Business North - Business Mentor
		with Daryl Erdman

Third in a series.

The ultimate objective in starting a company is long-term growth and stability. The ideal: a company that grows beyond the limits of your personal control, begins to achieve a life of its own, and ultimately stands as your legacy.

In the very early phases — detailed in my last two columns — you’ve spent much of your time just “staying alive.” There has been a continuous shortage of cash to do the things that should be done.

Then you reach a point where your sales have grown beyond the breakeven point, and you begin to think you have created a sustainable venture.

Although “sustainable” may be a premature description, you are profitable, supporting other people besides just yourself, and sales seem to be on a nice upward curve. So what further steps are needed to achieve stability, and perhaps immortality?

One early hurdle is learning to become effective at delegation. You need this critical skill to grow a sustainable entity. Too many entrepreneurs spend way too much time trying to do everything. When they no longer are able to do that they “assign tasks,” then manage to butt in “just to make sure things are done correctly” (i.e. “my way”).

Such micro-managing is the Achilles heel of many entrepreneurs. You absolutely need to let go of the mundane and repetitive tasks that others are quite able to handle with minimal explanation and training.

You do this through letting go with bits and pieces over time.

Off-loading too much assures you soon will be back doing everything. By delegating in bits and pieces you allow your associates to prove their competence, and help build your confidence for further expanding their responsibilities. You need to allow them authority to match their responsibility and then stay out of their way. I guarantee you will be surprised by how much easier your job can become. You do not abandon oversight but you do it through monitoring results instead of babysitting the activity itself.

Wil Schroter is the founder and CEO of www.gobignetwork.com a community of startup companies that share ideas online as well as offering much relevant advice. If you haven’t looked at this site, acquaint yourself with it soon. The Web site has researched the factors that trip up seemingly success-destined startups that “flame out” prematurely. It identifies five key things:

• Lack of focus. In my experience with literally hundreds of early stage companies, this one stands head and shoulders above the others.

The entrepreneurial personality gets recharged by taking on new challenges. The onset can be precipitated by too much early success, causing you to look around for the next elephant to slay. It also can surface because you grow bored with the routine as things fall into more predictable patterns. This is not to say you should ignore opportunity, but you need to be sure the nucleus of your company truly is stable.

Hone the one idea you started with to absolute perfection. This takes time, effort and focus! Don’t stray from your competencies, and keep it simple.

Al Ries, author of The Future of Your Company Depends on it, reinforces this with examples of how Dell Computer and Best Buy polished their central ideas to perfection, becoming better at it than their competitors. When you allow extraneous opportunities to consume your time before you have achieved stability, the distraction makes it easier to stumble. The same goes for the many issues and problems that demand your attention. One simple rule: Focus on anything that will help gain customers, keep customers or improve service, and postpone all others.

• Inadequate marketing. In a sense, marketing is the front side of selling. Carefully manage the message you wish the public to see about your product/service. Be consistent. If you are trying to portray quality and impeccable service, you cannot let the smallest detail go untouched.

I recently learned of a new Lexus dealership that cost the owner $35 million to build: polished tile in the showroom with leather lounge chairs, some of them vibrating; a valet parks your car and a concierge escorts you to the coffee bar for fresh coffee and fresh baked sweet goods. The dealership is marketing a luxury car with a consistent message of quality and prestige. And its sales have almost tripled from the previous, more usual location, where plastic chairs and a serve-yourself aluminum coffee urn with day-old coffee welcomed you.

• Cash management. I have touched on this many times, most recently in the March column. I cannot emphasize this enough. My grandfather had a “cash drawer” in his office that he monitored at least twice daily.

Cash is the lifeblood of a business. Nothing is more important to achieving sustainability than the careful and deliberate oversight of cash.

To me, it is more important to have regular and timely cash flow statements than P & L and balance sheet statements. I no longer have day to day operating responsibility in my own businesses, and the first question I always ask my managers is, “how is the cash flow?” If it is growing you know things generally are okay.

• Cramped trigger finger. As noted before, it is critical that time to delivery of the product or service always is ASAP. Speed is essential, in many cases it needs to come before perfection of product. A reputation for speedy order fulfillment in today’s world is an important attribute for any company.

I buy and read many books each year and purchase books as gifts for family and friends. This year my favorite online book store has allowed its normal speedy service to slip drastically. Books I ordered for Christmas gifts in early November 2007 were not delivered until after Christmas. That is totally unacceptable and they managed to lose me as a customer.

• Poor execution. No matter what you sell, an infinite number of steps occur between your receipt of an order and when the customer receives your product or service. Each step needs to be reviewed to ensure the order is fulfilled with the greatest proficiency and efficiency. Do not overburden your associates with too many “rules and policies” when it comes to order fulfillment. There should be just three overriding policies when it comes to customer service: Satisfy the customer; satisfy the customer; and satisfy the customer.

You wish to be known for competency, efficiency and excellent service.

A reputation for superior execution is one of the better competitive advantages you can have.

Last in this series, next: You’ve arrived; managing for the long haul.

Erdman is chief executive of Strategic Growth Resources, a business acquisition firm. He founded entrepreneurial programs at the University of St. Thomas in St. Paul and the University of Iowa. You can reach him at derdman@concertoventures.com, or by telephone at 218-326-6939.

• Stability and scale: no oxymoron -4/30/2008
• Setting the stage for real sales and growth Second in a series. -4/2/2008
• 'You have the money, now what?’ -3/5/2008
• Find your shining angel investor -11/19/2007
• Before you start your search for startup money -10/9/2007