08 Oct The Top 10 Musts That Should Be in Your Business Survival Kit
CHICAGO – In the bubble days of the 1990s, it used to be that every company “needed” great office space, fancy furniture and the best foosball money could buy to launch their business.
It was more important to “look like” a real company than to be one so you could attract great employees and lots of interest from investors. This became very profitable for companies like Herman Miller, landlords, recruiters and many Web development companies.
Obviously, this has changed. Companies are now subletting space and buying furniture for pennies on the dollar. It’s a very different market. In order to be financially successful in 2003, what should be in your business survival kit?
Here are my top 10 in no particular order:
1) A team that is effective together. Businesses are about people – not ideas. People make the difference in successful execution. Find lunatics like you.
2) Accurate monthly financial reports. This needs to include a cash flow statement and a cash flow model that works. It’s the only way to base your financial decisions on something. If you don’t have one, get one.
3) A sales culture that finds revenue. Everyone sells. If you’re not out looking for new or more existing business, go work somewhere else.
4) A sales prospect system. Any software (such as Salesforce.com, ACT or Goldmine) will work as long as you use it and keep it updated. Over time, this is a huge asset for your company over time.
5) Customers who pay on time. Customers who don’t pay are not customers. They are collection problems. You can’t pay your own bills with your company’s account receivables.
6) Excellent service that ensures repeat customers. It’s a heck of a lot less costly to acquire more business from old customers than to find new ones. If you have to run your company only on new business, you will have a hard time succeeding.
7) Large gross margins. It’s much easier to make money if you have 80 percent gross margins than 20 percent gross margins. Even I understand this math.
8) Low fixed costs. This will keep your business flexible regardless of how much business you are able to bring into it.
9) Enough cash on hand for when things go badly. If you can, save for when sales go down or a large customer fails to pay you on time.
10) A sense of humor for when things go badly. You need this one. Try to laugh after you are done crying.
Rich Heise, an experienced entrepreneur and investor, started Innerworkings a few years ago. He suggests a few things you should avoid:
High rent or excessive office space
Company credit cards
Software development not paid for by your customer
Negative margin customers
More than one person in charge
Mark Achler, a well-known venture capitalist at Kettle Partners in Chicago and now CEO of Rightfield Solutions, also believes in “the very brightest and most experienced advisors/board members. I also think that it’s critical to have the complete support of your family and loved ones.
“Being an entrepreneur is such a deeply personal and all-absorbing experience that it completely consumes any free time and availability. Being an entrepreneur affects your family as much as yourself. If your family doesn’t buy in, you’ll be asking for trouble.”
Emily Carter at Southern Tech believes that our fascination with the latest gadgets can be a huge burden on us.
“If you put an hourly rate on your time and apply that to the time it takes to learn to use the latest gadget, it can be a shocking figure,” she said. “I think one of the best tools is to keep a handwritten task list in front of you. It forces you to constantly face what you should be doing.”
Carter also believes that everyone needs an advisor or mentor with no vested interest to provide objective feedback about their business. She added: “This dialogue, which I prefer to have informally over a good cup of espresso, can foster new ideas and identify innovative solutions to problems.”
Jason Felger at the Chicagoland Entrepreneurial Center recommends that business owners have a strong network of people.
“This should at the very least consist of a lawyer, banker and an outside advisor,” he said. “I’m a big believer in engaging your lawyer and banker in your business because they can be so much more of an asset to a business then their defined titles.”
He also counsels businesses to have a sales kit that includes a Web site (nothing fancy but informative), a company/product backgrounder, customer testimonials and case studies. Felger reminds us in closing: “Foosball tables are a blast but I’ve never heard of one closing a sale.”
Barry Moltz, a Prairie Angels co-founder, has been running small businesses with a great deal of success and failure for 15 years. His first book, “You Need To Be A Little Crazy: The Truth About Starting And Growing A Business,” is expected to be published this fall. You can reserve your copy at BarryMoltz.com. Moltz can be e-mailed at firstname.lastname@example.org. This article has been syndicated on the Wisconsin Technology Network courtesy of ePrairie, a user-driven business and technology news community distributed via the Web, the wireless Web and free daily e-mail newsletters.
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