5 Rules of the Start-up
During the past few weeks I found myself thinking about the first few months running a startup. I keep contemplating what could have been done differently. Based on those thoughts I thought I would put together a list of some ideas that you might find helpful when starting a new business.
- Every dollar spent is another dollar you have to earn to turn profitable.
There is only one reason for a business and that is to make money. Sure there are other reasons to start a business, or to be a part of a business, but the primary reason for ever business has to be making money. You need to understand this rule from the very day you even think about a business, because every decision, step, thought has to be geared towards making money. Profitability is goal number one, two and three.
That being said, every dollar you spend is another dollar you will need to earn to reach profitability. It doesn’t matter what you are spending it on, marketing, infrastructure, furniture, telephone systems, every dollar will be a dollar lost unless you can earn a dollar to compensate. So before you spend a dollar, make sure that it will help you earn at least a dollar. This rule will make the thought process of spending money a little bit more structured.
- Long term strategies are great, but only after you have a short term strategy.
Every business has a long term strategy. It can be anything from dominating the online retail business to supporting the basic economic needs of a family. The detail of long term strategies can also vary from basic (see the two outlined above) to detailed and complex.
What some businesses don’t think about, especially when starting up, is the need for a super detailed short term strategy. You need to be very careful in planning out exactly how you to execute on your long term vision.
When we first started we knew we wanted to be the one stop source for non-professional workers to find employment, but we also knew that we wanted to focus on the Hispanic demographic first, and we also knew we would reach them through a newspaper we would set up, and we also considered how we would print the newspaper, and we also knew how we would design the newspaper, and we also knew how we would support the newspaper, and we even knew the font size we wanted to use…(maybe not the font size, but we did know just about everything else).
- Never let pride get in the way of change.
Our short term plan didn’t make any sense and we realized it about 8 weeks into the business. At that point we already had invested a lot of money, time and effort and my ego was telling me that my “customers” didn’t understand, and that we needed more time, and that we needed to market with a bit more bang. What a dangerous path it is to follow the ego.
Instead we thought deep and hard about what the next steps should be. We wanted to reach our long term strategy, but we realized our short term thinking had to change. We didn’t hold on to our initial idea, and instead we went full force ahead taking everything we had learned and developing a new strategy that proved to be exceptional.
- Always consider and internalize advice, but follow only your own path.
As you start a business, you will have many people offering advice. A word of experience, 60% will be obvious to you (but is still worth listening because it could give you a different perspective), 35% will be good and worth considering, and 5% will be fantastic advice that you will clearly see needs to be implemented.
The rule focuses on the 35% that is worth considering. The problem is that people believe very strongly in their own advice and so you might get pressure to follow it. Never follow advice because of pressure. Definitely consider it and think about it long and hard, but if you do follow anyone’s advice, make sure it is because you 100% believe it is the way to go.
- Never stop thinking, but not at the cost of doing (and never do without thinking).
This rule is my favorite because it doesn’t say much, but it says everything. The concept is that you should always be working because an idea alone is nothing. Put your ideas into motion. Make some noise. Build a business. Have a blast. But always continue to think about every move you make and also about the strategy and direction of your company.
Entry filed under: Start-up.