Entrepreneurship: Avoiding the pitfalls of the journey

Someday, these stories will make their business function on the same principles.
by Yehia El Amine English YehiaAmine

2 May 2018 | 17:40

Source: by Annahar

Focusing on what’s important; the seemingly urgent will take care of itself and build a company, which both the founders and its employees will feel proud of. (Photo courtesy of Cerviced)

BEIRUT: The tech world is riddled with thousands of articles preaching what entrepreneurs should do; glazing over the genius of Elon Musk, Warren Buffett, Jeff Bezos, and Steve Jobs.

People enjoy reading these pearls of wisdom. They give them hope. Someday, these stories will make their business function on the same principles.

But today, when these people return to work, they’ll get sucked into the Sisyphean chaos.

They’ll keep dousing fires, solving everyday problems, and wait for new issues to arise. It’s like quicksand. The harder people try to free themselves, the deeper it sucks them in.

Yes, there is.

PARETO’S LAW

In 1896, Italian economist Vilfredo Pareto stated a law which holds true in every aspect of life.

In most cases, 80 percent of results come from 20 percent of causes.

“For instance, 20 percent issues cause 80 percent of your problems. In physical training, roughly 20 percent exercises have almost 80 percent impact,” Khalil Boutros, a serial entrepreneur who has founded and exited four startups, told Annahar.

Boutros considers around 20 percent of customers contribute to almost 80 percent of a business’ revenue; even Microsoft noted that fixing 20 percent of the most reported bugs fixed 80 percent errors and crashes in a given system, according to Forbes.

The serial entrepreneur finds that there are 5 actions that will make startups founders standardize their businesses and scale it up without compromising on quality or values.

KNOWING THE NEED

According to a report by CB Insights, “no market need” is the reason for over 42 percent businesses’ failure.

Boutros considers that this can be avoided by engaging with the startups most important customers: the 20 percent who contribute 80 percent of the revenue.

“I asked a client whose business I was working on growing, why customers bought from him; the answers were cliché, competitive and cheap prices even if it meant low-quality goods,” he said.

But speaking to his top 15 percent customers presented a contrasting picture altogether. Boutros acknowledged that the company’s top customers prioritized speed of delivery followed by quality. Professionalism ranked third and customization fourth, while price came in a distant fifth.

“Armed with these insights, we went back to the drawing board and refined the client’s business model; the result was a 63 percent jump in sales within a year,” he added.

Invest the effort in identifying customers who’ll pay for what the startup is offering, and what they expect in return. Then delight them by offering what the competition doesn’t.

“Approach your premium customers, ask them what they expect, and why. Accordingly, develop your Minimum Viable Product (MVP) to delight them,” the serial entrepreneur said as a takeaway.

EARLY DELEGATION

Delegation is the shiny object that every entrepreneur chases. It makes them feel like they’re in control of their company.

But look closer at the chaos in the company and it will be defined as the root of it.

“In the initial stage, startup founders must know the ins-and-outs of their business,” Boutros said; “get your hands dirty; avoid delegation.”

When a startup grows into a small enterprise, design processes to streamline each function. According to the serial entrepreneur, dirty hands will prove useful here, because they’ll know how each function works optimally.

“You can delegate documentation and reports, but not decisions,” he added.

When the enterprise turns into a self-running organization, then delegating any task becomes easy as long as the performance of the individual handling it is tracked.

“As a leader, stabilize your organization before scaling up; get your hands dirty early on, and you’ll enjoy remarkable success later,” Boutros highlighted.

GOALS

Imagine eight people rowing a boat, each steering it in a direction of their own choice. The rowers will break their backs, but the boat will go nowhere.

This is exactly what happens in most companies, and it’s why they lose momentum.

Today, knowledge workers lack indicators to quantify their productivity. As a result, they turn to an indicator from the industrial age: ‘visible’ work.

“Answering emails, attending meetings, being online 24/7, and other ‘visible work’ is easy. But these tasks keep entrepreneurs busy in a never-ending game of whack-a-mole. All this does is burn them out,” Boutros noted.

Instead, set wildly important goals (WIGs) in key areas which will make the company grow. These goals include customer satisfaction and retention, fixing the MVP’s bugs, reducing turnaround times for delivery, getting tractions, and so on.

Set ambitious metrics for each WIG, and back them up with ambitious deadlines.

“When your team does the same, when everyone rows in the same direction, the boat will reach its destination faster and with less effort,” he added.

PROBLEM-SOLVING

Too often, entrepreneurs focus on the wrong problems. That’s why those problems keep raising their ugly heads over and over again.

Here’s how he identified and tackled one problem during his work as a consultant.

The business owner of a trading company spent two hours every fortnight examining returned goods. He wouldn’t delegate this task because employees would make poor decisions and the work would wind up right back on his desk.

“But he was looking at the wrong problem all along. The problem wasn’t him wasting time checking returned goods. It was: why did goods get returned?” Boutros highlighted.

The company then identified issues like defective items, customers’ inability to resell, incorrect orders, and more.

“We addressed those problems at the root. We improved Quality Checks. We trained the sales team to educate their customers and to check certain parameters before accepting returned goods,” he added.

The result was a 60 percent drop in returned goods.

KEEP LEARNING

As an entrepreneur, don’t be a rock; immovable and impenetrable. Be a sponge.

“Successful entrepreneurs keep learning from their failures. Instead of blaming poor market conditions or lack of investment and talent, they learn where they went wrong and fix it,” Boutros told Annahar.

But here’s the thing.

“Successful entrepreneurs also learn from their successes. They reflect on what they did right and what they could’ve done better and apply all these learnings to enjoy long-term positive results,” he added.

The serial entrepreneur considers making a startup a delight to customers consistently, with minimum involvement from the founders.

Focusing on what’s important; the seemingly urgent will take care of itself and build a company, which both the founders and its employees will feel proud of.

“You’re never ‘done’ as an entrepreneur unless you’re dead. It’s always a game of you’re-getting-warm-you’re-getting-cold,” Boutros told Annahar.

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