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Building the Business

Your Network is Your Net Worth

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Networking should be one of your top business-building activities.  The stronger your network, the more valuable you are to your business, and to other individuals.  Over time, you network will enable you to orchestrate major business deals, refer business to associates, help a friend land her next job, or even introduce future couples.  Use your network to make other people successful.  The more you help now, the more you’ll benefit down the road.  While the payoff is not immediate, your network is your net worth.

To be a mover and shaker you have to move and shake.  Resolve to have at least one network development meeting every week.  Make a list of your top 40 people and start reconnecting with them.  When you meet new people, be sure to follow up and stay in touch. It sounds obvious, but few people actually do it.

Over the long haul, your network will be one of your most valuable assets.  Creating value through your network is like any other asset – you have to invest well before you can cash out.  Invest heavily.  It only takes one call to change your life, so start networking like your future depends on it.

What To Measure

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“What gets measured, gets managed.” Peter Drucker’s famous axiom rings true for all businesses, regardless of their size or industry.  Anything that gets measured will naturally receive more attention by you and your employees.  Metrics are measurements important, quantifiable business activities.  Metrics can instantly tell you how efficiently your business is operating, and make it easy to identify inefficiencies.  The most common metric is the sales conversion funnel, but what you measure is limited only by your imagination.

Metrics help your company transition from a startup to a professionally managed company.  Like most tools, however, they can also do more harm than good. For example, they can be time-consuming to implement effectively.  They can also create an administrative burden.  Resist the urge to track anything that can be measured.  Find the right balance and focus your energy on a few useful metrics.

The best way to get started with metrics is to ease in.  Pick your company’s most important business activity, and find a good way to track and analyze it.  Starting with one metric will give you a good idea of how valuable and time-consuming metrics can be.  From there, continue to expand your set of metrics slowly.

Forget the Mission Statement

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Big companies can afford to do four-day retreats in the mountains to do trust falls, sing Kumbaya, and pay outrageously-priced consultants to come up with impressively meaningless mission statements.  You don’t have this luxury.  You’re fighting a war with about as much hope of winning as your grandpa beating Deep Blue at chess.  You can’t afford a meaningless mission statement.  You need a rallying war cry that will inspire the troops to follow you on your kamikaze march.  You need something actionable.  You need what Guy Kawasaki calls a “mantra.”  A mantra is a three- to four-word phrase that captures the heart and soul of what you’re trying to accomplish. It needs to be inspirational, aspirational, and attainable – inspirational in that it moves and motivates your team to action, aspirational in that it’s a meaningful and worthwhile goal, and attainable in that it’s realistic and achievable.  Forget the $50,000 mission statement.  Spend an hour and come up with a mantra that inspires your company and makes things happen.

Think Big, Execute Small

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Take time to explore game-changing possibilities.  Dream big, and come up with wild ideas that can take your company to the next level.  Let the idea of the elephant inspire you.  But don’t let it distract you from the day-to-day execution required to build a strong company.  Building a company is about more than ideation.  Take a look around and you’ll see that the world is full of people with “the next big idea.”  To create a lasting company, you have to execute on the fundamentals.  Look at the top athletes in the world.  They don’t waste much time with on innovative, game-changing plays.  They don’t learn experimental techniques.  They practice the fundamentals 99% of the time, because winning comes down to execution. You can eat an elephant, but only one bite at a time.

The chasm between those who dream and those who execute is wide and deep.  Great entrepreneurs can dream big and execute fundamentals.  They explore big possibilities and never stop coming up with new and better ways to do things. But they also realize that anything worthwhile takes focus, dedication, and follow through.  Think big, execute small.

Be Your Own Customer

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The average entrepreneur only works half-time – 12 hours a day.  Building a company overwhelms even the most efficient workers.  While trying to keep up, it’s easy to forget that customers are why you’re here in the first place.  Without a doubt, your customers should be at the top of your list of priorities.  While entrepreneurs start out taking great care of their customers, their customer attention spans usually diminish rapidly.  No matter how busy you are, check in with your customer experience frequently.

The best way to do stay in tune with customers is to be your own customer. If you have a storefront, have a friend or secret shopper visit and report back to you. If you have a website, register as a new user and go through the complete customer lifecycle.  If prospects call your company to get started, make the call yourself and pretend to be a customer.  While you’re at it, call customer service to see how complaints are being handled.  When you do this, you’ll probably identify a bunch ways to get better.  The last thing you need is more work, but your customer experience is paramount.  Take time to look at your business from your customer’s perspective.

