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MANAGEMENT: Tips for Building a Successful Start-Up
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Tips for Building a Successful Start-Up

By Marwan Emile Faddoul

BT 201503 10 Management 7676608930 5d4144fb10 oThe other day I was sitting with James, an MBA student from Renmin University. The first time I met with him was during a lecture I gave at his university about two month ago. We stayed in contact ever since, and we even met during couple of occasions. However, the last time we met, he sat down silent for about half an hour, then looked at me and said: "I have a wonderful idea that will surely help the people around me, but I don't know how to put it in practice, and I don't even know where to start"

James is a very passionate and open minded person, who is always eager to learn new things and to explore different horizons. Also, James is a determined gentleman who never gives up on something he believes in. He loves to take risks and do extreme sports activities, like snowboarding and skydiving. Above all, James is exceptionally flexible and is good at adapting to new environments. He simply have most of the required criteria of an entrepreneur.

Even though James is a person with an entrepreneurial spirit and a good business idea. Will he be able to turn his concept into a reality, without being in the right place at the right time and without the right guidance?

After listening to his question, I asked James what he considers to be needed to build a solid infrastructure for his business. His answer was simple: a place with abusiness environment, an entity to finance his idea, and a business person to guide him on the management of his start-up. When we had finished our coffee, I invited James to take a walk around the block with me, and I started to share with him tips on how to reach his objective.

Build a solid team that has all the needed competencies

BT 201503 11 Management 1362396810347.cachedRunning a business on one's own, will surely be difficult, and will not give major results. Nonetheless, having the right team working with you, and making sure that this team is continuously improving itself and working in harmony towards the same objective, will certainly help the company to grow faster and last longer. To build a solid startup, members of the team must have skills that complement each other and that as a whole satisfy the need of the company. These skills should include management as well as technical knowledge. Additionally, when building a startup founders must have people in their group that are good at executing and getting the job done.

Develop a well-designed strategy
Strategy is the primary building block of competitiveness. To be well-designed, the elements of the strategy must be mutually reinforcing. This is true when the business plan forms a coherent whole. Therefore a business model should include a large number of mutually reinforcing elements such as: Knowing how to give value and how to reach your customers, and knowing how to allocate your resources and manage liquidity. Also, the strategy must clearly show what the company will not do. This is very important, to the extent that business strategy can be defined as knowing when to say no.

BT 201503 08 Management hlTake part in an incubator program
The incubator helps tenants enhance their chances of success, raises credibility, and improves skills. Moreover, an incubator creates synergy among clients firms, facilitates access to mentors, information and seed capital. Despite the services and facilities that incubators provide, they do apply strict rules and screening processes to identify their clients. One reason for this is because incubators aspire to have a positive impact on their communities' economic health by maximizing the success of emerging companies.

In China, in the beginning of the 1980s, the government formulated a series of general programs for scientific and technological research and development, aiming to improve China's competitiveness in science and technology in the 21st century. The Key Technologies R&D Program, 863 Program, 973 Program, Torch Program and Spark program, have formed the main body of the state programs for science and technology. Today over 1500 incubators are present in China to help entrepreneurs develop their ideas and establish their startups.

Approach business angel investors or venture capital
Whether via a successful business person who is investing his own personal funds into a potentially rewarding business opportunity, or via a firm using investors' money, an entrepreneur is always in need of cash to develop his business, especially at its early stage. Additionally, VCs as well as angel investors, bring to the table their own business experiences, management skills and connections that could add value to start-ups. These investors can be categorized in four distinct groups: Firstly, Family and Friends, whom based on my personal experience, can be very supportive, and will surely know you the best. However they can also bring problems in the long run, especially that in general only a small percentage of start-ups is successful. Secondly, Individual Angel Investors, who are hard to find and work with. First, because they prefer to stay anonymous and, second, because they don't know you at all. Ideally, to reach these individuals, it is recommended to figure out someone they know, through your connection on Linkedin for example. That person can credibly make an introduction for you. Thirdly, Angel Investor Networks. Some of them are a group of angels who aggregates an amount of money and invest as a group in the deals they like best. Finally, Via Fund Raising Advisers, also known as a boutique startup fund raising adviser. The problem with this approach is that raising funds via this channel can be more expensive, with the adviser typically taking a 5-7 percent success fee in cash, plus the same amount in warrants to buy into the deal, and also a monthly retainer to cover their costs.

BT 201503 09 Management o NETWORKING facebookNetworking
Attending lectures and workshops related to your business idea and target market is something essential. These lectures can give you additional information on what your market is looking for. In addition, speakers would most likely share with you their experience in the business, which will help you learn from their failures as well as from their success stories. Furthermore, attending workshops would also help you broaden your connection, and get closer to your customers as well as your competitors. Beside these events, some entrepreneurs become part of social organizations or build their own entrepreneurial clubs, where they meet to exchange ideas and expand their awareness.

At the end of my conversation I explained to James that the tips that I mentioned will set him on the right track. However, he must be patient and willing to renew himself on a daily bases. Especially that failure will be his only weapon to help him reshape his idea and build a successful business with a solid infrastructure. The Start-up Guru Paul Graham from Y Combinator, once said: "Running a start-up is like being punched in the face repeatedly"

Being Patient and renewing one's self on a daily basis will help shape the idea of a start-up and drive towards success.


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