board will demand your time, challenge the way you do things and force you to justify your processes.
You’ll probably also feel uncomfortable being less in control but hang in as the benefits are immense, with research showing that companies with diverse decision-making groups will almost always outperform homogenous ones where it matters most – the bottom line.
The final leg of the tripod is money and if you accept from the outset that you’ll need it to fund your growth, you’re well on your way to getting it.
Investors will want to know what’s special about your business and why others cannot easily replicate it, and you need to be able to tell them, succinctly and convincingly.
Banks will want to see your business plan, get a feel for how it’s tracking and understand the impact should you suddenly be unable to work in the business while the other avenue of debt funding, venture capitalism, presents a tougher proposition. They worry about the ‘who’ and you’ll need to be able to demonstrate that you have good people in governance and management.
My parting advice for those preparing a business for growth is to put in the hard yards from day one and you’ll have a successful business that’s financially rewarding or, if you’re in it to sell, one that someone will pay a premium to own.
What are you preparing your business for growth? Please comment below to let me know.
Until next time…