Becoming an Entrepreneur is a Dream held by many but achieved by only a few. Even fewer succeed or survive the first few years. The catalyst is often necessity i.e. a do or die situation or a passion. Whichever road gets you there, there are a few fundamentals which I’ve identified personally and in clients businesses that contribute to success. It is important to note that these fundamentals are applicable in all types of business not just Entrepreneurial organisations.
1. Marketing & Sales
It’s important to understand your service or product offering relative to your target market and segment. Are you being market driven (i.e. supplying a need) or are you driving the market (i.e. creating a need). Your marketing activities must support this and be positioned within the reach or your ideal client. Once this strategic aspect has been dealt with it is vital that you actively drive sales. My business partner often refers to a phrase from the Insurance Industry, “See the faces to write the Cases.” Revenue and cashflow is the lifeblood of any business.
2. Manage Your Finances
First and foremost the business bank account is not your bank account. Keep your finances separate! Secondly while it’s important to understand the basics of accounting and initially you may have to manage your own books, it’s important to bring in a professional as soon as possible. You need to stay on top of your income, expenses and liabilities. Know your cashflow and watch your bank balance. Also stay on top of your Debtors and Creditors.
3. Correct Contracts & Agreements In Place
“A verbal contract isn't worth the paper it's written on” (Samuel Goldwyn). Ensure that you have agreements in place with suppliers, clients and employees. Understand the service levels, payment terms and obligations. Manage the relationships and quality levels accordingly. The true value of an agreement is demonstrated in difficult situations. We also tend to develop a psychological contract. This is generally based on unwritten and unsaid expectations. It is usually the psychological contract that leads to break down in trust or dissatisfaction. Manage this by ensuring alignment between your psychological contract and written contract
4. Governance, Risk and Compliance
While one may believe this topic is for large Corporates, the reality is the Entrepreneur and Small business requires GRC as much if not more. Governance refers to having the correct policy and procedures in place. This helps minimise risks and unwanted surprises such as an employee overstepping their delegation of authority. Understand the compliance requirements of business in your country, sector and industry. Non-compliance generally means fines, penalties and in extreme cases businesses being closed. Areas to consider are Taxes, Labour Agreements and Legislation, Health and Safety etc. I cannot stress the importance of Risk Management. Spend time to reflect on what can go wrong, what the likelihood and impact would be and how you could minimise your exposure. Risks may also present an opportunity to your business. Consider how you could turn around the situation.
Having the partners that share your values and support your goals makes you stronger and the journey easier. Often we find individuals working together but with their own goals and agendas that are conflicting. This negatively affects the business and ultimately results in a dissolution of partnerships. This is not to say that you should agree on everything. Diversity of opinion is important and robust discussion often lead to new learnings and options. Partners could be collaborators, shareholders or even suppliers. Choose your partner wisely and manage the relationship for success.