Does your startup count as a business? Well, that isn’t an easy question to answer, despite sounding like one. If you go by the technical definition, then sure — assuming all the paperwork has been filed and the registrations have gone through, your startup is indeed a business. But there’s a difference between that definition and the popular perception of a business.
As far as most people are concerned, a business is an organization with clients, revenue, contact details, opening hours… in essence, it’s a fully-realized implementation of a startup idea. If you took a random person off the street and had them sign an NBA player contract, they’d legally be a pro basketball player, but it wouldn’t mean anything.
With that in mind, does your startup feel like a business? If it hasn’t been running for very long, then it almost certainly won’t. You’ll probably view it (quite correctly) as a frantic project — a seed that will eventually grow into something legitimate. So how do you take it to that point? Let’s take a look at the ingredients required to reach that genuine business level:
1. Fully-formed brand guidelines
What’s the core color scheme of your company? Do you have a slogan, or set of slogans? Have you produced (or acquired) a high-quality logo that’s ready to be shared with the world? Brand guidelines are about consistency and identity, and you need everything covered.
Imagine a site expressing interest in writing about your company, requesting a media pack, and being told that you can’t offer one because you don’t actually have a settled logo yet. You’d look ridiculous.
You might not like the idea of solidifying these things at this point. Perhaps you’re still mulling them over and would prefer to keep your options open, imagining that you might yet come up with an idea far better than any that preceded it. It’s fine if so — but it does mean you’re not ready to call your company a business.
Only when you’ve actually committed to a brand identity can you move on to the next step (something like Brandpad can help you with the production).
2. Supportive core customers
Even a half-baked startup can have some customers — typically friends-of-friends and/or local businesses willing to give a new company a chance — but there’s a difference between that and having some committed customers ready to rely on you. The latter will actually view your company as a real business, while the former might view it as an experiment and a curiosity.
Truly supportive customers will stick with you for the long haul, give you invaluable feedback, and be willing to recommend you to others. They’ll pay you on a regular basis, providing the revenue you need to keep going (more on that next), and you can trust them to be there while you turn your focus to growth. If your main customer is your friend’s dad’s cousin’s son, and he isn’t all that interested, then it’s hardly a good idea to base your growth on his investment — he could give up and go elsewhere at any time, leaving you in the lurch and unsure where to go.
3. Stable and managed cash flow
Positive cash flow is bringing in more money than you lose during a set period of time (usually a month), and it’s distinct from profit because it’s about the money actually received and paid. A profitable deal can take months to come to fruition, so what happens if you bet everything on a big deal that ends up with a delayed return? You can run out of liquidity and see your business collapse despite being profitable.
Because of this, you need to have a great system in place to monitor your cash flow and help you optimize your incoming and outgoing payments (often through negotiating different payment dates). There are lots of options, but I suggest trying Wave over comparable tools, even Quickbooks: the Quickbooks comparison is flattering since it has a version that’s 100% free without the kind of feature restriction that ruins most “free” SaaS tiers, meaning that a startup can use it effectively now and later without needing to go through any messy data migrations.
4. Standard operating procedures
Where a startup is often haphazard and rife with ad-hoc solutions, a business is settled and efficient. Its core model is settled into a well-worn groove and can be handled with minimal confusion. This is made possible by standard operating procedures (SOPs): an SOP sets out exactly what a regular task involves ensuring that there’s always clarity about what needs to be done (and that someone else can take over if a worker takes time off, gets ill, or even quits). You can generate SOPs using a tool like ETQ, or simply through using free templates.
Look closely at your average day working on your company. Are you doing the same things over and over again but without any kind of codified process? If so, you’re not only wasting mental effort: you’re also making it all but impossible to implement efficiency improvements. How can your working process be made faster if you haven’t fully analyzed it? Start getting the vital core of your business model written out in logical procedures. The sooner, the better.
5. Sustainable working conditions
Lastly, even if you have everything else we’ve looked at, you don’t really have a viable business if your working conditions aren’t sustainable. How are you holding up under the strain? How are your employees (assuming you have some) handling the pace? The average worker might expect to give extra effort and work unreasonable hours during the startup phase of a company’s development, but not after that phase has largely concluded.
Imagine your company no longer in extra-hours startup mode, and answer one simple question: could you sustainably handle not only the business you currently have but also the additional business you’d need to find to continue growth? If not — if you’d quickly struggle and start to fall behind — then your company isn’t a business yet. Work on the team, work on the efficiency, and do whatever you deem necessary to get things to that point. Your success shouldn’t be rushed.
Author: Kayleigh Alexandra
This post was submitted by a TNS experts. Check out our Contributor page for details about how you can share your ideas on digital marketing, SEO, social media, growth hacking and content marketing with our audience.