Sound Advice by Mike Orlov featured in Business in Gulf October 2016 Issues

What you need to know before you launch your start-up

Most start-ups fail because of lack of funding. Of course we need capital to launch our fledging start-ups; investors clearly want to see revenue growth marching towards break-even and profitability (as they always have and always will), and we need this growth to be coupled with a common-sense business model, generating positive cash flows.

But before going out and raising capital, be it crowd-funding, visiting the bank for the loan you need or taking on a cash-rich partner (see box for funding options), make sure you are a ‘cockeyed optimist’ about your business idea; make sure you have explored ways of doing things differently. Be an enthusiast who has no fear of failure, and exhibit alertness to challenges with a belief in your purpose. And do not just clone someone else’s idea, be it an idea from somewhere else in the world. The Chinese have been masters of this approach over recent decades; exhibit an innovative approach for your about-to-be launched service or product.

No matter how many things do not work and no matter how often things go wrong, you have to have the aptitude and character to press on towards your goals, as defined by your purpose and vision. See the lyrics for ‘Cockeyed Optimist’, from Rodgers and Hammerstein’s South Pacific.

Start-ups can be robotic and lose the element of fun so ensure you are focused on making it and keeping it fun, aim for building an addictive culture around your optimism, purpose, vision and values. Make sure you create rituals around your business such as taking people out for dinner when a milestone is achieved, or casual Thursdays, or monthly celebrations of people’s birthdays or movie nights once a quarter.

For our people, it is not remuneration which is the number one motivator. For sure, it is the number one demotivator if things go awry with salary (late-payment, short-payment, non-payment, unfair salary levels which are not market-conform), but the number one motivator is undoubtedly the opportunity for your people to share in the purpose of the enterprise. If you lead with purpose you will create an incredible future.

Purpose is the top motivator, as uncovered by McKinsey research. Their study found of 100 variables, purpose had the greatest impact on motivation, accounting for 50 per cent of all movement in motivation scoring. Linked In’s researches show employees who are aware of, and agree with, the purpose of an organization, are 69 per cent more likely to be positive promoters of the enterprise; vital in today’s digitally connected social media world.

Purpose helps people connect to you, your ideas and the big picture for the enterprise. This helps them move beyond just doing their jobs each day and creates opportunities for their creativity, encouraging them to bring new ideas to the table.

Research from an Imperative Workforce Study shows us employees who embrace purpose are 51 per cent more likely to report more positive relationships at work. No surprise here; if we all know why we are doing things, this helps us understand and appreciate what others are doing in the enterprise, cutting down on company-politics and negativity in the workplace. And this enables groups of people to actually become trusting teams. Google research shows two of the five most critical attributes in their high-performing teams are meaning and impact. Teams working with purpose are much more effective.

If we can create a culture where employees are working in alignment with purpose, we can expect them to stay longer with the enterprise. Purpose-oriented members of the workforce are much more likely to be committed to the longer term ambitions and aspirations of the enterprise; normalized and shared values driving to succeed as defined by purpose.

These normalized and shared values create your enterprise culture. Glassdoor’s survey of 6,000 companies and 2.2 million employees worldwide found the biggest work factors related to the enterprise and the brand of the organization were culture and values. The third factor in this survey was ‘confidence in senior leadership,’ which means we need to be visible to and have to engage with our people. If we want engaged employees, we need to engage with them.

According to Glassdoor, people are looking for purpose, meaning and values at work, with leaders they want to trust and respect. They are also looking for a place where they can learn and develop skills helping with their future marketability. Most young people will have 55 plus year careers over and above their young twenties, so they know well their ability to grow and progress is perhaps the most important driver of their future earnings and job satisfaction. And older employees always surprise owners with their desire to learn new skills when they are given the chance; people can and do change.

Salary and benefits are obviously important. But in reality your investments in purpose, vision, values, leadership, culture, alignment, synergy and employee development are far more important. Be a cockeyed-optimist, be bold, be well-funded and stick close to your purpose and your people to give yourself the best chance for success.

See below for three boxes for the article

Tips for start-ups

Find a niche business idea in an industry you’re passionate about, and find a way to make money out of it. Passion fuels purpose and success
Locate a market that has huge potential growth relevant to your passionate niche idea. So a niche idea in a market that is untapped
Make sure you are ready to move around and have the flexibility to change your lifestyle around your business
Have a profit and loss plan with cash flow projections
Reduce costs as much as possible; guerilla operations. Try and use every advantage you can to get discounts, personal favours and services
Hire people who will become a team. Compensate them fairly.
Always be selling. Whatever the product or service is, make sure that everyone is selling including yourself
Optimise your business plans every three months. When you plan your startup, you will be assuming a lot of numbers, reactions to the product/service. You will need to optimise these figures every three months drawing out a clear picture for your team and for you to get a grip oon what is happening with revenue and costs
Fail often, fail quickly, fail cheaply. Failing is one of life’s tough lessons. Everyone has to endure. You will have to fail sooner or later.