Articles
Learn the super tips
and pitfalls to breaking the $1 million barrier with a new
business launch.
Superlaunching
through the $1 million barrier when creating a new business,
means you’re taking your idea, your product, your dream to
the next level, superfast
– and often – super smart. For many entrepreneurs, this is what
it’s all about. Superlaunching requires time, investment and making all
the right moves.
Joan Lyman, cofounder
and partner of the Lyman Management Group of
Atlanta
, works with entrepreneurs, executives, board members and investors
to provide strategic and financial advisory services to early-
and growth-stage companies. She says that superlaunching takes
entrepreneurs who are able to combine vision with execution.
When Joan evaluates an
entrepreneur’s
ability to superlaunch, she asks three key questions:
- Does
your background or industry experience qualify you to recognize
a winning idea?
- Who
is going to buy the product? This question is more important
that who is going to fund your idea or invest.
- Is
your family or support system 100 percent behind you?
“You’d be surprised how many entrepreneurs are
out there and they don’t get the support of their wives,
their partners, their children,” Joan says. “No
one’s going to let them take [money] out of their bank
account. No one’s going to give them the
time to work on the idea.”
Managing the Bird in the Hand
For entrepreneurs
who are already running a company while in the process of superlaunching,
there are additional obstacles. Tony Mines, CEO and cofounder
of Catch Media, says his company has learned that raising money
is a full-time job.
On
top of selling Catch Media to prospects and taking care of
existing customers, Tony’s staff also spends time talking to potential
investors and providing them with needed information. Mines
has decided to manage the process by incorporating it into
the company’s weekly and monthly planning and strategy,
rather than allowing it to become a stumbling block.
“That whole
balancing act has been a challenge for us, but it’s
been a good challenge,” Tony says.
“Everything that we’re going through, all the information that
we’re providing for investors, directly feeds back to our plans. So we
look at it in terms of a planning exercise. But it does get a little distracting,
and we’ve got to walk that tightrope, in terms of making sure that we’re
able to execute for our customers, as well as execute for potential investors.”
By
having existing customers, Tony is also able to have built
in market research. Catch Media has been going to its customers
to really figure out which of the company’s many offerings do customers
value most. With that information Tony has been compressing
Catch Media’s services into a stronger offering for
when it superlaunches.
Systems for Success
To ensure
that a launching company doesn't waste its initial investment
and exhaust its funds, Joan suggests three must-haves for a
superlaunch. The first is accountability. The launching company
must be held accountable by investors and its own managers.
Joan says she can tell that a company is on the right track
when they have a project manager accountable
only to the CEO, who ensures that everyone
is delivering to the timelines.
“You can’t
do that soon enough, because when you don’t miss milestones,
you have a superlaunch,” Joan says.
Secondly,
Joan recommends that companies incorporate sales methodologies
that everyone is required to follow. With a sales methodology
companies can hire salespeople, not because they came from
a particular company, but because they are able to work within
the chosen methodology. Otherwise, says Joan, an entrepreneur
may realize too late that
“I’ve got the United Nations here. They’re all speaking their
own languages, and they’re all convinced that they’re right and
yet I have no sales.”
The third key ingredient
is an effective human resources manager. This person should
have a thorough understanding of employees and the hiring
process so that the team is built upon a solid foundation.
“We had one
great gentleman who knew how to interview people and say, ‘You’d
like this job’ or ‘You won’t like it,’” says
Joan. “You do that so you don’t have the United
Nations. You know someone has hired them. They know what
to expect.”
Recruiting the Dream Team
Who is
the most important hire when superlaunching? Joan tells entrepreneurs
to look to their weaknesses. A great salesperson who lacks
skill at handling the financial details should immediately
take out an advertisement for a strong CFO.
“I find that
the most critical people to bring on the team immediately
[are those who] counterbalance yourself,” she says. “Always
bring them on first, so you have an absolute balance.”
That balance can
even be found in funders. Tony says that Catch Media will
consider their investors as members of their team, active
and involved in helping the company reach its goals.
“Obviously
money is important, but even more important is finding those
partners that can bring their connections to the table,” Tony
says. “[We want partners] that can bring industry expertise,
that can bring management expertise because we know that
we’re going to need some assistance to help us get
to that next level.”
Tony has also been
putting together a core competent team of people who can
wear many hats, saving staff costs.
“Obviously we don’t want our CFO
out shooting video or doing podcasts,” he says. “But
from a production standpoint, from a marketing standpoint,
and from a client services standpoint, everybody in the organization
understands that everybody needs to be able to do someone else’s
job.”
Some
hires can be put off, and should be put off until there is “proof
of execution,” according to Joan. Support staff such
as marketing communication or sales support can wait.
“The only
thing that matters when you’re starting a company for
the first hundred days is paying customers,” she says. “That’s
all you have to worry about.”
Avoiding Errors
Joan
believes that there are four common mistakes entrepreneurs
make during the process of superlaunching. The first mistake
entrepreneurs make is hiring people who think like they do.
“The reason
why that’s a mistake is that you don’t know why
you think the way you do. You just think the way you do,” Joan
says. “And just because people are sitting there smiling
and nodding in agreement doesn’t mean they’re
qualified to do what you do.”
The second mistake
entrepreneurs commonly make is hiring friends.
“When you
hire your friends, your friends and you have never had a
bad day,” she says. “When you’ve had a
bad day, I promise you it was never over money. When you
build a business, it’s all over money.”
The third mistake
is taking the attitude that running the business gets easier
once you have adequate investment money Raising money has
its benefits, but it also has its strings.
“When you
take funding, you’ve guaranteed the hardest job you’ll
ever take on, which is managing investors,”
she explains.
The fourth mistake
is inattention to corporate governance.
“So
many companies get started, and they have no idea that the
state of
Georgia
expects them to pay taxes, and to register their company,
and to hold the shareholder meeting that they say their going
to hold if it’s in the articles of incorporation,” Joan
says.
Superlaunching
a business is about more than a great idea and a desire to
make it big. Achieving success requires vision, coupled with
execution. Sharp focus, smart decisions and endurance bring
the goal in sight and allow the entrepreneur to become the
$1 million man or woman.
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