Secrets of Success
What are the secrets of success from a business perspective? To quote Bill Cross the founder of Idealab, the secrets of a successful start-up business in order of importance are as follows;
- Team and execution
- The idea
- Business model
From a traditional strategic planning perspective, while we might agree that all of these things are important, we would probably rank them in a slightly different order. We would probably rank the business model, funding and the idea closer to the top rather than down at 3, 4 and 5. When you stop and think however, it makes sense. How many video stores do we now see with their doors still open and trading profitably? What’s happening to the business model of Australia Post? Posting a letter has almost become a thing of the past. Without timing it really doesn’t matter how well organised we are in terms of our business model or funding.
Equally I have heard many stories of innovating entrepreneurs who didn’t make it perhaps because they were “ahead of their time”. The market and the bulk of the population were not yet ready for their ideas or product or service offering.
What about if we are already in business with ideas of exiting or transitioning within the next 5 to 10 years? How do these factors rank from an exit planning perspective? I would have thought not too differently. We need to plan around funding our retirement or the next project or the next stage of our lives. We need to review and adjust or restructure our business model where necessary. We need to consistently innovate and implement fresh thinking or ideas so that our businesses are sustainable into the future. We need our team on board and working together to build value and make the business attractive to a buyer, whether that buyer is external or internal. But, if we don’t have some sense of timing, realising optimal value might be a tough ask. If we are trying to sell our business in 5 to 10 years’ time when every other “baby boomer” in the country is also trying to sell theirs, then unless we have a really good well organised business it is unlikely to realise optimum value.
We also need to be aware of business cycles. If we are seeking to sell when general business confidence is low or when we are in a high interest rate environment then realising optimal value is also tough. Selling a business now that is involved in the mining services industry is not easy, whereas 2 or 3 years ago they were selling strongly. Is your business likely to be impacted by digital disruption? If so the value into the future may well be impacted.
What then can we do to protect and hopefully enhance and realise on our business’s value? The answer is planning and preparation. By having a well organised business with a definite, documented strategic and succession plan you are then in a strong position to realise on its value when the time is right for you.
In thinking through these concepts, I now understand why my golf game is so poor. It doesn’t matter how good my clubs are or what I think I can do, without timing and execution it’s all a bit pointless!