If you managed to survive the entrepreneurial process from ideation to monetization and you were asked to boil it all down into core competencies, what would you say? How would you even begin?
We faced this exact challenge. Our employees, business associates and clients all kept saying that we should break our journey down into its essential parts and expand upon those parts. So, for a year we kept tossing around ideas, thinking about how we could get these concepts across to startups.
Focusing on why so many startups failed seemed to be a good place to start. Did they all have something in common? What were the areas that most of the “failures” failed to master? Surprisingly, they all lacked competency in one or more of 4 key areas. So, we decided to focus on those areas and prioritize them in The Barefoot Startup’s GPS (Guiding Principles for Success). Here’s a brief summary:
- Monetization Strategy. Crazy as it sounds, many startups never ask the fundamental question, “Why am I doing this anyway?” Is it a lifestyle? Is it a legacy? Or is it to monetize on brand equity? If you’re setting your course on an eventual acquisition, merger, or public offering, the steps you take at the beginning of your journey will be critical to your survival. They will determine your expansion plans and the steps you take to maximize your brand equity. This choice means that your goods or services must be scalable, and your business can run without you. It means that your files reflect your acquirer’s due diligence. And it also means that you know and establish the metrics and milestones you need to become an acquisition target or, as we say, “Get your peanut in front of the elephant!”
- Cash Flow Management. The goal here is to reduce your need for capital. Do you know how identify and utilize your “hidden” assets. Ideally, your buyer’s will pay you before you need to pay for your supplies and overhead, and this is possible. But for most of us, we need to juggle! And we need to spend every dime on the bills before we pay ourselves. This is why outsourcing, reducing overhead, and pay-as-you go are so critical. This is why income and cost projections are so essential. You need to establish revenue, even if its small, before you ask for investors’ money. Do you know how to establish strategic alliances with your suppliers and your buyers, to reduce your need for capital?
- Personnel Management. The goal is to reduce turnover, the #1 hidden cost of doing business, and to engage and empower your people. How you find good people and build great people are covered in our video. We believe it is essential to overkill on orientation from day one to demonstrate where the money really comes from, including all the hands, hoops and twists it has to go through to get to them. Paying for performance encourages better performance. Paying by the hour encourages longer hours, not necessarily resulting in productivity. Nurturing a culture of permission, encouraging innovation, and giving public acknowledgement for a job well done are absolutely vital to building a productive and supportive team. Sharing challenges with the entire staff on a know-the-need, rather than a need-to-know basis will unlock your personnel assets to solve problems on the fly.
- Distribution management. Do you know how to get your product or service to the market, and more importantly, keep it there? Distribution is everything from supply chain management to sales. Sales is not just to your end user, but to your own people, your B2B customer, their B2C customer and eventually to their (and your) end-user. Understanding and delivering what each person in the chain requires can make the difference between access to market and being shut out. Not understanding the true cost of sales is the biggest single reason for startup failure. Start small, make your mistakes in a small place, learn from them, and get your act together before you take your show on the road. Don’t scale fast to fail fast!
Are you interested? We know that these 4 core competencies, so often overlooked, are so important that we spend an entire hour on each one in our online video course, The Barefoot Startup’s GPS (Guiding Principles for Success). Check it out.
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 email@example.com.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders