Article in English

7 Lessons Small Businesses Can Learn

From Tech Startups

David S. Rose
David S. Rose is Founder & CEO of Gust, author of The Startup
Checklist and one of the country's leading angel investors.

Starting a small business in the United States has never been easier and, in
fact, small businesses make up the backbone of the American economy. 9 out
of every 10 employees works for one of the 28 million small businesses
across the country. Each month, a half million new businesses enter the
market, of which about 70% will last at least two years and one-third will last
longer than 15 years.
But what does it mean to be a small business? The traditional “American
dream” for a small business is something along the lines of a brick and
mortar office or store, a steady salary, perhaps a few employees and, if it
ends up being sustainable, a family asset to pass along to the next
generation. Over the last few decades, however, that popular idea has begun
to change, particularly when we start thinking about small businesses like
tech startups.

While all businesses “start up” and start out “small”, not all “small
businesses” are “startups”. Whereas a small business is founded to be
profitable and create a good living for the entrepreneur and his or her family,
a “startup” is founded with the intention of rapidly achieving exponential
growth through scale, and either being acquired in a few years by a larger
company, or becoming a “unicorn” and going public in an IPO…in both cases
bringing in massive returns to its founders and investors.

While this type of venture seems quite different from the traditional corner
store where the owner greets each customer by name, many of the first steps
in starting a successful business—either small or high growth—are rooted in
universal best practices.

What then can the small business owner learn from the startup
entrepreneur? The answer is, a lot.

For the past 45 years I have been a serial entrepreneur, founding over a half
dozen companies. I’ve also been an active business angel investor, having
personally funded over 100 other startups. I’ve founded, taught in, or
advised many of the country’s leading entrepreneurship training programs,
and as the founder and CEO of Gust, I’ve learned from the aggregate
experience of providing the tools used by more than half a million startups
around the world.

One of the most valuable lessons I’ve seen proven true over and over again, is
that many of the biggest obstacles that businesses face along the way can be
avoided IF you take care to start things up correctly from the beginning.
When launching a company, investing a little bit of time and money at the
very start can pay large dividends later…but only if you have a solid
foundation, a thoughtful structure, and a strong focus.
Many of the critical first decisions need to be made earlier than one might
think. Here are the first seven steps every entrepreneur—including the small
business startup—should take to ensure a solid footing for their business
down the road.

 Get smart

There are thousands of books and articles available about starting a

company. It is impossible to read and follow every piece of advice, but it is
valuable to know the different strategies and perspectives that are out there
and to apply the most fitting to your venture. Especially for first time
entrepreneurs, there are many, many people who have already learned hard
lessons through trial and error—take advantage of their experiences and
your business will start off ahead of the game.

 Answer the question: What is your business model?

Establishing the business model for your business is something that might
not be as easy as it sounds. Do not waste your time looking for partners or
investors, performing competitive research, or even moving forward with a
website, before you have a clear idea of what need your business will fill, how
you will fill it…and most importantly, how you will create value and monetize
whatever it is you do.

 Feedback Round 1: the first of many

It is easy to get wrapped up in your own brilliant idea for a business. Give
someone else the chance to tell you what they think. Run your idea by others
in the field, especially others who have started a business from scratch, or
anyone you respect and think may have good feedback. Fight the
confirmation bias and truly listen to each critique. That is not to say that you
must act upon every suggestion, but listen carefully and weigh each as a
serious possibility to help strengthen your business.

 Analyze the market

You must understand the landscape you are about to enter, inside and out.
And you must be realistic about where your business will fall in that
landscape. First, know who else is out there with a similar offering and
identify your differentiating qualities. You do not necessarily have to be the
first to market, as more than one major player can coexist in the same
ecosystem, but you need to have a realistic understanding of the size of the
market. More than one major player can succeed, but an accurate read of the
market can set expectations and guide your business plans.

