This month, I was invited to UB – Universitat de Barcelona to give a speech about entrepreneurship. I prepared this class for those students out there that want to open their own company in the future and hopefully these entrepreneur tips will be helpful for you.
After 4 years of being an entrepreneur, I came to the conclusion that there is no magic formula for success. Therefore, instead of giving advices about “how to do things the right way”, I decided to share my own experience and point out on those important factors I believe are extremely important for a sustainable and profitable business (based on what happened in our case).
During these 4 years, I’ve been going through sleepless nights, 20 hours working day, problems with cash, etc. It literally took us years to achieve what we have now: 3 offices (Barcelona, Andorra and Ho Chi Minh city), a team of software cracks (leading developers and architects in Barcelona), efficient processes and project management, clients from all over the world (consolidated startups and big enterprises) clear strategic vision for growth, the right team, segregated areas of responsibilities and a profitable business.
So here’s what I believe to be key things that were crucial for us and in general, for many businesses, especially for B2B.
FEW CRUCIAL ENTREPRENEUR TIPS
The importance of choosing the right co-founder
The first and the most important of my entrepreneur tips starts here. Finding co-founders is tough, really tough. These relationships are more like marriages than the typical work relationship. You may stay with them for your whole life and your success will depend on them. So choosing the right co-founders is the foundation of any business.
Now, I will share with you my thoughts about this point. We didn’t do it right, we needed to live it all to understand that co-founders should set responsibilities for each one of them straight from the start, taking into account all circumstances that may appear and their impact on the business. Each co-founder should be responsible for an area, this means that each co-founder should have a different profile. Yin and yang, maker and seller, dreamer and pragmatist, call it what you want, but one of the most important things is to have different profiles. You don’t have all the skills to run the company successfully, but you do need a complementary set of skills to do so.
If you’re a tech guru, you may need a business development leader to get your vision to the market. If you are great in finance, having another finance ninja as a partner probably won’t be your top priority. Basically, if there are 3 co-founders, all these co-founders can’t be lawyers. In our case we had 3 tech guys and 1 designer, none of us actually had a business background and it really made it difficult for us to take the right business decisions.
Another important point is to have a shared vision & shared values; on the short and on the long term. When co-founders share the same vision and have common objectives, they lead the team to a common goal and transmit the same culture they want to create in the company.
Commitment. This one is highly important. I strongly believe that part time co-founders – doesn’t work! Each co-founder should be involved in a project, 100%.
Trust and confidence are essential, you need to be sure that you can rely on your co-founders, irresponsible people should not even be an option.
This point is not a must, but it is plus. It’s always good (and it really helped us) when co-founders have a good reputation and have good contacts. Referrals generate trust and increase sales.
The importance of the team
I am one of those people who believe that having a brilliant idea is not enough. Your team is what drives your business, your team is key to success.
So here’s another entrepreneur tips: one of the most important thing is to have an independent and responsible team. What do I mean by that? Entrepreneurs can’t stay in the office 24 hours a day. We also sometimes want/need to go on vacations. But the business can’t be on a pause mode when we are away, the team should continue working on their tasks and not depend on you all the time.
Your team should do the job, allowing you to focus on the strategic part of the company or on the area that you are leading, to focus on generating business. At the end, the idea is that the team knows what to do and how to do it, they should be experts in what they do and not be afraid of taking initiatives.
The importance of marketing & networking
As an entrepreneur, you may have an idea. Marketing helps you to find the market for your idea, helps you to identify short-term and long-term strategy, find an opportunity.
It may surprise you, but for many “entrepreneurs”, marketing is not considered important. And this is the biggest problem. We live in a globalised world with an increased competition in mainly all the fields and we all have to deal with competitors that are willing to steal your share of the market.
Marketing is important for many things; for the management of internal and external communications, for the support of the creation of tools improving customer satisfaction and to build & maintain the company’s image in order to ensure a good reputation and recognition.
Third of entrepreneur tips: Networking in B2B is one of the best ways of doing business. Presencial networking is extremely important, it generates trust.
Go to the events, try to organise meetings instead of speaking on the phone, skype or via email. Meetings generate emotional connection, makes you stand out from the crowd, you become closer to the person and he remembers you much better than your competitor who approached him via email.
Relationships are the catalyst for success. People do business with those they like and trust.
And in most of the cases, people choose companies because of the people they met, at the end of the day, you will have to work with those people.
