Earlier this week, someone posted this article — $5 million in revenues, 3 years in business, 4 lessons learned: Tips from a successful startup CEO — to OProducers. Santiago Valenzuela quickly responded with the following really useful comments. (I’m reposting them with his permission.)
I really dislike super-generalized “tips” like that. I often find it’s either uselessly general (“Be flexible”) or simply not really useful (“It’s possible to succeed in a recession” — this isn’t news, as evidenced by this 4 year old article.)
I’m nowhere near as successful as that guy, but here’s what I’m learning in my office furniture business. Different observations are, obviously, quite welcome:
1. Focus on what’s important: profits.
Being a small biz guy, everything is held together by bubble gum and shoe string. It’s easy to get lost improving little things and not focusing on the big picture, which is the next action that will move a customer to a sale. For me, that means keeping my name out there on online sites like craigslist and responding promptly to sales calls and emails. For you it might mean something else, but if you’re rearranging chairs instead of doing that, stop. You can literally spend 24 hours a day improving your business, but you need to focus on what’s important — which is making profit, not looking pretty.
I suspect that the thing that is both most important and most likely to get set aside for make-work is sales. Unless you start with significant seed money, you’ll be a salesman, at least at first. If you suck at sales, grab a book (How to Win Friends and Influence People is a great place to start) and learn.
2. Keep your network up.
Approximately 25% of the work I get comes from referrals or returning customers. This is setting up cubicles for offices. It always, always, always requires at least one follow-up phone call. A lot more of your work can come from these, I would bet. Get cards, call people every so often and ask them how they are doing and if they have any additional needs or people they think you would be a good fit with. If you did a good job for them, they like you, and a real person saying “This guy is great” — that is golden advertising that you can’t easily get otherwise.
3. Keep in mind why people buy your product.
Often the pricing for your product is based on your perception of its value — which is based on things like the materials you purchase and the time you put into it. This is the wrong way to go about selling stuff. While it is pretty obvious, I’ve seen others do this too, at surprisingly high levels. Instead, focus on why the customer would want to buy what you’ve got. For me, I emphasize a quick turn-around time and a free consultation where I suggest ways to arrange cubicles/desks to minimize expenses while still covering their needs. To emphasize this, I am starting to experiment with a pricing scheme that’s based on a per-person basis rather than per workstation / cubicle.
I focus on sales-y stuff like that because I have found it’s really rare for people to suck at what their business does. Programmers generally program well, for example. But it’s very easy to try and stick to your core competency and not branch out to where you need to go to succeed, and are probably currently pretty weak. If I could do one thing differently it would be to have gotten on top of sales and networking and spent less time obsessing about my inventory and the pricing. The former is far less important than the latter; if you master the former, you can be much more flexible with the latter.
Anyway, I hope this is useful and actionable, which I think all management advice should be.
I have a strong tendency to fail on Point #1, probably mostly due to some fear of trying the unknown (and perhaps failing) plus some perfectionism. Basically, my brain says: “Oh, that looks big and hard, and you might fail! Let’s tinker with the little stuff instead! You need to get that just right!” I hate being in that mode, but I find it hard to break out of absent some clear big goals to consume my attention. However, merely reminding myself to “stop rearranging the chairs” will be helpful, I know. That will force me to look at my bigger goals, and start working on them.
Where do you struggle?