 The Business Plan

Many entrepreneurs draw up a complicated business plan as step one, but
end up wasting a lot of time rewriting it as they work through their business
concept. If you’ve done all the previous legwork and feel confident that your
concept is marketable, viable and profitable, the next step is to begin to write
it down. You’ll want to use a simple, structured format to note the various
things that you are going to need to do to implement your business idea. For
now, don’t worry about a long document for investors…just start by writing
down bullet points outlining what is supposed to happen, a timeline,
assignment of responsibilities, cost analysis, and revenue projections. There
are some great resources available for this, and the best I’ve seen is the web
siteleanplan.com, by Tim Berry, the legendary author of Business Plan Pro.
The site offers an online course you can purchase, as well as commercial
online tools such as LivePlan, but it also includes the entire text of Tim’s
book “Lean Business Planning” for free. As you’ll learn from Tim, the most
important thing about a business plan is not that it be long, but that it be live.
An effective business plan is a living document, reviewed and updated every
month, that adapts to the market, the field, and your actual results.
 Feedback Round 2

Now that you have channeled your knowledge, research, and business idea
into a structured, quantitative plan with strategies and tactics, you should get
another round of feedback before going live. This is when you want to speak
with people who are knowledgeable about your specific field. Try reaching
out for advice to people you respect in your industry. If you are respectful of
their time, and not asking them for money, you may be surprised at how
responsive they might turn out to be. At this stage you are looking for
substantive comments about the business and market, along with specific
critiques (don’t take offense; listen to them carefully!) and actionable
insights. Refine and perfect your plan with this round of feedback before
there is any infrastructure in place, clients on board, or investments made.

 Put it to the test

Even with all this background work, there are many things you just can’t
anticipate until real users are involved. It is best to do a soft launch of your
business with a small number of customers who you can easily track,
analyze, and use to adjust your projections. The biggest test will be to see if
customers really want or need what you are providing, and to understand if
they are willing to pay for it at a price at which you can afford to supply it. At
this point, theory becomes practice, and you will be able to put final tweaks
on pricing and process to best fit the market. These initial tests will provide
the quantitative analysis that investors or potential partners want to see.

Whether you are creating the next global app or opening a local small
business, the same preliminary steps are crucial to success. From there,
traditional small businesses and high growth startups may have differing
paths, but the best of both of them are based on strong foundations.
Entrepreneurship is, after all, at the heart of every good business…whether
high-growth and scalable, or small and independent. Good luck with yours!

David S. Rose is the New York Times bestselling author of The Startup
Checklist: 25 Steps to a Scalable, High-Growth Business, Wiley, 2016

Commentary

One small business means the traditional "American Dream" for a small business is something of
an office brick and mortar store or a fixed salary, maybe a few employees, and if it ends up being
sustainable, good family to move to the next generation. In recent decades, however, that the
popular idea has begun to change, especially when we start thinking about small businesses, as
new technology companies.

Since ancient tiempor business start-up start as small businesses, of which not all small businesses
are successful. While a small company was founded to be profitable and create a good life for the
entrepreneur and his family, a "startup" was founded with the intention of quickly achieve
exponential through scale growth, and either acquired in few years for a bigger, or become a
"unicorn" and go public in an initial public offering ... in both cases, results in massive returns to its
founders and investors company.

For the author one of the most valuable lessons he has seen to result p is that many of the
obstacles facing businesses along the road can be avoided if proper care to start things right from
the start. When starting a business, invest some time and money at the very beginning can pay big
dividends later ... but only if you have a solid base, a reflective structure, and a strong focus.

He describes us the first seven steps every entrepreneur, to be taken to ensure a solid foundation
for your business:
  Get Smart
Talks about different strategies and perspectives that we always apply the most appropriate for our
company. Especially for first time entrepreneurs, many people who have learned hard lessons
through trial and error should use their experiences in their business.
 Answer the question: What is your business model?
The main thing is to build on this step is how to create economic benefits of the company.

 Feedback Round 1: the first of many

In this step, the bottom line is to take into account opinions from other people never stay with
what we have, consider the other people that some of his ideas are creative.

 Analyze the market

This step should consider the advantages of the product within certain advertising chains like what
people of the product offered, too, is important to know where you put advertising think.

 The Business Plan

Consider a business plan is an important thing that helps us appreciate calculate estimates of the
costs of production nustro product as the type of advertising to be done and how it will do, the
steps will follow for the company.

 Feedback Round 2
And with knowledge, research, and business idea into a structured, quantitative strategies and
tactics to plan, you should get another round of voting before going live. This is when you want to
talk with people who know their specific field. Try to come for advice to people who respect in
your industry. If you are respectful of their time, and do not ask for money, you may be surprised
how sensitive that it could become. At this stage substantive comments about the business and
the market is looking for, along with the specific criticisms (no offense;! Listen to them carefully)
and actionable knowledge.

 Put it to the test

in step utlimo it is to test our company, taking the product to the sale and see how the reacionar
public and how we see the product in addition to suggestions on how to improve the product, in
order to acquire a better value in trade.