5 Tips to Success in Business – Part 2

Lesson #3: Long-term Planning

The last lesson touched on this, but it’s important enough to reiterate. Taking the time to put together a long-term strategy is vital to your success in business. This means before you do anything else in your company, you come up with a plan, beginning with a reason for existence. Figure out your values; having these in place will end up shaping how others will perceive your business. Finally, lay out long-term goals and strategy. For us, this was to go high-end and focus on organic growth rather than a skimming approach (while our competition focused on grabbing as much territory as possible, we focused on penetrating the markets we were already in). Once these are in place, stick to it. One of our competitors, when reflecting on their business decisions, noted that they had initially developed a strategy which they had failed to follow. They experimented with different things, and doing so killed them.

Lesson #4: Focus

A Marketing 101 lesson (from freshman year Intro to Marketing professor Dr. Powell) is to stay focused; if you try to get too fat too fast, you’ll fail. We knew this, but failed to take it into account. Our initial product offering was diverse, and the consequence was, well, no sales. We corrected this and remained focused on our core strategies (back to the long-term planning), allowing us to do significantly better than our competition financially.

But at the same time, we were also able to recognize opportunity. While focusing on our core strategy, we realized that the only way to catch up to our competition (who were significantly ahead of us in market share at the time) was to slow them down. Therefore, we launched a new product in their primary product category (our primary product was in a different market than their’s), which succeeded in stealing market share and slowing them down (even better than anticipated). The quarter we launched this new product was the quarter everything changed and our growth skyrocketed (note here that this radical turn-around was a combination of the new product launch as well as having remained focused through quarter after quarter of struggle to get the right systems in place).

Lesson #5: Cash is King

Cash! The lifeblood of every business. I mentioned previously our struggle with cash flow. We had practiced careful cash management since the beginning, and it paid off. But the lesson we really learned came through reflecting on the actions of one of our competitors. This team came out badly at the end of three years of business. They ended up negative, thus losing their own investment as well as that of their investors. Part of the reason, as previously mentioned, was not sticking to their plan. But the biggest cause of failure was only taking the cash they needed when offered money by investors. They were offered $5 million (the maximum any team could get), but turned it down because they felt they only needed half that amount. The result: they burned through the cash and spent the rest of the simulation desperately trying to keep the business alive, rather than being able to focus on product improvement or stronger marketing campaigns. Only accepting the cash they needed sucked the life out of their company, which had, by the way, started out the strongest out of all the teams. The moral of the story is that you will always need more cash than you expect, and it is better to seek cash when you are in a position of strength than when you actually need the money.

In our business, these lessons enabled us to bring in an overall return on investment of 422%, crushing our competitors. Implement them, and you’ll be set for success.