10 Time-Tested Secrets of Serial Entrepreneurs These are the tips that lead to greatness.
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Even newbies to the entrepreneurial game are no doubt familiar with the ingredients needed to build a successful business.
Perseverance. Decisiveness. Confidence. Passion. Top-notch legal and financial advisors. Seasoned mentors who don't pull punches. The ability to cultivate lasting relationships and inspire others to support your vision. A willingness to take risks, listen to your gut and, of course, work your tail off.
But what about the lessons best learned on the job by those who've spent years in the trenches, launching company after company? What keeps them coming back for more when the odds of failure are so high and the workload so heavy? We asked a number of celebrated serial entrepreneurs to describe their secret sauce to growing a business as efficiently and inexpensively as possible. Here are their top 10 suggestions for boosting your odds of success.
1. Vet your product
It's not enough to identify a beefy market opportunity. You also have to gauge customer enthusiasm for the product or service you want to sell. Fortunately the internet—and platforms like Shopify and Kickstarter—make testing the waters and eliciting early feedback simple.
"There aren't a lot of technology barriers to determine if somebody's actually willing to give you money," says Tanisha Robinson, co-founder and CEO of Print Syndicate, a Columbus, Ohio, e-commerce company that designs novelty clothing, accessories and home goods.
She knew her hunch was correct—that people would pay competitive prices for "Introverts Unite!" and "Notorious R.B.G." T-shirts, phone cases and pillows—when customers began sharing selfies featuring the products on social media. The company did $4 million in sales in 2013, its first year; this year, Robinson claims, Print Syndicate is on track to gross more than $20 million.
But maybe you don't have a product that's easy to prototype, pre-tail, beta test or sell in small batches. So you validate your idea with customers before you invest in it, says serial entrepreneur Gregarious Narain, who did this with his current venture. "You actually go out and talk to lots and lots of customers first to get an understanding of what they care about or what the problem is, and then you build the solution," says Narain, co-founder and CTO of Chute, a visual-marketing platform based in San Francisco.
2. Bring in revenue ASAP
Enjoy those positive customer reviews, press mentions and industry awards all you want. Same goes for that hotshot angel investor or VC firm that took a chance on you. But without a viable path to profitability, your business won't be sustainable.
"If there isn't revenue, I'm not sure what my plan is for breakfast tomorrow," Robinson says. Yes, she scored $4.25 million in venture capital last year to fund her company's expansion, but she isn't relying on such financial infusions to feed herself and her staff of 140. "If the capital market dies and nobody can raise any money, we'll still be here," she says.
Dave Wakeman, a Washington, D.C., entrepreneur-turned-business consultant, shares this mindset. "Cash flow and sales are the livelihood of any startup," says the Wakeman Consulting Group principal. "You can't get so blinded or overwhelmed by the stories of startups getting crazy amounts of funding and think that not having access to that is a killer for your idea. Instead, you need to focus on your first sale and find something that you can easily build upon."
3. Chase opportunities, not trends
Don't let the allure of the shiny and new blind you to the cash cows. Sometimes less sexy customers present the biggest revenue opportunities, says San Francisco-area entrepreneur Misa Chien.
Chien quickly applied the lesson to her current startup, Fosubo, a customer engagement platform for companies with retail stores. While incorporating in 2013, her goal was to sell her idea to any business with a storefront. But when the telecom sector came calling, she changed her tune.
"It's a huge market," says Chien, whose company serves more than 700 telecom stores in 300 U.S. cities. "It's unbelievable how much we've been able to build our product and how much opportunity there is for one market—telecommunications. I mean, think about it: Everyone has a cell phone, and customer retention is a major part of the business."
4. Slash the budget
Resist the temptation to spend every last cent in the kitty; it's one of the quickest ways to lose your innovative edge. "Whatever capital you have raised or pulled together, cut it in half," suggests Gary Tuch, who founded Professor Egghead Science Academy with his brother and a working budget of $5,000 seven years ago. "Companies with smaller budgets are forced to think creatively and work to fix problems rather than throw money at them," he says.
Determined to expand their interactive science and engineering classes for kids to multiple locations last year, the brothers sunk more than $75,000 into print and online advertising. "We didn't get substantial returns at all," laments Tuch, who is based in Los Angeles. So the pair cut their marketing budget by 75 percent, which forced them to focus on more affordable ways to reach parents, educators and potential partners—namely Twitter, Facebook, YouTube and science, technology, engineering and math conferences and associations. Within six months, they'd generated enough interest to open two additional locations.
5. Establish best practices
It's never too soon to establish processes for all aspects of your business, from managing inventory to training staff to acquiring customers. The sooner you do, the more easily you can delegate critical tasks to employees, contractors and vendors.
Operating a business by the seat of your pants isn't sustainable, says Michael Krasman, co-founder and CEO of UrbanBound, a relocation management software provider for employers. "You can't scale that way. To become a larger company, you need to solve a lot of inefficiencies early on," the Chicago 'trep says. You don't have to create the best procedures known to man or set them in stone, though. "We actually have a process for how we fix problems," he adds.
