the 5 essential ingredients for building a successful business

quality ingredients are the recipe for successOne of the first businesses I helped launch appealed to a personal passion --  gastronomic delights.  I'm no culinary DaVinci, but learned early in life that at the core of every great dish is a blend of quality ingredients.  Creating a successful business is really no different, and here's my take on the 5 essential ingredients the business "chef" must incorporate into every masterpiece:

If people are hungry enough, they'll eat just about anything put in front of them.  Take away that hunger or lead them to a smorgaasbord, however, and they quickly gravitate to what they need and want most.  This behavior is very practical, and holds true for business.

The successful "business chef" understands this need to satisfy the practical, but gets his / her "dish" to stand out from all the others by being innovative or different in a meaningful way.  They get there from the passion they carry for what they do, by empowering their employees (instilling a sense of "ownership" in their roles) and never, never compromising on their standards.

A good chef understands you can't create a dish for 12 when you only have enough ingredients for 6.  A creative chef might be able to eke out an additional serving or 2, but if 12 is the number, he or she will head to market to get what's needed (or welcome that last minute cancellation).

Business is no different.   Effective bootstrapping is like the great chef eking out that extra serving or two.  In the end, it's no substitute for having enough ingredients on hand.

You're going to have to come up with the food analogy for this one!  Successful businesses understand that top-line revenue generation and customer focus go hand in hand.  The most difficult and expensive part of building a customer relationship lies in acquisition.  Successful businesses will "advertise" for impact.   They understand the distinction between "lowest cost" and "highest value."  They find ways to be memorable in the minds of their target customer.   This might mean being first, being different, or being daring.  

Once their customer is acquired, these businesses are expert at building repeat business.  They are expert at cross-selling other goods or services.  They are expert at leveraging the good will they have built up through these relationships to acquire more customers through word of mouth.  At the core of each is a customer-centric culture that naturally builds and sustains top-line revenues.

Even the Iron Chef can't do it all (you'll have to check out the Food Network if you don't understand this reference).

Successful organizations hire selectively.  Recruiting and retaining smart, reliable, coachable, and trustworthy individuals that "fit" into your culture is absolutely essential to your success.  On the flip side, nobody's perfect.  Being able to quickly recognize a hiring mistake and removing those who don't fit the bill is equally critical. 

Culinary masterpieces not only taste exquisite, but are often visual works of art.   Great dishes assault all the senses. 

Successful businesses pay similar attention to every detail.  They publish and enforce “Operations Manuals."  They operate under strict internal financial controls, monitoring and forecasting their cash flows religiously.  They never settle for "good enough" or compromise on their standards.

The specialty food store and café I helped launch contained all of these ingredients (some more than others).  We ultimately adapted our vision to respond to the needs of the marketplace, and successfully sold the operation to a new owner.  This new "master chef " should have been better suited to growing the business in the direction the market was taking it.  He stopped using several of these key ingredients, however, and recently ended his story on a less successful note.  The moral of the story?  My vote is "stick with the recipe."  What's yours?

entrepreneurs & lawyers :: a strange but necessary marriage

Many would suggest the characteristics that make for a successful lawyer are completely opposite those that make for a successful entrepreneur.  Successful lawyers are perceived to be risk-averse, follow convention, and strive for predictability.   Successful business leaders, on the other hand, are viewed as pursuers of risk, strive to be different, and navigators of chaos.    While there are always exceptions to such sweeping generalizations, it's fair to say they are generally true in large measure.

Ironically, building a successful business requires a blending of these polar opposites.  What many entrepreneurs fail to realize is the degree to which every business decision they make can influence their ability to succeed.  It starts with making a choice of legal entity for your business, and continues through to the details you cover within the contracts your business signs.   For this reason, involving an attorney early in the process of building your business (and integrating their input into your key business decisions) is truly critical. 

Unfortunately, with most attorneys and firms still charging for their time by the hour, it is usually impractical to follow such a course.  And even if your attorney's billing practices or your financial resources allow for you to build legal insight into your daily operations, the "character" differences between entrepreneur and attorney can often wreak more havoc than it might otherwise prevent.  The key to avoiding this latter pitfall lies in both you and your attorney's ability to properly "manage" each other's roles.  

The first step to effectively managing this professional relationship lies with making an effort to understand the mindset of each role.  Starting with their first class in law school, lawyers are trained to identify, plan and prepare for worst-case scenarios.  We learn the law by studying terribly bad situations that have wound up in court (the reality, however, is less than 1% of claims, disputes and "bad results" ever make it into the courtroom).   Our training is exclusively focused on eliminating risk, and finding ways to maximize "damage control" if and when things do go wrong.

Entrepreneurs appreciate that a successful business is not built on eliminating risk.  We realize too many customers, partners, and opportunities would evaporate if we "wasted" time tweaking every potential deal to eliminate risk.  Too often, however,  the business owner will embrace unnecessary risk in the pursuit of the deal. 

So how do you successfully blend this marriage of opposites to make for a successful business?  By realizing that just like any other aspect of running your business, it's up to you to manage the relationship so can maximize the value of what you're paying for.  To this end, some key considerations:

  • The breadth of expertise a fledgling business needs to get off the ground is expansive.   Entrepreneurs and small business owners have to "do it all," and so do your lawyers.  Here is just a small sampling of the legal issues we managed for the last new venture with which we worked :: tax laws, consumer privacy regulations, electronic commerce regulations, contract law, employment law, intellectual property law, real estate law, and securities law (to name just a few).   Few small firms or solo practitioners can capably cover this entire breadth of services.   Large firms can, but their interest in working with smaller companies may be limited.  Their costs won't be limited.   An expert familiar with individual attorneys and firms in your area will pay for their weight in gold.
  • Remember, it's all about managing risk.  Your attorney will be committed to doing everything necessary to eliminate risk.  He or she can't help it -- it's practically genetic.   Don't stop in your tracks whenever your attorney fills the air with all sorts of cautionary statements.   Don't let them spend countless hours working on ways to eliminate every last potential for trouble.  Use them to evaluate where the major risks lie, and specifically direct their activities to managing those (and only those) exposures.

There's more we could say, but it all comes down to striking the right balance between managing risk and accelerating your business objectives.   Successful business leaders understand how to do this.   It's not easy for the uninitiated, but well worth the effort. 

And now for our shameless plug :: if you want help navigating this process, it's one of the many services we bring to our client companies.  Give us a shout 😉

Jack Speranza is an attorney, software engineer and entrepreneur.   For 15 years he has helped his companies and clients strike the right balance between risk and reward by weaving good business, good technology and good law into new services and operations.