Building a business is hard.
It’s a never-ending challenge of balancing strategy, execution, people skills, product development, customer service, and opportunity cost. When you get all these things right, you have the opportunity to produce life-changing outcomes for your customers and clients, yourself, and your family. And when you get these things wrong, well, any stressed-out entrepreneur will tell you: emotions can range from mild frustration to complete and total demoralization.
However, regardless of how well your business is doing today, the future is always uncertain. Every day, there is room for improvement. And so the question becomes how you can continue to evolve—as a product or service, as a team, and as an entity—in a way that allows for long-term success.
1. Surround yourself with people who know more than you do.
As an angel investor, something I notice in many first-time entrepreneurs is a desire to hire people they can train or teach.
This is the wrong mentality.
You never want to be the smartest person in the room. Especially when your company is just getting off the ground. Instead, you want to hire people who know things you don’t. Who, in many ways, are the ones training you—who have been there before and already know which direction you need to move next. Now, this doesn’t mean you should hire people to give you the answer or tell you how to run your company. But it does mean “knowing what you don’t know,” and hiring people who can fill in your gaps.
Hire for your weaknesses, not your strengths.
2. Keep tabs on both the small details and the big picture.
As a founder, executive, or higher-level manager, it can be very easy to lose yourself in the details.
But part of what makes leaders so valuable is their ability to see both what needs to be done today as well as the larger context of how today’s actions will impact tomorrow. Leaders who over-rotate on the day-to-day minutia tend to lose sight of the bigger picture, and leaders who stay “up in the clouds” tend to lack the execution skills required to move the business forward.
Building a business of consequence is all about doing both simultaneously.
3. Objectively evaluate every aspect of the business.
It can be very easy to mistake “doing lots of things” with doing things that matter.
For example, we recently had to make a big decision within my company, Hydros. We were discussing whether or not to hire a certain type of salesperson, and after much debating, the conversation transformed into a larger questioning: “Do we even need this role?” And then, even further: “Do we need this line of business?”
Sometimes, operators, managers, and even executives get so caught up in making a decision that they fail to take the time to question the context of that decision. Is it necessary? Is it really going to move the business forward? What’s the “truth north” of the business and does this move the needle in achieving that goal? Or is this just more busy work?
4. Measure the opportunity cost of everything you do.
Too often, operators will make decisions in a vacuum.
- “How much does this cost?”
- “How much revenue will this generate?”
- “How long will this take?”
The problem, however, is that the answers to these questions change dramatically when you shift the context of the question. For example, something might seem expensive at face value—until you consider the costs you might incur if you don’t make the investment now. Or, something might seem more profitable now, but will end up costing the business more money over the long term.
Everything in business has an opportunity cost. So it’s important to consider both the cost of “the thing” in front of you, as well as the cost of not doing the thing at all (or too late).
5. Experiment before you invest.
This is something I have witnessed happen time and time again in many of the companies I invest in.
Startups will spend months or even years, and huge amounts of venture capital, building something they have zero data on whether customers actually want, need, or value. The result, of course, is a lot of hard work and money spent building something the customer ends up not really caring all that much about, and the startup needing to go back to the drawing board.
Always experiment before you invest.
So, gather data. Talk to customers. Make small decisions, test again, iterate, and then move forward. We now live in a world where data can be gathered from everywhere—social media provides customer data, as does a $25 Facebook or Google ad. It’s very easy to test ideas for almost nothing.
6. Once you find something that works, double down on only the things that matter.
Small businesses tend to remain “small businesses” because they spread themselves too thin. They try to chase too many different aspects of their business all at the same time, instead of over-executing on the one or two areas of the business that produce the lion’s share of the outcomes.
Said differently, this is The Pareto principle: “80% of the consequences come from 20% of the causes.” Only a few things drive the business. Figure out what those are, and focus on those relentlessly.