Brian Scudamore, founder and CEO of four home-services brands, including 1-800-Got-Junk and Wow 1 Day Painting, seconds this advice. "I made sure every single best practice would fit on a one-page "Here's the best practice' in the manual," says Scudamore, who employs more than 300 full-time staffers at his company headquarters in Vancouver, British Columbia. "It allowed me to scale and grow my business quickly."
6. Hire rock stars
Surrounding yourself with top talent—and empowering them to run with their responsibilities—is a must.
Kelly Hager's capable team kept her eponymous residential real estate company in St. Louis afloat while she was hospitalized for several months during 2010 and 2011. "Because I hired the right people, it literally made the difference between bankruptcy and where we are today," says Hager, whose decade-old, 45-employee company will have sold close to $90 million of properties by year's end.
Jeff Ellman, president of UrbanBound, echoes this sentiment. "The first 10 people you hire are very likely to make or break your company," he says, especially if they're in a position to hire more employees. "Be very slow to hire, but be very quick to fire someone who's not a match."
Ellman's secret weapon: asking candidates the name of their previous manager and how that manager will rank their performance on a scale of one to 10 when called for a reference check. "You can really read someone's body language," he says. "If they start getting nervous, that's a red flag."
7. Expect the unexpected
No amount of documentation and planning can completely shield you from setbacks. A competitor might poach a valued customer; a star employee might decide to change careers; technological advancements could upend the market, taking a significant chunk of your business with it.
None of this means your company is doomed to spiral out of control, Chute's Narain says. "Startups are all about dealing with fires," he says. "Fires aren't always a bad thing, but they're absolutely something that must be managed the second you realize the smoke's not just smoke."
The trick is to take deep breaths, avoid panicking, consult with trusted mentors as needed and troubleshoot your heart out. "There is always a solution," Narain says. "If you stay calm enough, you will find one." If, however, you give in to the stress and focus on the negatives of losing that A-list account, you sacrifice valuable time you could have spent finding a replacement client, he adds.
8. Measure your success
Goals are useless without accountability. Call them checklists, milestones, metrics—so long as you implement ways to track your accomplishments.
"We have a mantra internally that everyone needs to pay for themselves," Print Syndicate's Robinson says. This means requiring each employee to hit role-specific six-month metrics. For example, the company tracks its content designers' contributions not by output but by sales figures. "Their big job is to optimize conversions," Robinson explains, adding that all workflow gets measured in the company's custom-built production platform.
At UrbanBound, a "Starbucks challenge," which entails employees listing their top five tasks on a 3-by-5-inch notecard each day, helps keep teams focused. "If I come up to you and Starbucks-challenge you, if you don't have that card on you, then you owe me Starbucks," Ellman says. "If you do have the card on you, then I owe you Starbucks. It gets you aligned with what needs to get done in that daily eight- or nine-hour time period."
Fosubo's Chien recommends taking a few moments to enjoy the wins along the way. "It's important to stop and look at the progress you've made and celebrate it as a team," she says. After all, nothing boosts morale like showing your people some love for a job well-done.
9. Adapt as you grow
Revising your playbook as you scale is essential. The processes and market strategies that suited you as a three-employee operation that could barely pay the bills may not make sense once you expand to 10 employees and start bringing in seven figures.
"Sometimes it's "Well, that worked for us for a year, and now at this size, it doesn't work at all,'" Robinson notes. "I never say, "We've always done it that way.' That's just not part of our culture or our vocabulary."
Smart entrepreneurs take time to assess—weekly, monthly, quarterly, annually—how their people, campaigns and numbers are faring, and recalibrate as needed. The smartest ones enlist their employees to help with this process. At UrbanBound's quarterly off-site gatherings, the company's 55 employees have the chance to submit green, red and yellow index cards listing the initiatives they'd like to see management start, stop and continue. "We aggregate all that information, we document it, we go over it," Krasman says. "And then we hold the company and ourselves accountable for making sure that we're processing that list."
10. Stay balanced
When you're hustling to get your company off the ground, sleep, exercise, nutrition and a personal life can fall by the wayside. This can have major repercussions.
Joshua Weiss, founder and CEO of TeliApp Corp., a mobile application company based in Linden, N.J., learned this firsthand while running his previous business, 1-800-Tow-Truck, a multimillion-dollar national roadside-assistance outfit. Back then, his workaholic ways cost him his first marriage, jeopardized his relationships with friends and family and led him to gain 100 pounds.
"You cannot work 18-hour days, seven days a week, and expect to maintain your body and personal life," says Weiss, who has since remarried, started a family, gotten back in shape and set boundaries around the workday. "Everybody thinks they will be different, and everybody finds out the hard way that this is not the case. Work hard—absolutely. But make sure to take the proper time to have a personal life and to maintain your health. If you cannot balance multiple things simultaneously, you're not CEO material."
