How to start a succesful business?

Since 2020, I have been actively involved in carefully planning, building the foundation and launching start-ups in a number of different fields, mostly in technology and healthcare. In addition, I have advised a number of entrepreneurs during their growth journey and have helped them sell the businesses at premium valuations. I often get asked the question how to launch a successful business. Undeniably, starting a business from scratch requires careful planning, meticulous execution, ongoing management as well as a tremendous amount of hard work and dedication. But what often seems like a daunting undertaking can be simplified by applying a number of core principles that are almost universal in nature, and more importantly, industry agnostic. A universal playbook of sorts, if you will.

1.?????????? Passion!

Your passion about your business idea, and the industry, will be a great catalyst for energy, creativity, innovation, and success. It will drive you to go the extra mile for your customers, your colleagues and your business. It will make you stand up when you fall. Passion is contagious, and it will fuel further determination and a can-do attitude in your team. Furthermore, that sustained passion will also push you to remain studious and stay informed about the trends and changes in your industry.

2.?????????? The right legal structure

It is advisable to consult a (tax) accountant to ensure you pick the right legal structure for your business. This choice can have massive ramifications on the tax implications for you personally as a business owner. In addition, it also will determine what your reporting requirements are, what paperwork you need to file, what your personal liability may be - and how to protect yourself against it - as well as further down the road, your ability to attract third-party equity investors.

3.?????????? Understand your target market

Identifying and understanding your target market is crucial. Who are your target customers? What is their gender balance? What is their average age? What is their average disposable income? What is the lifestyle they lead or aspire to? And finally, and most importantly, what requirements or problems are they looking to address or solve for? Often this information can (partially) be found in specialized databases. Another good source of information is the study of your competitors. Taking a detailed look at their website for instance can reveal a lot about how successful players in the space address their customers, in terms of content, products, services, store structure and pricing. I also recommend buying a product from them which will provide insight in their fulfilment, branding and packaging approach, as well as the product quality. If you still require additional information, you can work with focus groups, although that is often a more expensive option, and may represent a prohibitively large upfront sunk cost.

4.?????????? Develop a detailed business plan

·????? What will the purpose be of your business, otherwise stated, what is the reason your business should be in existence?

·????? What is its mission and vision?

·????? What is your unique selling proposition?

·????? Which products will you sell, or service will you offer?

·????? How much money do you need to invest to get your business up and running (and please err on the side of conservatism when going through this exercise)?

·????? When will you conservatively achieve a break-even point in terms of cash generation?

·????? What type of infrastructure (IT, capital equipment, office) do you need to invest in before you go live?

·????? What do you realistically want to achieve in the first 5 years in terms of revenue, profitability, cash-flow profile and balance sheet?

·????? What are the key initiatives the business needs to undertake and which milestones does it to meet in order to get you to your desired outcome in your 5-year strategic plan?

·????? Do you have the right people to help you achieve your goals?

The importance of a detailed business plan can hardly be overstated. While it requires a lot of work, the business plan is your tool to assess the viability of your business idea, as well your compass to get you to your desired destination. Despite your passion, it is paramount to be objective and conservative when putting together the business plan. Very often, new entrepreneurs underestimate the financial requirements of setting their business up for success.

5.?????????? Build the right foundation

Ensure that you have the right infrastructure to enable customer delight, as well as to have access to quick and accurate management reporting. The foundational work spans the spectrum from processes and procedures, IT infrastructure, brand bible, website, packaging design, capital investments, order fulfilment, relevant KPIs, and many more relevant facets related to your business aspirations. As a general rule of thumb, I advise to do as much of the foundational work upfront since logically it is a lot easier to start working from a good foundation than to have to retrofit afterwards.

6.?????????? Surround yourself with good people and advisors

Please always bear in mind that successful businesses are not being built by individuals, but by successful teams. Therefore, be very meticulous in selecting your team, make sure you share the same value system, and that you are complementary in skill set. Diversity is a very important asset when composing your team, in terms of gender, background, professional experience, as well as education.

