After posting our “Happy 20th Birthday Whitecap” blog to celebrate our momentous milestone, I’ve had many people ask me about my experience building a 20-year business and some of the lessons I’ve learned along the way.
So here it is: my reflection on key lessons learned and my experience of starting a new business from scratch so many years ago.
1. Tune out the naysayers
There is perhaps nothing more important when you’re starting a new business than a total belief in yourself and your ability to find a way to make it happen. There will be a lot of people around you who think you’re crazy for taking the risks, and even more who will think you will fail (and perhaps even secretly hope you will). It’s your relentless tenacity, and perhaps stubbornness, that’s essential to your survival and the survival of your business.
2. Choose your business partners wisely
This may be even more important than my first point and I cannot emphasize this point enough. Be very, very careful who you choose to go into business with. Make sure you know these people really well and in particular you need to understand what makes them tick, their core values and how they align with yours. Are they honest people? Do they have exceptional integrity? Are they ethical? What is their comfort level with risk? What are their goals for starting this business and what are their key motivations – money, power, independence, happiness, challenge, etc. etc. etc.
3. Take time to document
There’s a perception that small businesses fly by the seat of their pants with little written down to formalize responsibilities and processes, but if you’re going to succeed over the long term, you need to have clearly defined, documented and articulated roles for you and those around you. It will help minimize arguments, frustration and misunderstanding about who was supposed to do what. It will also provide a strong foundation for growth. It’s hard to know where you need more help if you haven’t articulated who does what, as well as how and what needs to be done, and how you want to do it.
4. Hire people smarter than you
There is an old adage that you should hire people and surround yourself with people that are better and smarter than yourself. That’s because it’s absolutely true! To build a successful company, you need people whose experience or skills complement yours, and then empower them to act as much as possible, independently in areas where they have more knowledge and experience than yourself.
5. Never underestimate the importance of sales
You can have fantastic ideas and a wonderful product, but you’ll ultimately fail if you spend too much time focusing on “other things” and not that next sale. That famous line from the 1989 movie Field of Dreams “If you build it they will come”, does not apply when starting your own business. Sales are everything – and shouldn’t be back-burnered even if you’re busy. It can be tempting to turn all our attention to things that are easier, perhaps more interesting, fun and contribute to building a better product or service. There have been times when I’ve found myself looking up after an intense couple of weeks doing “other things” only to realize we haven’t kept building the “sales funnel” and thus have very few new sales prospects. Sales are the lifeblood of every organization, so you need to make sales a top priority and keep filling the pipeline to keep a steady flow.
6. Work your network relentlessly
You’re in business for yourself, not by yourself! Reach out to your network (and your network’s network) and find ways to stay in touch over the long term. The people you know can help to assist you in building all aspects of your new business and especially by helping to identify early sales opportunities. It’s equally important to stay in touch with your extended network even when you’re established.
7. Show me the money
I’d love to tell you that you can start a business with little or no money but that’s just not the case. It takes a significant amount of “startup capital” to build a business … way more than you ever anticipate! Here’s what people often don’t realize even once you get off the ground. Unexpected expenses, capital upgrades, adding staff to meet future demands or securing more space could require a further investment.
Even after you’ve reached a point in your business where you are selling your goods or services, there will be times when you need access to credit to supplement your cash flow if customers are slow paying. There will be times when they fail to pay you by the due date. A line of credit helps keep the bills paid, the lights on and salaries covered while you collect.
So many businesses don’t make it because they are severely under-capitalized, and they simply run out of time.
8. Be ready to take risks
There will be many crossroads throughout your entrepreneurial journey where you will need to assume some risk. You can’t build a successful business without taking risks, and these risks can come from many different places like entering a new market or launching a new product. There are also financial risks (and I’m not only talking about risking the capital you needed to get started) where you will be asked to put personal assets on the line. I had to put my house on the line as collateral to gain access to a bank line of credit in the early days of Whitecap, because despite what you might hear in ad campaigns, unlike you, banks aren’t risk takers. They aren’t keen to extend credit to new businesses, and they require personal guarantees to get you access to the funds you need.
Of course once you’re well-established, proven and growing successfully, the banks all of a sudden become your best friends. They’re more than happy to provide capital to you, even unsecured loans.
9. Take care of your very best key people
Sharing a portion of the company’s equity with very key people in your company, while maintaining a majority position, can be a very smart thing to do. As co-owners of your company, these key people are more highly committed to the long-term success of the company. But don’t just toss around equity as a benefit, even in the beginning when the company has little value on paper. You need to be absolutely sure of the people you bring in as shareholders because they will have a say in the company going forward.
10. Make it legal
Whether you’re drawing up contracts, employee agreements or bringing in new equity partners, getting all your legal documents vetted by a professional protects everyone’s interests. While we’d all like to believe nothing bad will happen, by setting out the terms during the honeymoon phase when everyone’s happy will protect your business, your staff and yourself from issues that could arise in the future. A shareholder agreement is a must when bringing on any new equity partner.
11. Pay attention to corporate culture
When you find outstanding people to work in your company, make sure you do everything you possibly can to keep them. Yes, this means paying them fairly, but salary is just one piece of the compensation puzzle since there will always be someone willing to pay more. Your culture, your environment and all the other, sometimes less tangible, benefits can make the difference between keeping and losing great people. Invest, and continually re-invest, in building your corporate culture to become a key differentiator of your company.
12. Everyone is replaceable
For me, this is one of the hardest lessons and I’ve talked before about how upsetting I find it to lose people. I go over and over the interactions in my head to see if there was anything we could have done better or differently. This is a great way to learn and avoid making the same mistakes over and over again, but, as hard as it can be to lose one of your best people, life does, and must, go on. Make it your business to find someone even better.
13. Keep pace with your market and industry
Technology is constantly and rapidly evolving, and we’re in the technology business. So in some ways, we have a front row seat to the advancements coming down the pipe. To stay relevant and provide our customers with the very best advice and direction, it is imperative that we stay current with the ever-changing technology environment. We must know what’s happening in the market while watching the fringes for what could transform the way business operates. It takes investment, both time and money, but I see it as essential to future success.
14. Keep balance and perspective in your life
Building a new business is fun, exciting, and highly rewarding. But owning and running a business can become all-consuming if you allow it. No business is worth sacrificing your health, or the relationships with people you love. I think there is a misconception out there that in order to make it as an entrepreneur you must be prepared to work 60 – 80 hours a week for several years – pay your dues so to speak. Simply not true! I would suggest that maintaining good balance in your life is far more important than the hours you log on your venture. Personally I never work more than 40 hours a week, even in the early days of Whitecap. My health and my family are my top priorities in life and I make certain I have lots of time for these top priorities each week.