We see too many entrepreneurs falling in love with their products and kidding themselves into believing that their idea itself is all they need to make them a screaming success. Warehouses are filled with great commercial products that never got to store shelves. Founders of promising start-ups wind up working for their investors, or worse, close their doors. All hopes are dashed and they are back living with mom. Why? Because they failed to master the three core competencies of any successful business.
- Cash Flow Management. You’ve got to pay your bills! And when you can’t? You have obvious two choices. Go out of business, or raise more capital. But that comes with a price; diluted stock or loss of control. So many companies try to get financing to pay for staff without sales. They may be financed and even refinanced before they make enough sales to support their overhead. In other words, they are top heavy and reliant on multiple rounds of new investment to stay afloat. One different solution is to make sales a priority, sell in a small territory, service the heck out of it, and use the proceeds to finance growth. Another solution is to identify and forge strategic alliances with your vendors and your buyers. Vendors who trust you will extend your credit and terms to help you make ends meet, especially when they believe their business will grow if you succeed. Buyers will pay in cash for volume discounts which also help you pay the bills.
- Personnel Management. You’ve got to get some help! And it ain’t easy! Probably the most important skill successful entrepreneurs have learned in their years of experience is how to hire the right people. But even if you hire well, you still have to train, incentivize, and encourage your people to do their best. It’s a tall order, but absolutely necessary. Just discovering and implementing a productive compensation system can take years of trial and error. We suggest you start with bonuses for sales, growth, and profitability. Get everybody to agree on exactly what the metrics are and how their jobs can contribute. Then offer a quarterly bonus to everyone, regardless of their job, to put them all on the same team. This builds a positive company culture.
- Distribution Management. You’ve got to get your product to market! This requires satisfying several levels of distribution before it gets to your ultimate customer. This is perhaps the most important skill set new product producers overlook. They tend to focus on production and think, if their product is good enough and priced right, it will sell. But you will run into distributers who want to know what the strategic advantage is of carrying your product. Their sales managers want to know how you will help them make their numbers. Their salespeople want to know what the incentive is. The retailer wants to know how fast it turns, and his clerk wants to know why he should stock it on the shelf. Nobody but your end-user customer cares about quality or price. Everyone has their own requirements and you’d better satisfy them or you simply won’t make it to market. Distribution is more important that your product because nobody can buy it if it isn’t there!
These 3 core competencies may vary from business to business, but they generally fall in to these basic proficiencies. Master them and your great idea will be much more likely to succeed.
Who Are We.
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse in 1986, to the board room of E&J Gallo, where they successfully sold their brand in 2005. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They offer their Guiding Principles for Success (GPS) to help entrepreneurs become successful and help corporations achieve entrepreneurial cultures to engage and empower their people.
Currently they travel the world keynoting at universities, corporations, conferences and symposiums. They are regular media guests and contributors to international publications and professional journals; along with being FOX News Radio Network’s Workplace Culture Experts. They are also the recipients of the 2014 Distinguished Entrepreneur Speaker Award from the Turner School of Entrepreneurship and Innovation at Bradley University. Visit their popular brand building site at www.thebrandauthority.net. To make inquiries for keynote speaking, trainings or consulting, please contact firstname.lastname@example.org.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders