Entrepreneurs, Focus on What’s Really Important!
It can be challenging for executives at a new startup to prioritize things that are most critical to success. It’s easy to lose focus on the essentials as you get caught up in the ever-changing rush of tasks and new developments that every entrepreneur faces. Once in a while, it’s beneficial to step back and remind yourself of the most important things you should be focusing on to keep your startup on track towards growth and profitability. Success in business often comes down to focusing relentlessly on the things you need and avoiding investments in the things you don’t need.
Things You Need
1. An Innovative Product or Service That’s in Demand
Your primary goals as an entrepreneur are to bring your company’s products or services to market, gain market share and quickly become as profitable as possible. An innovative, in-demand product or service is central to that goal.
CBS Insights determined in a study that lack of market demand is the top reason startups fail. So it follows that your number one priority as an entrepreneur is making sure that there is actually a market for the product or service you are offering to the public. If there isn’t one, there isn’t much point in carrying on with the business.
2. A Focused, Motivated, Talented Team
A company’s team and their collective experience are its most valuable assets. Having the right team is key to business success; hiring the wrong team is likely to lead to the downfall of your business, no matter how innovative your products and services are. The CBS Insights survey determined that having the wrong team was the #3 reason for startup failure. If you haven’t put the right team together yet, doing so should be high on your priority list.
Hiring the right team can be a challenge when you don’t have formal recruiting experience. It’s especially tough when you need to hire team members with specialized skills, but you have no actual clue what those people do all day. If you don’t know anything about IT, it’s a waste of time puzzling over an IT manager resume sample or your competitor’s classified ad postings. You’ll need to delegate the task of recruiting to someone who knows what they’re doing.
If you need to hire a sizable team, it’s probably worth hiring an expert human resources manager to help you. If you only need to hire a few employees, outsourcing the hiring to a professional recruiter might be a better option for you. Consider working with freelancers or a temp agency when you have short-term tasks that fall outside your areas of expertise and need to be delegated.
3. Sufficient Cashflow to Cover Your Business Expenses
Running out of cash was #2 on the list of reasons that startups fail. Any business needs funding, but all funding sources are not equally beneficial. The ideal source of funding for your business: sales of your goods and services.
Funding from investors can either help or hurt your business. The minute you bring in funding from outside investors, you risk having your priorities shift from satisfying customers to satisfying the investors. This is acceptable for some businesses, but it can derail others completely.
Either way, positive cash flow is critical to the continued existence of your business. It helps to have the right people managing the cash flow and making the critical decisions on behalf of the company.
4. A Well-Defined Brand and Corporate Culture
A well-defined brand and corporate culture can help employees and customers both feel emotionally connected to your company. The brand and culture are both important considerations for attracting the right employees, retaining them even when times are tough, and empowering them to make the right decisions as they go about their jobs each day.
Things You Don’t Need
Anything that doesn’t propel a startup to its essential primary goal of reaching profitability falls into the category of “things you don’t need.” Resist the urge to splurge on expensive non-essentials like foosball tables, daily catered lunches, branded logo t-shirts and the fanciest available office space in the trendy downtown district. You do want to offer a presentable and attractive work environment that will be a comfortable place for your employees, suppliers, and customers to conduct business in; however, you should avoid committing to anything beyond the minimum expenditures necessary to attract talented people and make your associates feel comfortable in the workspace.
Overstaffing is another common pitfall that new entrepreneurs fall into. It’s crucial to make a distinction between positions that are essential and those that aren’t. Here’s a story that illustrates the difference between staff you need and staff you should do without:
There was a lion. He started a company and employed 10 donkeys to work in it. At first, things were great, and money was pouring in. After some time, the lion figured out he was rich but had no time for himself. So he hired a bear to be the manager and handle the business. So the bear, being a manager, started asking the donkeys to deliver reports on their results. After a while, the bear hired a wolf as his assistant to help him with analyzing all the reports. The wolf did that, but also introduced new reports for donkeys, to prove himself capable. At this point, the donkeys were working so hard and spending so much time on all these reports, the morale was dropping. So the bear hired a fox to keep the morale up and organize activities. After a while, when the lion met with the bear to check up on things, he realized the profit was going down. So what did he do? He fired half of the donkeys in order to cut costs.
The main takeaway here: You need the donkeys, but be cautious in deciding to hire any wolves or foxes. Your company will obviously need to have supervisors on staff, but micromanagement of employees is always a mistake.
There are countless examples of businesses that failed. A close look reveals that many of the problems were a result of the executives’ own stupidity. These examples can give us numerous insights about how critical it is to focus relentlessly on the things that are important and avoid prioritizing the things that are not.