Know the WHOLE business.
“Your pizza is so good, you should start a restaurant!” Bob’s friend tell him. After thinking about it for awhile and discussing with his wife, Bob realizes that he has enough in his savings and retirement plan that he really could do this. Besides it would be a great transition away from the job he’s been doing for 20 years. Finally, something different!
I’ve heard this story so many times and while certain aspects change a little here and there, the one universal truth is this:
Bob is about to go on the most horrifying roller coaster ride ever. He is going to drain his finances and have to pick up 2 part time jobs by the time this whole thing is over.
Because making a good pizza is about one tenth of what you need to understand to run that business. You need to understand front of house, back of house, inventory management, pricing and promotion, and crisis management: what to do when it snows and NO ONE is coming out, the only thing that’s going out in that weather is your produce into the dumpster.
I’ve heard this story so many times because 9 out of 10 business’ don’t survive. Going into this business Kenny, Philip and I were all very aware of this and it is with a sigh of relief that we are still here to tell our 20 Lessons from Month 12.
#2 IT’$ NOT ABOUT THE MONEY
If you’re in business for the money you’re going to be totally hosed. Money is not enough. It isn’t going to be there for you when you’ve put in 80 hours already and just found out that you need to put in another 20 to get the books done. It won’t be enough when you have to look a friend in the eye and explain that they’re not a good fit for the business. It is not going to be enough when you need to decide between doing what’s right for the business and your family. You will die a million deaths before you realize that you don’t have the energy to keep it going.
You had better LOVE what you’re gonna do, because it’s going to consume your life. But if you’re driven by passion, purpose, or just blind drive to change the way things are done, you too can work 18 hour days jacked on coffee, survive the panic attacks, deal with the insomnia, and drink yourself to sleep.
For Lion + Panda we created a business model where we enable freelancers, contractors and partner agencies to work from any location in the world. We create customized teams for our clients to ensure that we do kick ass work. We aren’t just in the marketing business, we are in the business of marketing our model. We want to show business that you can enable people to work remotely, have a work/life balance, and still produce great work. Changing the world…well, at least the business world, is no small feat, but it’s there as a reminder when we need it.
#3 Define your market
You aren’t going to be all things to everyone and “we market to women” is bullshit. You aren’t going to target women 18 to dead. Define a real niche that you can actually market to and go after it. Find out who your heavy users are. Are you talking to moms? Are you talking to tech savy moms or moms who prefer to stay at home and bake? Is she college educated? Does she like to play tennis or would she rather be running the board meeting?
These are different women. And not one product on the market speaks to all women or all men.
Our business set out to work with clients with potential. It doesn’t matter if they are large or small, we are in constant pursuit of clients who want to grow aggressively.
WHAT’S WINNING? WHERE AM I GOING TO PLAY TO WIN? HOW AM I GOING TO WIN WHERE I PLAY? WHERE ARE MY CORE COMPETENCIES THAT WILL ENABLE ME TO WIN WHERE I PLAY? WHAT SYSTEMS + MEASURES ARE GOING TO HELP ME EXECUTE MY STRATEGIES? + A.G. LAFLEY, CEO, P&G
#4 Don’t go it alone
Find business partners early on. Determine how your business will help them to succeed and don’t worry about if they will reciprocate.
Early on we looked into solo consultants. We knew that we could play well as a partner for them. They already had relationships with their clients and we could provide them with the team to handle the work, while also providing them suggestions for additional marketing services that they hadn’t been comfortable selling before. As they brought us to the table they brought credibility to our start up.
As we’ve moved forward we’ve been incredibly fortunate to continue to build out our relationships and while some haven’t worked out for everyone involved, because we traveled down that path, we met the team at Ertel Publications. Benjamin Smith and Alex Culpepper have gone from strategic partnership to great friends. Everyone of us looks for new business opportunities to help grow each other and their teams. It’s not something that you see often in business today, but we were very blessed to see the mutually beneficial potential.
#5 Money isn’t power. Networks are power.
Build your network. Go to chamber events, go to business after hours, drink at the right bars, but don’t ever be “that guy”. The guy who is at all the right events, but treats it like a Turkish bazaar. Don’t run around trying to sell everyone in the room. Ask them what they do and try to find connections in your network to help them. That builds better relationships than making a quick sale.
#6 Set your marketing budget.
How much are you going to spend on marketing? With so many options for marketing your business on traditional platforms like TV, Radio, and Print to newer technology: web site design, social media, Google AdWords, SEO….how much are you going to put back?
The standard rule is 5% to maintain market position, 10% for growth, and 15% for aggressive growth. That number comes off of REVENUE. Not profit. Don’t be greedy, you need to do marketing to grow. Set up the checking account and put the money in there. If it doesn’t happen on day 1 that’s fine, but if you’re on day 90 and haven’t started investing in marketing, you’re probably screwed.
#7 Don’t row the boat
This is the number 1 mistake of small business owners. Every time there is an issue, they stop steering and go down to help row the boat. DON’T! If you’re rowing than no one is steering. Do you have any idea what happens to a ship when no one is steering? As your company grows, you need to turn over your responsibilities of steering the ship. You need to go below deck and start to plot the course.
If you’re not good at something…don’t do it. Get some help. It’s easy to stand here and tell you that you need to hire the right people, but when you’re first getting off the ground the idea of hiring is very intimidating. You know you suck at book keeping, but you can’t hire someone to do that, you just can’t afford to.
