The statistics on small business survival are daunting: Only 50 percent of new companies will survive for more than five years in the U.S. marketplace. Before diving into entrepreneurship, wouldn’t it be ideal to tap into the knowledge of experienced, thriving business owners for advice on failure-proofing a new business?
We asked members of Entrepreneurs’ Organization (EO), a global, peer-to-peer network of 14,000-plus influential business owners, what lessons they wish they’d known to ensure ongoing success before starting their companies.
Linger before launching your small business
“So much of an entrepreneur’s success relies on figuring out your true target prospect, the right pricing, and the winning product mix. We didn’t realize how much of this we could accomplish before launching,” says Heidi Rasmussen, EO Dallas member and co-founder and COO of freshbenies. “If we had kept our full-time, paying jobs longer, we could’ve done all of that in addition to growing our network of prospects, creating a social media following, and articulating the problem our company solves.”
Validate product-market fit
“Do whatever legwork is possible to validate your product-market fit before investing everything in your concept. The more confident you are, the clearer your path becomes – and the lower your risk,” says Chris Cardinal, EO Arizona member and principal at Synapse Studios. “Go beyond just asking friends and family what they think: They won’t be honest, and they’re probably not your customer base.”
Leverage others’ experiences
“Join an executive group: It empowers you to develop leadership skills and knowledge, which is nearly impossible to do alone. Learn from the successes and failures of others. Leverage their experiences instead of reinventing the wheel,” says Nicolle Cannon, EO San Francisco member and CEO of Cannon Quality Group.
“Experiment frequently, fail fast, and learn from it. It’s okay to put bold ideas into action as long as you’re not afraid to jump ship quickly on experiments that aren’t producing results. Just move on to the next experiment,” says Marcia Zaruba O’Connor, EO Philadelphia member and CEO of The O’Connor Group.
Beware of overbuilding
“Don’t overbuild your product. Get to revenue as fast as possible. Often, this means identifying the single-most effective problem you can solve, solving it, and selling into it to drive revenue,” says David Finkelstein, EO South Florida member and CEO of BDEX.
“You can always add features and solutions later, which customers will love, but if you try to solve too many problems at once, it can become overwhelming. Simple solutions are much easier to sell.”
Hire the best
“Hire the best employees you can afford, then take care of them to develop loyalty and make them essential parts of the team. Listen to their needs and ideas. Then take chances on the ideas that make sense, so that they will feel more invested,” says Tina Hamilton, EO Philadelphia member and CEO of myHR Partner.
“The more invested they are, the more they will give you when you need it most. It takes a team effort to expand and evolve. A strong core of dedicated, invested employees is essential for growth. You can’t do it alone.”
“I’ve seen businesses fail because they couldn’t reconcile the costs that come with hiring staff, inefficiencies, and time spent on manual labor. A small team is capable of accomplishing a lot with the right combination of technology and tools. Still, automation always seems to be an afterthought,” says Chad Rubin, EO New York member and CEO of Skubana and Think Crucial. “A good inventory management and fulfillment software can give a business the platform to scale at an unprecedented rate.”
Listen to the market
“Listen to the market and be flexible. When we launched, we thought we knew exactly what our target market needed. It turns out, the market found a different – but far more valuable – use for our skills,” says Justin Lake, EO Dallas member and CEO of Venado Technologies.
“What makes a business successful is finding those customer challenges that they want to solve, which may not be what you originally set out to do. Your chances of success grow exponentially when you listen to your prospects’ needs and are willing to adapt and apply your skills to the solutions for which they’re willing to pay.”
Monitor cash flow
“Watch your cash flow. You have to be aware of it, monitor fluctuations, and never count on future income until it’s in the bank,” Cannon says.
Find your mentor
“Learn from entrepreneurs both in your immediate market and outside of it. Find mentors who have successfully grown a new business, have made mistakes, and know how to advise you to navigate your company’s challenges,” Hamilton says.
“I wish I had known the importance of being willing to seek help. Entrepreneurs are often prideful, which can hinder us from seeking the advice needed to succeed,” Finkelstein says. “I have learned over time to be more willing to seek help when I need it and to be vulnerable enough to say, ‘I don’t know what to do’ to the people who may be in a position to help me solve the situation.”
This article originally appeared in the USA Today Small Business Insert that ran on 31 December 2019.