From Launch to Succession: Tips for Building a Thriving Business
While there is no single formula for when and how to launch a successful company, here are some tried and true tips every prospective entrepreneur should keep in mind.
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In my last article, I focused on what it takes to become a successful entrepreneur and what "success" means today. Here, I'd like to drill down on when to launch a business and offer some practical tips for entrepreneurs as they grow their new ventures.
Two Windows Theory
Deciding when to launch a business can be one of the most difficult decisions for entrepreneurs. For many, it's a choice between a typical 9-5 corporate grind with the risk of burnout vs. becoming an entrepreneur too early in life before you have had enough real-world experience.
Consider this: The majority of startups fail in their first year, there's an even higher percentage of failure in the second year, and only about 2% of surviving startups make it to year three.
Given the inherent risk in starting a business, there are two ideal windows of time to launch a new venture: right out of school in your early 20s, when you have a lot of energy and no other commitments, or in your late 50s or 60s, when your children have left home, and you presumably have a higher net worth. Both of those windows are easier times to assume the risk of starting a business. But if you want to have a successful and profitable business by your 40s, you really need to put in the "sweat equity" when you're 22.
Related: Why Some Startups Succeed (and Why Most Fail)
Don't give up equity
Successful entrepreneurs often say, "The first million is always the hardest." That's true, but today's technology can certainly help. In today's hyper-connected digital age, an entrepreneur can launch a unique product or service online and quickly become profitable, especially if they employ the right marketing and social media channels to build a loyal customer base and brand following.
If I could give any advice to entrepreneurs, it's this: Don't start a new business unless you know you have the drive and the funds to get to year three. And don't give up equity in your own company just to keep the lights on. $10,000 bills add up quickly, but if you start giving away equity to pay those bills, you may live to regret it once your company is making $10,000 every minute.
If you're an entrepreneur, by definition, you are likely to have some failures. That's the norm. But brush yourself off quickly, and don't let it define you. Learn from the failure, and then apply the lessons to your next venture. Try to build positive momentum. Just like in sports or even gambling, momentum swings also happen in business when the stars just seem to align for you. Staying focused and keeping your confidence level high is a big part of building and maintaining positive momentum, and that confidence and positive energy will inspire your team as well.
Related: How to Create Business Momentum
Delegate as you grow
The whole point of being an entrepreneur is to work for yourself and to create jobs, careers and livelihoods for others. Once you've created a new job, you should train someone and have them do it. If you do it yourself, you're wasting your own time and skills that should be focused on generating new revenue flows for your growing business. Delegating roles and responsibilities to others will give you the time required to generate new business and new revenue streams. You can't do it all. Scaling a business will be very challenging if the founder is micromanaging or trying to do every job themselves. Learn to effectively train others and the art of delegation, and you will succeed. As a company founder, you will need time to work on strategic priorities like profitability, marketing, managing costs, hiring, staff retention and communications. Remember — you manage projects, but you lead people. Successful entrepreneurs know the difference.
Have a succession plan
Finding people who are smarter than you is part of being a successful entrepreneur, while also having a succession plan for the long term. Some may get intimidated by people who are smarter than themselves and think "Well, they could take my job." On the contrary, I want to surround myself with smarter people who can eventually do my job, should something happen to me. There are about five people in my company who could succeed me if need be, and I'm proud of that, because I know the company has longevity past me. A thriving and enduring business will be the legacy that I will eventually leave behind.
Related: 4 Lessons on Succession Planning for Entrepreneurs
Always be on and ignore the noise
Nothing can fully prepare you for the ups and downs of entrepreneurship. Not even an MBA! There is such a high level of failure with startups, that it keeps a lot of smart and talented people from even trying. But of course, if you can make it, you're in an exclusive group. But with that privilege comes serious responsibility. Any successful entrepreneur will always be available to their team, because your company is always on, which means that you always have to be on.
And as you grow, more livelihoods will depend on you and the strategic decisions you make. Other priorities fall by the wayside, and 12 to 16-hour days can become the norm. When you are that focused, driven and dedicated to your business, outside forces (like critics and naysayers) just become noise that you should ignore. Always be on, ignore the noise, and you'll have a strategic advantage over your competition.