All great achievements in business and life are built on a willingness to stick to first principles – what you know is right, even though many people around you will tell you to do otherwise. These principles represent the overarching strategies behind individual tactics of successful entrepreneurialism
1. Debt is like a disease – managing debt and repayments slowly eat you up, and burn up time. Avoid it in your enterprise at all costs, unless you can’t, in which case, take on amounts so large that it becomes someone else’s illness.
2. Prove your business before you take on equity partners– if at all. And proof means one happy customer who delivers an operating profit and is willing to recommend you to another potential customer. This simple foundation is the first base for any prospective entrepreneur.
3. Leverage a good idea with talent, but without building liabilities.This means that in the UK and Europe you must use freelance and contract talent and ensure you don’t accumulate long-term liabilities for redundancy, pensions or other entitlements.
4. Hire or contract with all talent on a local basis. Yes, they can work from home or in their own agency, but they must be within easy traveling distance of a single meeting point. This allows you to bring different people together with different talents to seek and find solutions to the inevitable problems that will crop up.
5. Talent is defined as anyone who can take your idea and make it better than you can. If you find you are giving a job or delegating the work to someone who does it worse than you would, then you have the wrong person. On the other hand, if you give the brief to someone else and the idea or implementation gets better, then you have talent. Do not compromise on this.
6. Never hire new staff to meet growth instead, you should have your team prepared and ready for action before you take on the additional business. Otherwise, you will hire in desperation – ‘anyone who can do the job’ – but you’ll fail to get the right people.
7. Business is not about jobs or ‘saving jobs’ – it’s about profit and then the talent you can engage with that profit.
8. In fact, business is not about profit, it is all about profit margin – as the profit margin is the true defense for any business which hits a difficult patch. No amount of cash reserve can save a business if the profit margin evaporates.
9. Learn to negotiate – and learn to negotiate win/win meaning, simply, that both you and your negotiating partner do well out of the deal. That way you will build long-term good will with all of the stakeholders (staff, suppliers, customers, and shareholders) and the relationship will develop new ideas and ways to earn a profit for all.
10. Look after yourself – without you, the business is nothing. So, preserve that most essential element – you.
11. If you don’t love your business, move on – if you have built a successful business but don’t enjoy it anymore, then move on, sell up, get out. As a demotivated leader your business isn’t going to last anyway, so sell it fast and find something new to do.
12. Grow your business smart – set a target of the annual revenue per employee or effective employee (regular freelancers count in proportion to their time) at, say, £100k per person and ensure that you constantly increase this as your gross revenue grows. This way, you’ll become a smarter and leaner core team. If you fail to do this, then the business risks becoming Big but Dumb.
13. Manage your managers. You need a mechanism to decide whether your managers are performing – which you will need once your business grows beyond a certain size. The best mechanism to use is the team member or staff appraisal method. Note, this appraisal should apply to all your team – freelance, contractors, agencies and full-time employees (if you have any). And your managers’ ability to spot weaknesses and act on them as a result of this ongoing appraisal process is the best mechanism for assessing your managers’ skill. So use it.
14. Avoid dangerous goals – don’t set a rigid target to sell your business for x million pounds or dollars within three years – it will only lead you to overwork a poor business idea and/or make bad decisions. Aim instead to build a great business that you love to work for and which has a sustainable cash flow and profit. That way, someone will come and buy your business for a large amount of money one day.
15. You must build a strong brand – all your ability to maintain price margin, and therefore profit margin, will come down to the strength of your brand – because anything you do can be copied, except your brand. I’ve put this last on the list, so you can put it at the top of your things to do.
source: 100 Rules for Entrepreneurs Real-life business lessons by Neil Lewis