Expect the Unexpected

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When it comes to building a company, you have to expect the unexpected.  This is especially true for deadlines and deliverables.  Whatever you’re planning, be certain that it will be harder and take longer than you expect.  That website you expected to go live in six weeks?  Try six months.  Raw material shipments won’t show up on time, joint ventures will come together late, meetings with potential partners and investors will take forever to line up, and customers will be slow to adopt your products.  When planning your strategy, factor in the unexpected.

These delays are one of the key reasons to wait as long as possible before you ramp up your overhead.  You could easily and unnecessarily disadvantage yourself if you start growing too early.

The unexpected is also important help you deal with third-party expectations.  Whether it’s the press, investors, or potential customers, don’t set yourself up for failure.  Hold off on announcements and promises until it’s already in the bag.

Hope for the Best, Plan for the Worst

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It’s an entrepreneur’s naive optimism that leads to worries about problems that don’t yet exist. The funny thing is that entrepreneurs usually worry about upside problems.  But what about the downside?  You have to hope for the best, and plan for the worst.  It’s okay to think about scaling up, but also be prepared to scale down.  How quickly can you reduce your overhead if the orders aren’t coming in as quickly as you planned?  What happens if your biggest customer switches, and you lose 50% of your revenue?  Are you able to adjust your business until you find a replacement?  Make sure you create an elastic organization that can scale down as well as it can scale up.  Dream big, but keep your feet planted firmly on the ground.

What Business Are You In?

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At first glance, this question seems too obvious.  But dig a little deeper and you’ll see there’s gold in this question.  Carefully considering this question can affect everything from the right feature mix to important go-to-market strategies.  Take the classic example—railroad companies were the reigning champs of transportation for decades.  It was the de facto way people and materials moved around the country.  Then along came cars and airplanes.  Over the years, these two innovations severely disrupted the railroad industry.  Why did they completely miss the opportunity?  They didn’t realize that they were in the transportation business, not the train business.  Had they expanded their thinking, they might have realized the opportunity to expand into these high-potential new industries.

Markets and technologies are changing faster than ever, making it that much more important to expand your horizon.  The internet, introduced less than two decades ago, has already toppled and created dozens of industries.  3D printers will turn traditional manufacturing on its head.  You must to adapt constantly to shifting environments, and this adaptive mindset begins by understanding what business you’re really in.

Make Meetings Matter

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Meetings are for people in big companies who don’t have better things to do with their time.  They’re one of the biggest robbers of company productivity.  A pointless meeting with five people that lasts an hour is not a waste of one hour of productivity, it’s a waste of five hours. On top of this, people usually hate everything about meetings.  As a result, the fewer meetings you have, the more productive your organization and the happier your people.

Minimize the number of meetings at your company, and never have a meeting just for the sake of having a meeting (e.g. weekly recurring meetings).  The best way to reduce the number of meetings is to start them with one simple question: “What is the problem that we need this meeting to solve?”  If the problem you’re solving doesn’t require a meeting, work with people individually.  The best case resulting from this question is that you realize that you don’t need to have the meeting, and everyone gets back to work.  The worst case is that you now have a clear justification and intended outcome for the meeting. Either way, it’s a great question to get startup meetings on track.

Adding or Subtracting Value?

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As your company grows, you will have to delegate many of your responsibilities to the people you work with.  You may have been able to manage everything yourself at the beginning, but hanging onto the reins when you’re growing at 60% a year is a recipe for disaster.  You’ll either severely restrict your company’s growth, or cause its demise.  You have to delegate.  And as you do, your business will start to take on a life of its own.  Its business activities will multiply and your team will take it in new directions.  In a company’s lifecycle, this is usually when organizational bloat creeps in.  Pay attention to the ways that your company grows, and whether this adds or subtracts value.  One of your new responsibilities is to ensure that your company’s activities add value.

Value can be added directly or indirectly.  Activities like introducing new revenue streams, or upselling existing customers add value directly.  Indirect value builds organizational value without contributed to the bottom line directly.  This is where you usually get the biggest long-term payoff.  Take customer service, for example.  Improving customer service is a classic way to increase the lifetime value of a customer and to build a strong brand.