The 4 Core Proficiencies of the Barefoot StartupThe 4 Core Proficiencies of the Barefoot Startup https://c-suitenetwork.com/advisors/wp-content/themes/csadvisore/images/empty/thumbnail.jpg 150 150 MIchael and Bonnie Harvey https://secure.gravatar.com/avatar/dfe7dbddd973f4b41b9f0e9b47ad6323?s=96&d=mm&r=g
If you’ve survived the entrepreneurial process from idea generation to capital generation and you were asked to sum it up into core principles, what would you say? Where would you start? We were met with this exact challenge. Clients, business associates, and our employees insisted that we should break our journey into its fundamental parts and elaborate on those parts. We tossed ideas around for a year, thinking about how to get these principles across to startups.
Thinking about why so many startups fail seemed to be a good starting point. What did they have in common? In what areas were most of the “failures” incompetent? To our surprise, each of them was incompetent in at least one of the 4 key areas. That led us to focus on and prioritize them in The Barefoot Startup’s GPS (Guiding Principles for Success). Here’s a brief synopsis:
1. Cash Flow Management. Here, your goal is to reduce the need for capital. Do you know how to distinguish and utilize your “hidden” assets? Ideally, your buyers might pay you before you have to pay for overhead and supplies. This is possible, but for most of us, juggling is necessary! And, before we pay ourselves, we must spend every cent on the bills. This is why minimizing overhead, outsourcing, and pay-as-you-go are crucial. This is why frugality and revenue are necessary. No matter the amount, revenue must be established before you ask for investors’ money. Do you know how to create strategic partnerships with your buyers and suppliers, to decrease your need for capital?
2. Monetization Strategy. It might sound crazy, but many startups never ask the all-important question, “Why are we doing this anyway?” Is it a legacy? Is it a lifestyle? Or is it to make money on brand equity? If you’re looking at an eventual merger, public offering, or acquisition, the first steps of your journey are key to your survival. They will determine plans for expansion and how your brand equity is maximized. This means your goods or services must be accessible, and that your business can operate without you. It means your files mirror your acquirer’s due diligence. It also means that you understand and create the milestones and metrics necessary to become an acquisition target, or, as we like to say, “Get your peanut in front of the elephant!”
3. Personnel Management. Here, your goal is to reduce turnover, the top hidden cost of business, and to empower and inspire your employees. Finding good people and building great people are covered in our video mentioned above. In our opinion, it’s necessary to overdo it during orientation from the first day to show where the money comes from, including all the jumps and hurdles it must pass over and through to get to them. Paying for performance inspires better performance. Paying employees hourly encourages more time spent at work, not necessarily leading to productivity. Publicly appreciating a job well done, encouraging innovation and creativity, and nurturing a culture of permission are undeniably crucial to a supportive and productive team. Share challenges with the whole staff on a know-the-need basis, rather than a need-to-know basis. This helps on-the-fly problem solving by unlocking your personnel assets!
4. Distribution management. Do you know how to get your product on the market? More importantly, do you know how to keep it there? Distribution encompasses everything from supply chain management to sales. And, sales is not just to your end consumer, but also to your people, then your B2B customer, then their B2C customer, and finally to your (and their) end-user. Knowing, understanding, and delivering what everyone in the chain needs can be the difference between market access and being shut out. A failure to understand the true cost of sales is the principal reason why so many startups fail. Start small. Make small mistakes. Learn from them, and get yourself together before you go large. Don’t move fast to lose fast!
Interested? These 4 core principals, so often disregarded, are so critical that we spend a whole hour on each of them in our video course, The Barefoot Startup’s GPS (Guiding Principles for Success). Check it out and see for yourself!