What do you bring to the table?
In my work as a business mentor, I am lucky to meet a lot of people who are desperate to be their own boss – but don’t know where to start. They are usually very hard-working, have some good ideas, but don’t know if they have what it takes to be successful.
That’s cool – it’s pretty scary to start a business. Many, many factors go into creating a successful business. They can seem endless.
First, you have tangible items. Finance, products, goods, premises, website. Then, there are the intangible items. Persistence, dedication, education, wisdom. The list goes on.
Both are important. It’s also true that many people measure their success – especially in running a small business – in non-financial ways. Many business owners tell me that it was things such as lifestyle, the freedom to be their own boss and flexibility that led them to start their own business.
The bottom line: unless the income is more than the outgo, you won’t be in business very long. Therefore, we need to boil all this down and secure the 3 critical success factors for business that you need.
I know, because I have learned the hard way.
3 Critical Success Factors for Business
It was back in 1999 right at the height of the dot-com boom. Even in Australia people got a little carried away.
I was working hard at my job as a financial planner – at this stage, I had zero equity in the business. One of our clients, Will, had come up with a great idea. He had a background in insurance and had listed an online insurance sales website business on the Australian Stock Exchange.
He’d issued a prospectus, raised some capital, come up with a fancy ‘dot.com’ in the title (this was virtually compulsory for a tech company in the early 2000s) and was sitting back watching the shares skyrocket. And skyrocket they did, along with everything else that had the word ‘tech’ in it and didn’t earn any revenue.
There was a huge buzz around their project and because Will was a client he made sure even little old me got into the initial public offering. I managed to scrape together the minimum amount of $2,000 and held my breath for when they went public.
Deal me in!
All of this was tremendously exciting to observe – the innovation, the hype, the possibility of changing the face of Australian insurance distribution. It wasn’t just this project either; every day new ideas were being put forward and new businesses launched. It seemed as long as you put the letter ‘e’ in front of the name, or it ended with ‘.com’, you were on a winner.
How could I get involved in a project like this? I loved my job but it seemed staid and boring: there was ‘gold in them thar hills’!
I got some time to talk to Will so I asked him what he thought. I will never forget his question to me: ‘Patrick, you are a nice guy. But, what do you bring to the table?’
In other words, why should anyone want to get involved in business with me? Sure, I was a nice guy but so what?
It was time to face reality and realise that actually, I brought very little to the table in terms of adding value to a business enterprise.
Business is also all about who you know, and how you can connect those relatinship networks to create economic value.
Critical Success Factor 1: Money
Yep. You can’t escape the fact that money is the lifeblood of business.
Back then, I had to face the facts. I didn’t have any money and, while I wasn’t broke, it was only a few years back that I’d been cleaned out in my divorce. All in all, I was in a rebuilding phase. I’d just bought another house so I was loaded up with debt, not equity.
I was struggling with this critical success factor. Short of an unknown inheritance or winning the lottery (spoiler alert: neither happened), it was going to be a long haul to get enough money to create a business.
Importantly, I was taking all the small steps that would add up over time:
- I was spending less than I earned.
- Every pay, I was saving extra into super,
- My home loan repayments were ahead of schedule and
- I had a small amount invested in the stock market.
Yes, this was going to be way slower than I would have liked, but all I could do was simply persist in that area, and let compound interest take care of the rest.
The counter-intuitive realization is that there is more money available than ever before. For the right business idea, there will never be a shortage of dollars.
Your challenge with this critical success factor is to find the smartest place to get the money you need, at the lowest price.
Critical Success Factor 2: Networks
People do business with people they know and like. Yes. Even in the internet age.
For example, an overarching strategy in this business mentor blog is to give you the reader, an insight into who I am as a person, to accelerate the development of trust in me. How’s that working so far?
Business is also all about who you know, and how you can connect those relationship networks to create economic value.
If money is the blood, relationships are the veins and arteries that make it flow. When you can connect people and introduce others, that can add value to an enterprise and in turn, you also become valuable to that business.
Again, back then in my situation, the reality was I also was lacking in this critical success factor. I had no network. However, I could build relationships, starting today. I was always hearing about networking groups and clubs so it was simply a matter of getting off my butt and doing something about it. This plan is still yielding results today in my work as a business mentor.
Your challenge with this critical success factor is to have a process in place that allows you to build relationships with others so that you can add value to them and your business.
Critical Success Factor 3: Skills
Also known as Intellectual Property (IP). If you have rare talents or you are acknowledged as a maestro in your field, you will be welcome in any enterprise that requires those talents.
What about my skills back in 2001? Well, I knew how a small financial planning practice worked practically but I had no formal qualifications in management. I had a Diploma in Financial Planning and was a Certified Financial Planner.
To be honest, although I was a Certified Financial Planner, I hadn’t achieved anywhere near my potential academically. I was about a 3/10 for this critical success factor.
There was no way I had come close to achieving what, I knew deep down, I was capable of achieving. But deciding what and how to study, as well as paying for it, was going to take some time to plan.
It was time to stop procrastinating on this and start shaping the development of my future skills. I started to plan for going back to study and this eventually manifested in (among other things) my master’s degree.
Academic qualifications don’t necessarily guarantee success, but my experience as a business mentor tells me they don’t hurt, either.
Your challenge is to identify the specific skills and talents that your business will need to thrive and grow to the next level.
So how do I improve these 3 Critical Success Factors?
It’s simple, but it’s not easy.
Whether you are already in business or wanting to start, you need to be honest in assessing where you are right now with each of these 3 critical success factors. Then, you need to plan to bridge the gap.
How you do this will vary for each of the 3 critical success factors.
If it is money you need, this can be raised through savings, or debt (borrowing) or equity (bring in partners). The starting point is to ask two questions:
- What money do I need to buy assets right now?
- How much will I need to pay running costs over the next 12 months?
Building networks starts with meeting and then helping others. The best question to ask yourself is ‘who can I send a referral to today’?
There are now so many places where you can learn the knowledge and skills you might need. As well as the universities, there are amazing sites like Skillshare and Brilliant.
The good news is though, with a plan and with accountability that you can design with your business mentor, you can overcome.
Some people do this on their own or with their team.
Others prefer to work with a business mentor like me, to inspire, encourage and hold them accountable to their actions.
Like to know more about how I work with my business mentor clients to achieve their goals? Contact me and tell me your story!