Long before the internet era—and before home-flipping reality shows and easy financing options—I worked in real estate. My vast experiences taught me valuable lessons about illiquid assets and managing expenses during lean periods. By the time I launched my own company, I had benefited from incredible foresight.
Unfortunately, countless entrepreneurs enter the market without any of this understanding to guide their way.
Too many young businesspeople become overly optimistic, bite off more than they can chew, and exhaust their treasuries. This leaves them needing to focus disproportionately on raising cash instead of providing the value that will keep customers coming back for more.
Making Your Mark on the Market
We all love to look at successful companies, but it’s easy to miss the struggle behind the scenes. Success requires more than just passion. It also requires the humility to rectify a flawed, mistaken course. It’s better to pivot and change execution—crashing, while hanging on to your original idea, is a raw kind of solace.
Any entrepreneurs looking to make an impact and build a successful business should take these lessons to heart:
1. Find your flow.
Too many companies choose to enter a crowded space purely for financial reasons. Then they have no differentiating factor to guide them in competition with other businesses, and they lose their way. Drilling down to that core competency that only you can provide will help you maintain your identity when the battle gets rough.
Too many companies choose to enter a crowded space purely for financial reasons. Then they have no differentiating factor to guide them in competition with other businesses, and they lose their way.
—Frank Schilling, founder and CEO, Uniregistry
I started my business, Uniregistry, in the third bedroom of my home and would sit in front of the computer so long that I lost track of time. Ten years later, I realized I was still as engrossed in my work as when I started. I could have never lost so much time if my business had failed to match up with my strengths.
2. Keep a rainy-day fund.
Don’t run your business aground, hoping that cash will show up. Consider keeping a stash sequestered—and forget about it. This emergency fund will keep you from being crushed by unexpected expenses. Be sure it’s in a place that can earn a little return, but doesn’t tempt you to use it before you need it.
The right amount will be different for each business. It could be three months’ payroll, enough to cover your single biggest historical expense, or a stopgap amount to cover costs until you receive more stable financing. Just don’t leave yourself cash-exposed.
3. Swallow hard and pivot.
In a hole? Stop digging. Don’t be too proud to change directions if your model isn’t working. You won’t be the first or the last startup to pivot.
Recently, one of our registry business units was languishing. After evaluating cash-flow projections and expectations for future sales, I made the unpopular and difficult decision to materially change prices, essentially altering the business model on some products, making them more exclusive but lower-volume. In the process, I ensured the unit’s future success by pivoting.
Many on the sidelines may boo and throw rocks, but the numbers tell a different story. Some of the hardest decisions in business are those that everyone doubts, but you know in your gut that you are right. Don’t listen to the Monday morning quarterbacks who could never do what you do.
There are those who make it happen, those who watch it happen and those who wonder what happened. Follow your heart with passion and courage—and you can find success.
Source: American Express Open Forum Blog