Stop take a deep breath
What we are recommending is using services that are available on a per hour basis. There are hundreds of virtual assistants available on the web who can knock out your book keeping in 6 hours a month, instead of you wasting 20 hours. And that’s 20 hours that you can apply to growth.
#8 Pareto Principal
It’s more commonly known as the 80/20 rule. And in business it’s been used as often as that crap about being able to cluster all the world’s people into two groups.
I’m bringing it up here for this simple illustration: 20% of your clients will take up 80% of your time. It’s actually more like 100% of your time and then you’ll work later hours to make up the 20% of time you needed to take care of your good clients.
FIRE BAD CLIENTS! Do it fast and move on.
#9 Get a board
Before launching your business have your advisory board established. This should be comprised of people that are not actively engaged in the business, but that have your interests and more importantly, the business’ interests at heart.
This is actually the same advice you can get at Aileron, Clay Mathile’s business development center. The first thing that they will set you up with is a power board of successful entrepreneurs to help you avoid some of the same headaches they have had. As a start up you can usually pull this together from friends of friends.
#10 Be ready to burn the business plan
If you can predict what your business is going to be doing in the next 5 years, you aren’t dreaming big enough.
We had plans that we anticipated that we were going to do. We had anticipated results that we expected to see in the first year….
And then we started getting calls from organizations bigger than we predicted that we would work with after 3 years. It was a really good feeling.
ENTREPRENEURIAL BUSINESS FAVOURS THE OPEN MIND. IT FAVOURS PEOPLE WHOSE OPTIMISM DRIVES THEM TO PREPARE FOR MANY POSSIBLE FUTURES, PRETTY MUCH PURELY FOR THE JOY OF DOING SO. +RICHARD BRANSON, CEO, VIRGIN
#11 There’s no such thing as business as usual
If you look at what happened in 2008 with the recession and translate that into science terms: this was not a physical change, this was a chemical change. It wasn’t water into ice. It was water into iron.
Those days are not coming back. The middle class has been destroyed and the market will remain volatile. So since there is no longer a standard for business as usual environment, what is there? There’s just the next one. Be ready to change at a moments notice and realign your model when you’ve taken too many body jabs…because otherwise you will get knocked out.
#12 Emotionless decision making
This is one of the hardest things to do in life. The problem with emotionless decision making is that every decision you’ve made up until this point was an emotional response. Changing that habit is incredibly hard. You have to learn to take yourself out of situation, stand at a high level and make the decision based upon what is best for the business.
12 months into this and I can tell you that sometimes that takes a toll on your personal relationships.
YOUR WORK IS GOING TO FILL A LARGE PART OF YOUR LIFE AND THE ONLY WAY TO BE TRULY SATISFIED IS TO DO WHAT YOU BELIEVE IS GREAT WORK. AND THE ONLY WAY TO DO GREAT WORK IS TO LOVE WHAT YOU DO. +STEVE JOBS, CEO, APPLE
#13 Right Size
Decide early on what the goal is. Do you want to make enough money to take money off the table? Do you want to have 3 employees or 30? Do you want to have 30 locations worldwide? How much of your personal life are you willing to give up to make this happen?
#14 Earnings report = autopsy report
The earnings report shows what you’ve done, but projections are the lifeblood of a business. You need to know where you’re going. Where is the ship sailing?
#15 You aren’t the business
You need to think of the business as another person and separate that in your mind. If you’re spending money for your business than the business owes you that money back. Don’t think that spending your money is okay. It is okay to invest in your company, but expect a return on those dollars.
#16 Hard decisions are always hard
It never gets easier to fire people. It’s never easy to fire people who are your friends. It’s not easy to tell your friend that they aren’t good enough or fast enough. And it never gets easier. You just get better at dealing with it.
#17 Make money while you sleep
This is really the key to wealth. Our business model currently suffers from this, but we are aware of it. We brainstorm on supplementary ways to make residual income to break from from the promise of working until we die.
#18 Let good people do good work
Do not get in the way of talent. Do no micro-manage. Give them the tools they need and let them have a go at it.
#19 Read every damn day
Be a perpetual student of your business and your customer’s. To stop learning is arrogant and so easy. There is always more to learn, which I read as often as possible. Just as your body needs exercise, so does your mind.
#20 Always keep a bottle of bourbon on hand
It’s not easy. It gets easier over time, but there are going to be arguments. Every marriage counselor will tell you not to go to bed angry. Philip and I were both well aware that many of our business competencies compliment one anothers, but we also knew that our type A personalities would always be something we had to monitor. We heard that you’re not supposed to do business with your friends, but we felt that with open and honest conversations we could make this work. Integrating Kenny in as a partner into the team certainly helped, but I still smile when I think of the early days when we would open a bottle and take a shot until we both came to a resolve.
TIMING, PERSEVERANCE, AND TEN YEARS OF TRYING WILL EVENTUALLY MAKE YOU LOOK LIKE AN OVERNIGHT SUCCESS. +BIZ STONE, CO-FOUNDER, TWITTER
So there you have it. The good, the bad, and the ugly of how we survived the first 12 months. I honestly hope that if you’ve made it this far that this will somehow help your business grow. One thing that didn’t make the list, but was critical to our success was that my partners in this business are two of the smartest and most passionate people I know. They have let me take some chances when I saw opportunity and have pulled me back when I tried to run too fast. Without Philip and Kenny this business likely wouldn’t have made it into the 10% that survive.
Thank you both, very much for taking this strange trip with me over the last year.