For many, building a winning business is about incremental steps. So instead of picturing end-games, consider the early obstacles you need to get over to build your start-up into a success story.
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Being a first-time entrepreneur is filled with many unknowns. The entrepreneurial journey is full of twists and turns and a constant question that entrepreneurs are always asking themselves is: “What does success look like?”
There’s so much discussion on why businesses fail, yet little attention is given to help entrepreneurs understand the journey they’ll face and what are the key critical success points they should aim for in the quest for entrepreneurial success.
Knowing these are important, it helps us plot our entrepreneurial journey into smaller chunks of achievable outcomes. The journey for an entrepreneur isn’t around the myth of overnight success, fame and fortune. It’s a series of mountains that have been climbed to get there.
I’ve coached many entrepreneurs and one of the first questions I commonly ask them is what does success look like to them and for the business they’ve created. The replies I commonly get are focused on the end goal. “I want my business to be worth £1 million, I want revenue to be this, I want profit to be this, I’d like to employ a hundred people.”
When I ask what goals come before that, they tend to answer: “I’m not sure.” In this article I explore some of these key tipping points to success for owners of SMEs so that they can drive towards their end goal of success knowing that they are on the right path.
Registering your business
All businesses start as an idea, but many of those ideas never make it into an actual business. Most of us have considered being an entrepreneur. Many have looked at exploring those business ideas, researching costs and the potential customer base.
However, the number that actually make it into a registered business is much smaller, so here are some insights into getting the first part of the business journey right and ensuring that your business reaches its first milestone successfully. It all comes down to making sure you have a plan.
"Even Apple, the world’s biggest company, started with one paying customer"
It’s important to have a business plan and a timeline of how that business will grow. A business plan helps put together all the research undertaken in this initial phase and brings together your analysis so that you can justify how your business will make money.
Many first-time entrepreneurs think they don’t need a business plan if they’ve decided not to go for finance. But a business plan is much more than an appraisal for getting funding, it provides you with a plan - you might not stick with it, but it does give you dates and targets and to help you to crystalise the ideas you are going to work on.
Done well, a plan can be like a good business coach or mentor providing you with guidance on the next steps of what needs to do be done on your business. And this separates out those with just a good idea to those who can action a good idea.
I recently worked with an entrepreneur who took the blog they’d be writing as a hobby into a business. They had the idea to do so for three years or so. They managed to keep the content going on their blog but they just hadn’t actioned how they were going to get from being a hobby to a business. They didn’t need finance, nor did they need any additional staff resources.
The business plan helped them understand what the business model would be, and helped them take a deeply-held dream for three years into the reality of a fully-registered business.
Getting your first paying customer
The first few weeks of any business are tough - you see more going out of your account with nothing going in. It requires resilience and courage to be an entrepreneur and to know that at some point you’ll meet the second success point in your journey, getting your first paying customer.
Knowing that someone is willing to pay for your services shows that you have a product or a service that is capable of making money. The next challenge is one of scaling up and finding hundreds, thousands and even millions of similar customers.
But remember, even Apple, the world’s biggest company, started with one paying customer. It then converted that to another 50 and then continued to build into the multi-million dollar sales machine that it is today.
Apple is one of the world's richest businesses, but even this ultimate success story had to fight to get it's first customer
For Steve Jobs and Steve Wozniack who sold the first Apple computers, it was a test that this was a product that people would pay money for rather than just win praise within a small group of computer enthusiasts in Silicon Valley.
For any entrepreneur, the journey is one of belief. Knowing that you can sell one product is knowing that someone believes in you. So how to find that first elusive customer. A good way if you are just starting out is to think about your personal network.
Who do you know who might be interested in your product, who do you know who might already be purchasing something very similar? A personal contact will be an easier sell as you won’t have to wait for your marketing strategy to be set up until you find them.
And if they really like your product or service, they’ll tell other people as well. So think about friends, friends of friends, work colleagues and family and see who might be available to buy from you instead of elsewhere.
Hitting the break-even point
So you’ve got your first set of customers and slowly that base is growing. Here’s the third and in most cases the most significant tipping-point for your business. It’s can you meet your breakeven point? This is the point at which cost or expenses and revenue are equal: there is no net loss or gain. It shows that you now have potential to go on to the final and most noted success factor, making a profit.
Profit comes from this point from looking at how you grow the business and maximise your margin. So at this point, it’s important to go back and look at your business and see what you can improve.
The work of any entrepreneur is never done, but in getting here you’ll have reached one of the most pivotal points in the history of your business, prized by investors and entrepreneurs alike. The big issue for many small businesses though, is they don’t know when they’ve reached that point!
So my final tip here would be is to ensure you keep up-to-date accounts. Accounts bring one thing to your business which is invaluable, accountability. Knowing how you are spending money, and knowing what is coming in and having a clear picture isn’t a task relegated to the end-of-year accounts.
That’s what so many businesses get wrong - not knowing the financial position of the business or worse still not even having a process to develop an up-to-date set of accounts. A lot of entrepreneurs just end up relying on their bank balance as a measure rather than keeping up-to-date accounts.
In today’s technology world, a whole host of packages exist to help small businesses keep up-to-date records, so really there’s no excuses in knowing your financial position and better still how close you are to that prized break-even point.
In summary, here are my top tips for any small businesses or entrepreneur who is thinking about what the entrepreneurial journey looks like for them: