Beyond making an impact or working on something they really care about, most entrepreneurs dream of making it big with their startup idea. Either they want to sell their company to a well-established company or be able to ring the bell at the New York Stock Exchange on the day of their initial public offering. But this is no easy task; entrepreneurs must have a solution that customers want to pay for and understand how to build a business that will continuously grow.
To help the entrepreneurs out there that want to achieve more with their businesses, we interviewed seasoned entrepreneurs who have had successful exits in the past. We asked them how they were able to build and sell their business. And we present the common threads we picked up on to provide a way forward for an app and product purveyors who know they are onto something but want to take it to the next level.
This article aimed to go deeper than the usual #hustle philosophy that many entrepreneurs live by. Instead, we wanted concrete answers to hard questions that could help entrepreneurs just starting out understand what they were in for and what they might want to avoid, directly from the mouths of people who have proved they know how to build a business. In particular, we asked these entrepreneurs:
- What are the key business building tips you’d give to other entrepreneurs?
- What was your experience like selling your business?
- Are there any pitfalls (in business building or selling) that other entrepreneurs should be aware of?
What they had to say is sure to help entrepreneurs learn new strategies around how to build a business at all levels. Let’s jump into their answers.
How to Build a Business
Test Good Ideas
Any great business starts with a solid idea. Then you’ll need many more ingredients to be able to turn that idea into something real. This product or service solves a significant problem for the customer, and they are willing to pay for it. To develop this, there are a number of questions entrepreneurs must tirelessly find the answers to, according to PJ Taei, President of Uscreen. Questions that help validate a business idea include:
- What’s out there at the moment in terms of a similar business/product?
- Is it serving the needs of the potential customer (if so or not, how?)
- How many competitors are there?
- How big is the market?
- Are people educated to buy the service?
It’s next to impossible to create a great product in a vacuum. This precursor to building and selling is required to really understand your market, customers, and competitors. So entrepreneurs who want to learn how to build a business must first do their research and have a clear idea of why their product is better than what the market already offers.
Put in the Work
Next, the actual “building” part comes with years of blood, sweat, and tears. PJ illuminates just how hard entrepreneurs will need to work: “You must go all-in, especially when you start. It is an incredibly time-consuming process. Starting a business can’t just be something you do whenever you feel like it or get a bit of spare time working on it. You have to get motivated by creating a fantastic product and business for your customers. A tremendous and validated idea will get you far, but discipline and the drive to do that hard work will take you further.”
On a similar note, Stacy Caprio, Founder of Her.CEO reminds entrepreneurs to: “Work on your business every single day, even when you don’t feel like it or aren’t seeing quantum progress leaps. Small efforts over time [lead] to big results. The key is you need to be seeing some type of small result over small bits of time…” Burning out simply isn’t an option, but consistent work is a requirement. If breaking up projects into chunks works well for you, then, by all means, do it that way. Your workflow doesn’t have to fit any particular mold. You just have to be ready to put the work in however you can. On the other hand, you must also know when to take a break in order to re-center and come back to tasks refreshed.
Become Customer-Centric
Once you have your business idea tested and locked down and you have bought into the long days and nights of work ahead, it’s time to focus on your customers. There are endless examples of businesses that go above and beyond. These businesses have staying power because they’ve learned to create great products and take care of their customers and employees. Amazon is the first company that comes to mind when thinking of fiercely customer-first organizations. And companies of all sizes can also learn from their playbook.
Jayson DeMers, CEO of EmailAnalytics, suggests entrepreneurs “Focus on customer service. It’s the easiest and most impactful way to differentiate your brand from your competitors, and it has a huge impact on customer satisfaction, loyalty, and word-of-mouth marketing.”
Creating a signature experience for your business is crucial: customers should keep coming back because your product works well, and you treat them fantastically on top of that. When you’ve achieved this consistently over time, offers to buy your business or a high valuation might begin to show up in your inbox. Then you have another hurdle in front of you: potentially selling the business you’ve worked so hard to build.
Pitfalls to Avoid When Building and Selling Your Business
Jayson admits that the process of selling a business not only takes a considerable amount of time but an equal amount of perseverance. Selling his company “was a long, difficult process full of twists and turns, and many stressful days. I hired an agent to help match me with suitable buyers. Multiple deals fell through before I finally found a serious buyer who got through the finish line. The entire process took over a year.”
Despite this long timeline, finding the right buyer for your business is worth the time and effort.
Stacy also advises entrepreneurs to be ready for a long process when they get to the selling phase. “Even if you have an airtight signed contract, and money transferred or partially transferred, nothing is really airtight, and money can be taken back, and contracts can be broken, it’s up to you if it is important enough to fight and sue or simply move on and find another buyer.”
Getting the right legal help is essential to make sure you consider only the best potential buyers and don’t fall victim to terms or conditions hidden in a lengthy contract. You won’t want to save money on this part of the business building. Instead, get the best lawyer you can that has great references. It would really be a shame to put years of work in, just to have a negligent lawyer botch the selling process. And that is an important fact to underscore: selling your business is such a small part in relation to the entire process of building a business.
PJ reminds entrepreneurs that “It’s not easy, it’s not always fun, and you know, most importantly, it’s not guaranteed. Do not build a business with the sole intention to sell; build a profitable business for the long term… Most importantly, focus on building a business that delivers an outstanding experience for your customers. If you do that, your business will automatically be worth something!”
PJ offers sage advice regarding your priorities and intentions: it’s not about the money or clout. Yes, it’s a nice bonus to be able to prove you know how to build a business with a check in your pocket from a buyer. But it’s also about so much more. It’s about the people you built the business with and the happy customers you’ve amassed over the years. Entrepreneurship, at its core, is all about making a difference, shaking up the old way of doing things, and changing your industry for good.
What other strategies are most important when exploring how to build a business? Let us know by tweeting us @Protoio.
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