Three Steps to Starting a Successful Business
- Apr 14, 2020
Have you ever dreamed of starting your own business? Are you worried about the high failure rate? In this short video, Lisë Stewart explains the 3 most important steps to setting your new business up for success!
Hello. My name is Lisë Stewart from the EisnerAmper Center for Family Business Excellence and today I want to talk a little bit about one of my favorite subjects, startups. Maybe you've recently started a business or maybe you're just thinking about it. Perhaps you've found a partner and the two of you are brainstorming about some way in which you can make money together doing something that you really enjoy. Or maybe you and your family have decided that there's something that you feel would be fun, interesting, engaging in and in the long-term rewarding. So what's it mean to start a business and how can you make it successful? We know that a lot of startup businesses just never make it to the finish line. In fact, fewer than 14% of them that get started ever, really make it through. So what makes the difference? At the Center for Family Business, we've identified three key steps that we believe help businesses to be more successful.
So number one, start with the end in mind. Take the time to write down what it is you're really trying to achieve. Let me tell you a story. A number of years ago, two lovely young men asked me to help them with their business planning which I was very excited to do. They were structural engineers and they were going to start an engineering company. My first question to them was, "Well, tell me what do you want to do with this business someday?" One guy scratched his head and said, "Lisë, we're only just starting this so we don't want to think about the end or what we want to do with it or an exit plan. We want to figure out how we're going to build this." And I said, "Oh, that's okay just humor me." And he said, "Well, we want to build this up to sell it someday we're going to make money out of it I mean, why else would we start a business?"
His business partner turned around and said, "What are you talking about? I want to build something up so that my two sons can come into the business someday." Aha! So here's two business partners that had never sat down and had a conversation about what is the end going to look like? Now, it doesn't mean that might not change along the way, but I think it's really important to think about do you want to build something up to pass down to future generations? Are you going to try to build something up to sell? What is your purpose for going into business? What's the long term plan? So give those ideas down on paper. Maybe you want to explore a several different options and that's okay, but we know that depending on the direction that you want to go it will often change many of the steps it's going to take to get there.
So you may run quite a different business if you're going to build something up to sell in five years than if you're building up something that's going to last a lifetime. So start with the end in mind. The second thing to do is especially if you're going to be working with other family members or a business partner, is to develop some operating guidelines and then stick to those guidelines. For example, how are you going to pay yourself? How much money do you think you're going to draw out a company? How much money do you need to draw out of the company in order to be able to support yourself and your family? Who gets to spend money in the company? Again, let's say you've got a partner and he or she goes off and spends several thousand dollars on some equipment without ever speaking to you. How do you feel about that?
You might want to think about some guidelines about spending money, investing in new things, hiring people, maybe even the business name or the use of that business name or perhaps some of the risks that might be associated with the use of money or in investing. Other questions you might ask are things such as what about hiring family members, are you comfortable about doing that? Can anybody hire a family member to come in? What would you say about other decisions that are being made now? What happens if one of you in the business, either a family member or a business partner stops performing? Maybe just not working as hard or not coming in on time Operating guidelines, however you want to structure that are really important because they give us an opportunity to think about some of the really tough questions that many business owners, particularly those who are new to business never stopped to think about but these are the sorts of things that destroy partnerships and can even destroy families.
Finally, think about what constitutes excellence. What does it mean to do a really good job? Set yourself some goals. What does excellence mean to you as an owner? What does it mean for the people that you hire? What kinds of people would you like to work with? What kinds of personalities or styles might they have? What makes somebody really good at working with you and for you? We want to make sure that we're hiring talent, people who will stick with us and help us to grow the business and drive it somewhere. However, most of the time we hire people for their technical skills and we don't pay a lot of attention to their personality, but that's what makes us tire of them. We're more likely to hire for technical skills, but fire for their personality.
So think a little bit about the kinds of people that you want to work with. Who's going to really help you to achieve your vision, to achieve your dreams? Surround yourself with good people and that means both the people who you hire, but also your advisors. Find people who are willing to impart some of their knowledge and experience to make sure that you're not making mistakes that you don't need to make. Starting a new business can be really exciting, I know I've done it a few times myself. It can be extremely rewarding and it's also hard work so anything that you can do to learn about the potential pitfalls and mitigate those circumstances will help you to enjoy what you're doing more. We really wish you the best of luck and along the journey if you need some help and some advice we're some of those people that have already done it a few times and we're happy to share.
OUR CURRENT ISSUE OF RISE (Real Ideas to Stimulate Engagement)
- The Words of a Leader in a Time of Crisis
- Make Risk Management Part of Your Business Plan
- Three Steps to Starting a Successful Business
- The First 90 Days!
- Partnerships and Personalities May Mean Problems
- The Start-Up Business
- The Art of the Start - Steps to Take to Ensure ‘Start-Up’ Success
- Assessments and Their Use in Leadership Development
- Keeping Mentally Fit During COVID-19
If you have any questions, we'd like to hear from you.
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