Profit in 90 Days? Avoid the Mistakes That Could Cost You a Million Dollars. 'Undercover Billionaire' is all very well. But, TV fantasies aside, here's how -- if you're smart and lucky -- you can reach success before you run out of cash.
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Like most reality shows, Undercover Billionaire has a seriously catchy premise: Give an uber-successful businessperson precious little capital, drop him (or her) off in an unfamiliar city, and see whether this individual can whip up a successful business idea in 90 days. Does our hero (or heroine) make a million bucks or fail miserably? Which of three factors -- desire, old-fashioned hard work or luck -- plays the biggest role in realizing the American dream?
It's not a novel concept given the rags-to-riches stories of everyone from chocolate magnate Milton S. Hershey to media queen Oprah Winfrey. What makes Undercover Billionaire different is the abbreviated time frame. Three months isn't exactly a practical allotment for building a profitable organization. But maybe it's enough to generate some interest among viewers to try the same thing, and spur other startup ventures, even those that are cash-strapped.
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After all, a lot of folks fit into that category: According to research from GoBankingRates, 57 percent of people in the United States have less than $1,000 in their savings accounts. Perhaps binge-watching Undercover Billionaire will inspire folks to start socking away some money. Viewers will just have to make sure that like the entrepreneur they follow on the screen, they avoid making common mistakes.
After all, to err may be human, but it's not ideal for entrepreneurs. Even if you yourself are not racing against the clock to grow seed capital, you don't want to misstep early because that could cost you dearly. Unfortunately, too many founders start out spending their dollars in the wrong place, focusing on expensive office spaces and high-end furniture. And that's just the beginning.
In an era of "startup amenities," young organizations are sinking big bucks into perks like beer on tap for employees. That's a risky maneuver; tons of sweet benefits might get candidates excited, but they'll turn sour if the freebies are later taken away because of paltry cash flow.
Speaking of employees, new businesses tend to miscalculate in that arena, too. They hire the wrong people, focusing on the development of the wrong departments and forcing the company into a struggle from Day One. A better approach is to find workers who align with the company's current needs, as well as its corporate mission and culture.
When we opened the doors here at Rocksauce Studios, we gave producers -- not executives in the C-suite spots -- the highest compensation amounts. This kept the revenue-generators satisfied and eager to help us reach each goal. Eventually, everyone could enjoy higher salaries thanks to our frugal approach out of the gate.
A final budget item ripe for miscalculation is marketing. No matter what the type of company, it must invest in advertising to get the word out. Without making intended audiences aware of what's available, organizations are doomed to fail. Plus, it's tough to entice investors if you're a "nobody" among potential buyers.
Related: Founders Keep Making These 9 Common Mistakes That Crush Promising Startups
Whether you have enough money to cover your first 90 days, weeks or months, be sure to take those first steps carefully. The better your foundation, the better your outcomes will be. To build a solid foundation, start with these tactics:
1. Outposition your competitors.
Want to make a big splash before another month passes? With limited time to iterate, you need to engage your audience quickly. Become an industry expert. Do research. Position yourself as a thought leader.
At the same time, make sure your focus is narrow and your product solves one big issue, not a million different ones. A great example is business application Slack, which skyrocketed to success with a sharp blueprint to streamline workplace communications into a versatile, smart hub. Slack learned from the hesitation and lack of marketing displayed by a similar application, called Hall, which has long since died an unceremonious death.
Slack simply outpositioned its competitors with a straightforward product that filled a need. If the offering can alleviate one specific pain point, your audience will become adopters and, eventually, advocates.
2. Get the price just right.
After you know your customer and your offerings inside and out, position your product clearly and succinctly. This will help others see the value in coming aboard. Obviously, pricing your items correctly is a huge part of this step. Shoot too high, and you'll lose sales; aim too low, and your merchandise could be perceived as low-quality or unnecessary.
Understand your monetization strategy, and have as many avenues to generate that revenue as possible. Don't overestimate customers' understanding of your offerings. You may be tempted to offer discounts or "free samples" to spur interest and growth, but don't give everything away early, thinking you can pick up subscriptions later. Most companies not named Google can't profit without charging something up-front to users.
3. Hire the right people for each job.
Feeling pressured to build the team? Take a breather. While acting quickly can be great in some ways, be careful: Hiring the wrong person simply to fill a seat could lead to some serious toxicity, not to mention wasting your limited funds.
According to CareerBuilder, companies lost an average of $14,900 on every bad hire in 2017, and some 74 percent of businesses polled said they succumbed to that trap.
"There's a ripple affect with bad hires," CareerBuilder's chief human resources officer Rosemary Haefner said in a press release regarding the survey. "Disengagement is contagious -- poor performers lower the bar for other workers on their teams, and their bad habits spread throughout the organization."
Due diligence in hiring, then, is key. Find people who buy into your vision and want to go above and beyond for the benefit of the company. Then, train them to enhance their skills for personal and professional gains. Your startup will become a natural beneficiary of their knowledge.
Unless you're the unidentified "Undercover Billionaire," you probably don't have the stress of delivering a superstar product or service in 13 short weeks. But, just because you're not followed day and night by a camera crew doesn't mean the pressure is any less intense. Maybe you'd be wise to imagine yourself the star of your own reality show, so you'll push a bit harder on the gas pedal.
Related: Nailing Down the Perfect Price Point
That way, you just might get to your preferred destination -- and maybe your own reality show -- a little faster.