2019 ARIZONA MICROCREDIT INITIATIVE

info@azmicrocredit.org  |   PO Box 25886, Tempe, AZ

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September 16, 2016

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The three keys to small business success

January 21, 2016

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Do 'big league' startup rules apply to small businesses?

February 10, 2016

I don't know about you, but I'm a HUGE Shark Tank fan!

 

Thanks to the success of ABC's TV show Shark Tank, "shark"/investor Mark Cuban is a household name. Cuban's extensive involvement with startups has earned him his reputation as a seasoned expert. 

 

I stumbled across this graphic the other day in an article Cuban wrote back in 2012, just as Shark Tank began to gain notoriety. Based on his experience, Cuban made a list of 12 rules for startups. 

 

Cuban works with large startup companies that are looking for equity financing, meaning they go on Shark Tank to offer an ownership percentage of their business in exchange for funding. Most of these businesses value themselves at more than $1 million, though some exaggerate their numbers and risk the sharks calling their bluff (which is always fun to watch). 

 

But for many small businesses, it can take YEARS to acheive a million dollar valuation. 

 

I wondered, do his rules still apply to the small business startups clients we work with at AMI?

 

 

The answer, for the most part, is yes! Here's my breakdown: 

 

 

Rule 1: Don't start a company unless it's an obsession and something you love

Small business verdict: Still true!

 

Getting a small business off the ground takes time, energy and a whole lot of effort. You gotta love what you do to make your business successful! 

 

Rule 2: If you have an exit strategy, it's not an obsession

Small business verdict: FALSE, keep the exit strategy.

 

Many small business owners invest personal savings to start their business. It's important to know at what point your business becomes an expensive hobby rather than profitable. Not every business succeeds, and that's ok! What's important is knowing when to stop pouring your own money into a sinking ship. Exit strategies are a healthy way to make sure your small business venture doesn't take you to bankruptcy court. 

 

Rule 3: Hire people who you think will love working there.

Small business verdict: True

 

Knowing when to take your business from one-person to multi-person is tricky. But when you do hire, hiring passionate employees will always help your business succeed. 

 

Rule 4: Sales cure all. 

Small business verdict: True

 

 Businesses exist to sell. More sales means more customers and a growing business!

 

Rule 5: Know your core competencies and focus on being great at them

Small business verdict:  VERY true

 

This idea is critical to the success of any business, and one that we focus on in AMI's Business Development Workshops with the section of the Business Model Canvas called value proposition. What makes your business unique and how can you deliver that promise to customers? By focusing on one or two great products or services for your business, you can invest the effort to make them exceptional. 

 

Rule 6: Lunch is a chance to get out of the office and talk

Small business verdict: Take the break. 

 

Entrepreneurship is a 24/7 job. That said, take time to get to know your employees or to just take a break. Taking the time now to prevent a burnout later will pay off.  

 

Rule 7: There is nothing private in startups

Small business verdict: True

 

Keep employee morale up by encouraging open communication and suggestions. An open door policy can also help hold you accountable for keeping your business records in order. 

 

Rule 8: As far as technology, go with what you know

Small business verdict: 100% true

 

Don't be intimidated by expensive technology. You can fully operate a business with QuickBooks, Microsoft Office and a website built through a web platform (i.e. WordPress, Wix, Weebly). Social media is also easy to learn and there are plenty of free tutorials online to help get you set up. 

 

Rule 9: Keep the organization flat

Small business verdict: Titles don't drive sales

 

A flat organization means that employees works together to make the business successful without a system of upper and middle management. Adding too many layers of management or creating unnecessary titles can hurt morale. 

 

Rule 10: Never buy swag

Small business verdict: Wait until your business is out of the startup phase

 

In the startup phase, don't waste money on anything that is not essential to the growth of your business. Buying t-shirts and pens is fun but it won't increase sales, even if you account for the "free" advertising. You're better off focusing your marketing efforts online through less expensive channels. 

 

Rule 11: Never hire a PR firm

Small business verdict: Outsource only when absolutely necessary

 

Again, remember to prioritize essential expense over nonessential expenses. Anybody can create a professional-looking website and run their own social media. Really! Marketing is essential to any business but you're better off running it yourself until your business is big enough to justify hiring an in-house marketing manager.    

 

Rule 12: Make the job fun for employees

Small business verdict: Have a good time!

 

A fun work environment doesn't mean you have to spend tons of money. Ask your employees what they would like to see to make work fun! Find milestones to celebrate the success of your business and recognize employees for their hard work and contributions. Just making a habit of saying "thank you" can go a long way.

 

 

 

Check out Mark Cuban's full article here:  http://www.entrepreneur.com/article/222524

 

 

Interested in seeing a business development workshop held near you? Email our Director of Business Development Jonathon Barkl at jonathon@azmicrocredit.org

 

 

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