You are thinking about starting a new business. Or maybe you already have one up and going. Congratulations! If you’ve been in this position before, you don’t need me to tell you how volatile this time can be for you. New businesses have to get a lot right, and they have to be as lucky as they are smart if they’re going to make it.
But there are ways you can reduce your risk, get that bucking bronco under control and put yourself in a better position to achieve and maintain success.
Business should never be about what you want to sell
It should be about what people want to buy. It doesn’t matter what industry you’re in, if there’s no demand, you’re not in business. And if there’s not enough demand, that can be even worse, because you can start up guns blazing only to crash and burn when you realize your product or service had a short shelf life.
That’s not to say you can’t do what you love. You just need to find a way to market it and make it work. And, if that’s not going to happen, do something that will make you enough money to pursue your original interest as a hobby. There’s nothing wrong with actually having a vacation that’s not your vocation.
Speaking of money, most startups drastically underestimate the cash flow necessary to get their business up and running and to keep it going strong. Think about how much cash you “need.” You will need more than that. If you don’t have cash flow, your business will die. Plain and simple. Don’t be afraid to ask for deposits up front or balance on delivery. And stick to your guns. It’s totally okay for you to actually have working capital … and to expect your clients to respect that, even if they pretend to not understand.
Keep your costs down
You need to be IN business not LOOK like you’re in business. Hold off on the flashy clothes and cars. Unless absolutely necessary, don’t buy it. Keep office costs to a minimum, and clutch every penny. That’s not to say you shouldn’t invest, but those investments should be measured, reasoned and for the business, not to make you feel like a high roller. Just don’t be that guy.
On that note, if you need it for your business, don’t pay retail. Just don’t. Retail isn’t bad if you’re selling something, but if you need it to make your business go, then you don’t need the fastest, best or newest. You’re a startup, and that money you would spend on retail probably has another “name” on it.
To make good decisions, you need good information. If your data is incomplete or inaccurate, or you just didn’t take the time to ask all the right questions, you will end up with a plan that’s “almost” plausible, decent, and actionable. Those are the times, often, when you “almost” make it. This happens all the time. People get “so close” and can’t figure out why what they thought would work, didn’t work. Well, sometimes it’s outside your control. More often, though, you missed something. So what you have is both a failure and a learning opportunity.
What do you think? Have you implemented any of these processes or guidelines in your business? Are there any suggestions you would add? Let us know!
Chris Burch is a venture capitalist and founder of Burch Creative Capital.