The field of startups is littered with failures. Over 20 percent of businesses fail in the first year, and 45 percent have failed within the first five. Sometimes the problem is a lack of cash flow. Sometimes it’s the wrong business model. But all of these failures have one thing in common: not thinking far enough ahead.
A forward-thinking entrepreneur will run into the same difficulties but can outpace competitors because they see the road ahead and prepare for it. There are ways to get ahead of the pack and beat the odds on business failures.
Sometimes the problem is a lack of cash flow. Sometimes it’s the wrong business model. But all of these failures have one thing in common: not thinking far enough ahead.
Rob Finlay of Thirty Capital has beaten the odds by thinking ahead. Thirty Capital has only been in business since 2019, but Finlay has been building businesses for many years and knows the ins and outs of success. Finlay’s insight can help other entrepreneurs who are trying to get ahead.
1. Don’t Assume It’s Always Going To Be Good
“It’s easy when the money is rolling in to think it’s never going to change,” says Finlay. “You have to control the urge to spend and expand beyond what you can. You should absolutely be looking to grow and expand, but you need to make sure you don’t overextend and you keep some reserves. Look at what happened with COVID — who saw that coming?”
Some businesses are more on top of this than others. Restaurants, for example, usually try to keep a few months of operational costs on hand. New restaurants usually don’t turn a profit for three to five years, so their owners are already aware. Other industries may not be as aware.
Keep that reserve on hand in case something happens. That way when you run into issues — and you will — you’re able to take care of them without having to dip heavily into credit.
2. Chase Sales, Don’t Cut Costs
“When you’re first starting out, you might want to cut costs. There is a time for that — once everything is working right and you’re set up with a good customer base. Your new customers might start to tail off a little bit, you’ll have the budget for different staff,” says Finlay. “Then you can start thinking about efficiency. To start with, you have to get your customer base up.”
Make sure you know who your audience is before you start. Go where people already care about what you’re selling. Then you can really dig into that group and create a presence. Building that solid customer base and getting the sales is key. Do what you have to — don’t be stupid about your spending, but don’t be afraid to spend either.
3. Build a Community
“Great companies have people who care about them,” says Finlay. “On the large scale you can look at something like Patagonia which is very mission-based. Or you can look at Apple which changed the landscape with evangelists like Guy Kawasaki. The same thing applies on a smaller scale too. If people care, they’ll spread the word about you — and other people will listen.”
There’s a reason companies run loyalty programs. Larger businesses like Nike have more involved programs with user-generated content and ways to share each other’s fitness ventures. Smaller companies like the corner ice cream parlor might just have a punch card system. But every good business knows that their success relies on building a community of people that care beyond just the price or quality of the product.
4. Distinguish Yourself with Service, Not Just Product
This ties right in with building a community — you have to sell on more than just product. Even if your product is the best in the world right now, competitors will always catch up. You’ll always see copycats. And you have to commit yourself to beating your competition in more than just product to have a chance.
“There are plenty of fields where the product isn’t differentiated very clearly,” says Finlay.
“For example: let’s say I’m a building materials store, and for the most part, no one cares whether they buy their sheetrock or plywood from me or the guy across the street. But when they come into my store I’ll ask how their kids are, get them out the door fast, take care of them when something goes wrong. They’re obviously shopping with me, right?”
You can sell the same product as someone else and be more successful if your service is better. That’s where you can make a difference if you’re in a field where there isn’t a ton of product diversity.
5. Choose the Right Team
“No one knows everything,” says Finlay.
“I’ve had the benefit of working with a number of highly qualified people over the years. One of the biggest mistakes people make is starting without a team or with the wrong people on their team. You need to get good advice and you need a partner who’s a good sounding board, or you’re probably not going to stick around for the long term.”
Disney CEO Bob Iger talked about how much influence Steve Jobs had on him both as a friend and as a fellow board member in his biography, and he also mentions the importance of having people that you trust to give good opinions.
“How can bringing Steve Jobs into our company not be a good thing? Even if it comes at my expense?” he says in his book. The acquisition of Pixar and Jobs revitalized Disney’s animation side and paved the way for another company-changing purchase: Marvel. The rest, as they say, is history.
Iger’s not the only one. Great leaders have great teams — and that means successful companies have great teams. Make sure you have the right people on yours.
Forward-thinking entrepreneurs can outpace their competitors with ideas like these. Supercharge your startups by following these steps as you build your business.
Originally Appeared Here