7.?????????? Delight your customer

Businesses that set themselves aside from the rest always excel in providing best-in-class customer service backed by products or services that aim to have a slight angle of differentiation, even in a commoditized environment. They are able to put a special bow around their offering, often through a combination of excellent products, outstanding customer service, and less tangible differentiators, such as eye-catching packaging and superior branding.

8.?????????? Instill an inspiring corporate culture and related core behaviors

I have often written about this topic (please consult my book “Core Values”), but I am convinced that rallying around core behaviors of openness, fairness, respect, creativity, open mindedness and speed of execution will truly propel your business and provide you with a competitive edge. Alignment around these core behaviors will ensure a larger level of harmony and alignment around the strategic goals and how to achieve them. Let me also issue a word of caution: one of the most counter-productive situations to affect a company is the presence of a passive-aggressive colleague: somebody who nods during meetings, to then actively oppose the consensus decision outside of the room. It may sound harsh but there is only one remedy: you should remove the rotten apple.

9.?????????? Tightly manage your finances and your financial reporting

Please ensure that you have tight financial reporting, in line with US GAAP or IFRS, timely and accurate, from the very outset of your operations. Often founders believe they are doing a good job by looking at the top line, but they forget to take into consideration the cost of goods sold, the impact of price setting, the price tag of their marketing efforts, the ramifications of discounting, the working capital requirements, the cost of a customer service and returns, and thus overall, the cash-flow generation of the business. Often business that have clear intrinsic potential fold early in their growth journey because the investment requirements have been underestimated, or business decision have been made – often in the quest for growth – that hurt the viability of the business.

10.??????? Understand rules and regulations and operate in full compliance

Self-explanatory as it may be, never cut corners, always abide by the legal requirements, the rules and regulations that surround your industry and make certain that you have access to good compliance counsel, whom you should consult - and I know they are expensive - in case of any doubt about what you do or how you do is fully compliant. It is much better to be safe than sorry.

11.??????? Serve all your stakeholders well

Your stakeholders are vital of your success. These parties include, probably in this order of importance: your associates, your customers/clients, your shareholders, your banks, your suppliers, your service providers such as counsel and attorneys, and other parties that help define the success of your business. Respect and empathy go a long way, and in business are often reciprocated!

12.??????? Focus on lean and continuous improvement

So, now you have started a business and you are up and running. You are probably in the trenches, trying to do many things at the same point in time, all of them as well as you can. But since you are in the trenches, it is very well possible that you not see the battlefield anymore, the long road ahead. Hence, try to take some time to think strategically and challenge the status-quo. Always ask yourself what can you do better and more efficiently. Yes, start with the low hanging fruit but do not be afraid to also tackle what in your mind already is pretty good shape. Everything can be done better, even what you are already doing well. And once you have identified and implemented improvements, you need to recircle and look at your processes and procedures again to do exactly the same, time and time again. It is a never-ending task.

13.??????? Listen to your customers and colleagues

It is a great idea to take the pulse of your customers/clients and your colleagues alike. Voice of the Customer/Client (VOC) and of the employee (VOE) initiatives can be very enlightening and provide a different perspective on the things you think are working well in the company. There are multiple tools to assess both VOE and VOC but a simple NPS scoring will provide you with tons of insight in terms of how to improve your business.

14.??????? Be compassionate

Controversial to some, logical to others, it is my sincere belief that true leadership is rooted in compassion. Gone are the days of being a tough and unrelenting entrepreneur, behind us is the era of the know-it-all leader, despite examples we see from very successful, entrepreneurs who love to be in the public eye and don’t mind alienating half of their potential customer base, and 80% of their colleagues. Let’s jointly say goodbye to old-style, autocratic leadership and embrace the collective effort of your team and be grateful and empathetic to all stakeholders. You don’t have to be tough and hard to be successful: you simply have to be rooted in the right values and work very hard.

In conclusion, launching your own business requires a meticulous, multifaceted approach, a tremendous amount of hard work, an unwavering desire to be successful, a never-ending focus on continuous improvement, all whilst unwaveringly rooted in the right core values. Good luck on your wonderful journey towards success!

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