7 Crucial Things To Know Before You Start A Business

Business Start

Making mistakes is a great way to learn. Unfortunately, it isn’t fun to actually make those mistakes.

It’s way more fun to make as few mistakes as you possibly can.

That’s why I asked Joel Basgall, co-founder and CEO of Geneca, a software product development firm and six-time Inc. 5000 honoree, to list some common mistakes entrepreneurs tend to make when they start a company.

Here, Joel tells us some of the things he knows now that he’d love to have been able to tell himself before he co-founded Geneca:

1. Don’t focus on finding shortcuts

Many entrepreneurs, especially those in tech startups, tend to embrace the hack mentality and look for shortcuts and easy alternatives. The same is true for entrepreneurs who have started companies before.

Knowledge and experience can help you climb a staircase faster, but you still have to go up each step. Try to leap ahead by skipping steps and eventually you’ll trip and fall on your face.

2. Avoid unnatural growth states

Twice we’ve gone over $20 million in revenue as we’ve grown, and immediately afterward we had problems. Within the last couple of weeks I finally realised we can’t be a $20 million company. We have to be a $16 million company or a $24 million company.

For us, $20 million is an unnatural state.

As an example, say you publish a magazine. At this time a 100-page magazine makes sense: You have the right number of editors, contributors, staffing, presses, and distribution tools to support it. As a system, it works. But try to make it 50 percent bigger overnight and it won’t work – you probably won’t have the right resources.

When you’re growing, it’s tempting to assume you can just keep on growing, but that’s rarely the case. So what can you do to avoid those inevitable unnatural states?

3. Plan for leapfrog growth

Planning for incremental growth is easy, but eventually incremental growth will put you in an unnatural state and your systems will start falling apart.

That’s when you need to plan for leapfrog growth that vaults you through that unnatural state as quickly as possible. That means planning not just your next five steps but also your next 25 steps.

Sometimes you need to forget incremental and think fundamental – that’s the only way to reach a level that is once again natural for your company.

4. Never introduce what you don’t need

I owned a company before I started Geneca, and like many serial entrepreneurs I thought there were functions at that company I needed to immediately put in place at Geneca.

That approach is a definite problem.

Think of building a company like creating an ecosystem; you can’t introduce higher-level organisms until you have a suitable environment in place to feed them. Creating an entire marketing group when you’re a startup will not work if you don’t have enough products for the group to market… or, even worse, revenue to support it. Even if you raise funding and have cash to spend, your business ecosystem still needs to ramp up.

There’s comfort in growing your business infrastructure, but genuine comfort lies in revenue, not staffing and systems.

5. Spend more time talking philosophically

Processes are great, but rolling out a process without explaining the underlying reasons for that process is a dictate – and no one likes dictates. Talking about the thinking behind a process helps people inform that process rather than get trapped by it.

And if nothing else, always remember that even your most forward thinking will feel limiting to people who can think even further forward. Never assume you have all the answers – you don’t. (But your staff, collectively, almost always does. You just need to give them the opportunity and time to contribute.)

6. Don’t necessarily see employee turnover as a bad sign

As your company grows and evolves, so will certain roles. Some people can evolve to fit in; others cannot.

That’s not a bad thing. The CEO you would hire to run a giant corporation is different from the CEO you would hire to run a startup; the skill sets are completely different. Your head of operations may be the perfect person to run a bootstrapped, cobbled together, crisis-a-minute manufacturing department… but may be a terrible fit for running a massive, capital-intensive, process-optimised production facility.

As your company grows, the demands and requirements of different jobs will change. That’s natural, and so is losing the people who no longer fit.

Keep in mind that that also applies to company founders. (I’m painfully aware that at some point my skills may no longer cut it at Geneca.)

7. Focus on creating a company based on culture, not process

Every company has a culture; the only question is whether that culture is intentional.

The best companies are culturally based, not process based. Why? Successful companies encourage innovation and creativity. You can’t enforce innovation – but you can foster and nourish and support it.

And you can hire people that fit your culture – because that’s the best way to ensure that your company grows.

by Jeff Haden: Bestselling non-fiction ghostwriter, speaker and columnist for Inc.com.

SOURCE:     http://www.leader.co.za/

IMAGE CREDITS:     http://unconventionalnurse.com/

Your Turn To Talk

Your email address will not be published.