Wednesday, December 3, 2008

Empire Building - Dangerous to Start-ups

Today, a word of advice to start-ups who have dreams of private helicopters, sports cars and skyscrapers that bear their names.

Many years ago, I did a fourteen month stint as a "Farm Assistant". It was a junior management role for me to get some experience before attending agricultural college. Which I never did. Farming wasn't for me.

The farm I worked on was pretty vast and we grew a lot of different crops - mainly tobacco and maize and we raised cattle. Baboons and bush pigs were a particular problem. Both could lay waste to a significant portion of a field of maize in just a few hours. So we were at war with them, constantly. I used to sit concealed on the side of a small 'kopje' overlooking one of our maize lands armed with an FN rifle, tasked with shooting the thieving animals on sight. To be honest, shooting animals is not my cup of tea. For sure, over time I shot many, but I found it was almost as effective to just fire off a couple of rounds and watch the baboons hastily scarper, the youngsters riding on their mothers backs like comical little jockeys. (The bushpigs, by the way, were delicious, slow roasted in a dixie by the "Rhodesian Boiler's" fire.)

But I also used to watch in disbelief as baboons raided the field. It was a mixture of pure comedy and mindless destruction. The adult baboons, instead of pulling off a single cob of maize (ear of corn) and eating the whole thing, would pull one off, perhaps take a bite and then stuff it under their arm, desperate to move on to the next plant where they would pull off another cob and perhaps take a bite before stuffing that tasty treat too, under their arm. The previous under-arm-stuffed cob would then fall wastefully onto the ground. And so it would continue, with a single baboon thinking he was gathering up lots of maize to enjoy at his leisure, later. Baboons are very greedy. Careless too. - and probably quite disappointed when they see that their collection of cobs is in fact, errr.... one.

How does this baboonery translate into wisdom for small businesses?

I quite often notice the same sort of behaviour demonstrated by the baboons, in start-up businesses. What happens is this: an individual, or more often a pair of partners decide to open a business. Its a very exciting time and usually there's a lot of energy. Things get done. Bank accounts are opened, good intentions are listed, the company name is debated and established, domain names are registered etc. Splendid. They are doing everything right. So far.

But then they get carried away in their excitement and start having too many visions of expansion. Of empire building. When they should be focused on the original concept of the buisness, they get carried away with their vision of the future: a wide ranging group of companies that offers a whole array of complementary services. And that's where the maize cobs start slipping from their grasp.

I have seen this happen so often. A great, singleminded business idea, usually right at the core of the entrepreneurs' knowledge, becomes distracted and diluted as they try to paint themselves into the picture of their now over-complicated vision. I partly blame beer for this, as again, I have so often seen the expansion of the empire plotted in pubs. But its fair to say that it happens wherever two start-up mavericks dare to dream.

First, consolidate your position .

I have nothing against dreams and I have nothing against start-ups aspiring to offer a whole plethora of services that go beyond the scope of the initial business. I do, however, strongly believe that if the energy and imagination that went into plotting the growth of the corporate behemoth went instead into perfecting the original business plan, there would be a far greater chance of eventually having an empire. A strong, respected empire.

As a branding and marketing person, I come across so many brand new "Groups of Companies" that are in fact more of a collection of half thought-out ideas lying partially tasted and semi wasted on the field of dreams. These are weak businesses. They seldom gather momentum and they usually fade away. Why?

Its dead simple: After the exciting dreaming phase, the cold, bony hand of reality firmly grips the shoulders of the entrepreneurs. Bills have to be paid - amongst them, mine (instead of designing one brand identity I have now designed several) . What then happens is that the half formed, poorly nurtured complementary businesses are left out in the cold as the entrepreneurs start frantically doing what they set out to do in the first place. They are forced to focus on their core business. Sadly, quite often, they are also forced to focus on the reality of what their expansionist dreams have delivered: Boxes of unused stationery for this company and that. Logo designs, brochures, uniforms etc. Bills, bills, bills....

What then happens is this: The dreamers find the debt rather alarming, blame me, blame everyone else but themselves and close down. Another needless stillbirth.

Empire building: Don't do it. Not yet.

I think the key to success for all start-ups is to keep it simple. Don't complicate your ideas. Make your dream manageable and focus, focus, focus. Be one thing!

Here are a few rules for start ups that I think should be folllowed. This list is by no means definitive, its what I can think of now. I might add to it, so come back and check:
  1. In one sentence write out what your new business will do.
  2. In as few as possible bullet points, demonstrate your business process (how you will do what you do and how you will make a profit from your customers)
  3. In one sentence, write out how you intend to grow in the first 6 months
  4. Make a list of 10 objectives to be achieved within the first 6 months
  5. Prioritise the list above
  6. Think like your client: make a list of 10 things your client/customers will expect from you/your product
  7. Prioritise that list
  8. Make a list of 10 things that will make your company/product more attractive to your target market than your competitors
  9. Prioritise that list
  10. In ten bullet points, outline your marketing plan. Prioritise them.
  11. In ten or less bullet points outline your sales plan. Prioritise them.
Take the above once completed and display it prominently in several places where you will often look. Fridge doors work for me because I am an eating machine.

I think that with the global economy as it is right now, it is a great time for entrepreneurs to start up businesses, But it is a time for realists, not fantasists. Go forth and multiply, but do it slowly and carefully.


In other news, this article was written in several short stints between my monstrous headaches. KIP 7-9s. Feel sorry for me. I know I do!


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