It has been a while since I wrote an article on startups, and with good reason too. I have spent the last few months making mistakes in my own startup and learning these lessons the hard way. You can never connect the dots looking forward, you can only connect the dots looking backwards. Had these lessons been learned earlier, or simply taught to me, I would have saved countless hours and energy on repetitive tasks that were not working.
1. If failure is not an option than neither is success.
Recently, I was told that 60% of Venture Capital investments yield losses. That might seem pretty bad, but what it really means is that the 40% of investments that do yield profits are so disproportionately successful that the VC world is able to keep on making investments and that the investors themselves live extremely well. In the world of ‘business success rates’, 40% is unheard of. According to the Small Business Administration, over 50% of small businesses fail with the first year. So, when you choose the start up life, you could become very lucky and experience a statistically unusual take off, or you could be like most small business owners and see very limited growth, if any at all. It is important to be in it for the long haul. We know this as entrepreneurs, but what we don’t expect is needing to have the wherewithal and skills to deal with personal and financial failures repeatedly and without warning. After a year of struggling, only now do I feel that I have these skills and the streams of income to stay moving while beginning to build the business up. Now, some people are probably able to move much quicker than this, but for very inexperienced individuals, or for those of you who this is your first business, I would say that this time period is normal.
2. Take action in your business during a feeling of uncertainty.
If business isn’t good, don’t just wait it out until it gets better, take incremental steps. The business cycle may not take an upswing, in which case the time you wasted hoping for an upswing will have become completely useless to you. If your business is in a rut, every good piece of advice I have received points towards taking steps to spur business growth through supplemental or alternative means. You may not be moving as quickly as you would like, but at least you will be moving. You may not be able to allocate fully the necessary resources, but at least you will have begun adapting to the change if it’s here to stay. Many businesses try to wait things out, only to find out that when they can’t wait the downturn out any longer they are also out of business. Markets change, and small seemingly begin changes can have ripple affects across your industry as a whole or within the specific niches you cater to.
3. Where your skills are lacking, seek out external structure.
In the beginning any entrepreneur must be a jack of all trades. Being able to handle all aspects of a business is vital and it is very important that you try to learn as much as possible about how your business operates on a fundamental and conceptual level. As your business grows you must recognize where your shortcomings and knowledge gaps are — failing to do so can seriously prevent your business from growing and or pose disastrous consequences to it. Knowing when to seek the advice of others and having mentors is key to running a successful business. Investing back into your business with intelligently placed guidance from people who have experience producing the type of results you seek for your own business is quite possibly the single most important thing you can do.
4. When a repetitive action is not yielding desirable results after multiple market cycles, it may not be the market’s fault.
There may be a problem in one or more of your processes. Let me cite a specific example. Recently, I’ve been experimenting more and more with email marketing for public speaking. I’ve learned that there are good ways to go about email marketing and there are very bad ways to go about email marketing. For example, the opt-in should not be ‘Subscribe to my newsletter’, but rather should be something like, ‘Receive the 2011 Report on Cyber bullying — Free’. You must make the value proposition easily identified as favorable for a person to give up their email address. Thus, spending money on a Google Adwords campaign to drive traffic to a site where the opt-ins are not constructed properly really does you no good at all and can cost you a lot of money, even if traffic is landing on your page. There are thousands of examples of similar situations within business processes that may not be fully optimized. Metrics are king. Evaluation and improvement is compulsory. Very few people get automated campaigns or manual marketing campaigns exactly right the first time they are implemented.
Hopefully these lessons will help prevent you from making the same mistakes in your own businesses!
Michael Costigan speaks to teens and adults about effective communication so that they may make better informed decisions together. Read more about Michael here.