The importance of finance & accounting
Imagine a world without language and communication. A chaos, isn’t it? Imagine, what would happen if there were no balance sheets or income statements to show you the financial situation of your business? What decisions can you make if you don’t know how your company is performing? Accounting is a language of business. It helps co-founders to make better decisions based on numbers.
Good accounting doesn’t only give you a picture of how you are doing. It enables you to be aware when things go wrong. In case you are starting a self-funded company, what’s important to understand is that in most of the cases it creates a huge snowball. You invest in your company from your pocket, wait for the ROI, but before you get ROI, you invest again and again to stay competitive in the market and as a result what you get is a big debt. It also happened to us, and classic accounting wasn’t enough. So we decided to switch to profit first model. And that was definitely the right decision.
Profit first vs. Frankenstein
I read the amazing “Profit first” book written by Mike Michalowicz, where he also shares his entrepreneur tips. It really helped me a lot, it made me generate money, it increased my control over the business and permitted me to sleep at night.
What is great here is emotional change. It helps you predict your profit and control your expenses taking into account your revenues. When you have control, you become calmer and happier, you get your salary, you get your profit.
I mentioned earlier this horrible snowball of investment and debt we went through, and in this book, it’s very well described. Mike calls it the effect of Frankenstein; when you invest all your profit and hope that tomorrow you will make sales that will change your life or find a client that will make your business profitable. But what are you actually doing? You are feeding a monster that you will have to “kill” at the end.
For those who are not familiar with the concept of Profit first, let me briefly explain it to you.
The old and well-known formula of Sales – Expenses = Profit didn’t work for us. In theory, it totally makes sense. But in practice, I realised that we almost had no profit at the end of the day.
Then I tried this new formula that Mike proposes: Sales – Profit = Expenses and we’ve been profitable ever since.
Have you ever heard of Parkinson’s Law? It basically says that your work will expand to fill the time available for its completion. For example you have 1 day to finish the task, you finish it in a day, but if you would be given 2 days to finish the same task, you would spend 2 days on it. Same happens with money you have available. You have 1000 euros per month, you will live with this amount of money. If you have 3000 euros on your account, you will spend it buying things you couldn’t afford earlier.
So with this formula, you save your profit and invest the rest of the money that is available. If you see that you don’t have money for some expenses, you will need to cut them and in most of the cases, you will see that you spend hell of a lot of money on unnecessary things without even being aware of it. This formula really helps you control your expenses and profit, it helps you to get your money. Don’t forget that the ultimate goal is that your business feeds you, not vise versa.
The importance of being Agile
One of the most important entrepreneur tips I’ve got to give is about being Agile. Today we live in a liquid world – a world where everything moves too fast. It is very important to be flexible and adapt to change; client’s preferences and competitor’s innovation. You should always focus on business value and the customer’s needs in a productive and cost efficient way. I believe Agile is all about that. Agile methodology can be used in any department and what is so good about it is incremental upgrades, constant improvement, rapid delivery and the ability to change.
I am a big fan of this methodology and I think that only Agile companies will survive in the world we live in. It allows us to have a high product quality, higher customer satisfaction, to reduce risks of failure because we implement new features step by step always basing our decisions on customer feedback, get ROI faster and launch the product to the market faster. It reduces costs, because basically you won’t need to redo anything from scratch because of the frequency of new increments that are produced. Adapting to the client’s needs and preferences makes you deliver exactly what the client wants, creating long-term relationships and a good reputation.
I will insist, perfection is not important, what is important is agility. Agile means fast product releases, ability to see the customer’s reaction first and alter accordingly, keeping you ahead of the competition. It gives you a first-mover advantage which is already a lot. It allows you to be the innovator instead of being the follower.
More entrepreneur tips about agile & benefits of agile methodology you can find here.
The importance of tools
And last of entrepreneur tips but not least is – use tools! Today’s businesses are driven by productivity and collaboration. To increase the efficiency of your team, keep in mind that tools are essential. Don’t try to reinvent the wheel when it is already invented. Don’t work using a pen and paper if you already have programs that does manual stuff for you. Many online tools make it easier for teams to communicate clearly, prioritize tasks, delegate responsibilities, plan, measure results, etc. Don’t be afraid to try new things, tools will save you time and money and they minimise the risk of having an error. As an entrepreneur, you shouldn’t have time to waste on manual & repetitive tasks, automate what you can. Be efficient!
So here were a few entrepreneur tips I thought are worth talking about. As I said, I don’t believe that if you follow those tips you will definitely succeed, but I do believe that listening to others’ stories can be very helpful and can make you aware of certain difficulties of being an entrepreneur, and in a way, help you be more prepared.