Tips for a Start-up

Dan Pink turned me on to this post by a guy named Jason and this one by Mark Cuban (at least I’ve heard of him) with tips for start-ups. I was mildly distressed by the focus on tech and software companies. What about an old school company that makes stuff out of atoms not bits? Not that some of their ideas don’t apply but here’s some that they missed.

1. Technology is a tool – a great one – but only a means to an end. If you don’t know what the end is you’ll waste a lot of time and money on useless technology.
2. Likewise computerizing a process only makes sense if the process is a good one. Otherwise you’ll just be more efficient at your ineffectiveness. Think about processes apart from technology and people. Then adapt them to the people you have and their special mix of strengths and weaknesses. Then adapt technology to fit your processes and your people. Sometimes the best technology is the lowest tech ones, but don’t use that as a cop-out to let technophopes avoid improvement. Sometimes the best technology is high tech.
3. Management’s job is to create an environment where people can do their best work. That means providing them with all the resources, instruction and time they require. It also means good processes. As Daniel T. Jones Chairman of The Lean Enterprise Academy said: “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.”
4. Your employees are not mind readers, nor do they think like entrepreneurs. If they did they wouldn’t be working for you. If they don’t do what you know should be obvious, it probably isn’t. Spell out your expectations in much greater detail than you think should be needed and repeat yourself much more often than you’re comfortable with.
5. Track the right data. If you have any kind of production facility you need to track error rates, productivity and the like. If you spend money you have to track costs. If you make decisions you have to track why you made them and how they turned out or you’ll never get better at making them. The saying is Practice Makes Perfect. not Doing Makes Perfect. The difference between practice and doing is evaluation against a standard. That means tracking data to evaluate so you can improve.
6. Use a sales funnel. This is a sub-set of what to track but sales data is so important I wanted to give it it’s own tip. You have to define your sales funnel – and keep refining it till you get it right. Then relentlessly track every sales activity to learn what works and what doesn’t. The biggest waste of money in most start ups is cost of sales. You’ll never get that under control if you don’t track your sales effort well. Not every sale is a good sale – often the margins are too low or the cost of selling too high. There are patterns you can learn but only if you track and evaluate. From the start. After a month of selling you’ll have enough data to gain some insights. After 6 months you’ll have a lot.
7. You can’t buy buzz. I agree with what Jason and Mark said about not buying swag or PR. Likewise with sponsorships at conferences and lunches at events. Nobody cares who pays for that. And getting your “name out there” is worthless. You want sales in the door, not your name out there. If you get buzz, great but lots of money has been made without buzz.
8. Cross train everyone. Every person should know how to do at least one job besides their own and every job needs to have at least one person trained who doesn’t normally work that job. Even you. In some cases there might not be one person who could do it all, but every aspect of every job needs a backup.
9. Your financials can tell you a lot – but not the way most people use them. You have to figure out what you want to know and have someone who speaks accounting as their first language set things up so transactions are booked properly and reports are relevant.
10. Have a dash board. You should have between 5 and 15 numbers you track in real time. Some on a daily basis, some weekly. But all in real time.
11. Be sure you don’t measure the wrong things and remember some important things are non-quantifiable. People tend to game whatever system you set up to measure so it helps to measure contradictory metrics. For example, if you just measure speed of output, quality can suffer. If you just measure quality, productivity can suffer. So measure both.
12. Learn how to have good meetings. Meetings get a bad rap because they’re done so poorly. Good meetings actually save time, and mistakes, and wasted effort.
13. Focus. That means learn to say no. To yourself and your wonderful ideas. Keep a list of someday projects and do them then. Someday is not on the calendar for a reason. It’s better to do 3 things a quarter and get them done (that’s 12 a year) than be working on 30 all the time and a year later be working on the same 30.
14. Celebrate failures and mistakes. But only the first time. If nobody makes mistakes, then you’re not taking risks or accomplishing much. Mistakes are great when you learn from them. Problems are great when you prevent them (not just solve them). You’ll know you’re doing this right if the company keeps making different mistakes and has different problems. If it’s SSDD (same shit different day) then you’re doing it wrong.
15. Capture everybody’s wisdom. Build a policy and procedure manual on the fly. Keep the master copy on a network where everyone can read it. When they have a question, don’t answer it – have them look it up in the manual. If the answer’s not there, put it there. It should always be a work in progress.
16. Don’t have rules or policies you don’t enforce. Which means don’t have stupid rules and don’t have too many to remember. The ones you have should be dictated by law or the customer’s needs. Nothing else.
17. Under Promise and Over deliver. To your customers (duh!) but also to your suppliers, your employees and your family.