When you’re launching a startup, one of your first tasks is to identify potential customers and learn about their needs. This may seem very different from the goals I have described in previous columns about defining your business‘s greater purpose and helping to tackle some of the big problems our society faces today, but in fact they are related. Getting involved in volunteer efforts may help you to find customers and grow a business with deep roots in the community, which may be integral to its long-term success. When my friends and I were starting up Virgin Records in the early 1970s, we backed a student advisory center in London close to our headquarters, which provided guidance for young people on everything from dealing with depression to getting a job. This may not have led directly to record sales, but our work there did help us to keep in touch with our audience’s concerns and the problems they faced at a time when the culture was changing very quickly. Over the years, businesses in the Virgin Group have taken part in a number of local projects, though ”local” now means close to our offices, stores and other locations around the world. Experience has taught us that during our Virgin Records days, we might also have looked at lending some of our equipment, manpower and other resources to local school music programs and other music-focused community groups.
More importantly, you need good ideas! Business ideas which could be implemented inside society by making peoples’ lives easier:
What ideas can you think of for your business? Are there groups in your community in need of support, perhaps in terms of mentorship or equipment? Are there skills you could offer to teach? How would your team like to get involved? Just a few hours a month can make a big difference in people’s lives and help with your company’s development. This has been seen at other companies than Virgin. A well-known example is Ben & Jerry’s Homemade, an ice cream company based in South Burlington, Vt., which in its early years invested a great deal in its relationships, hiring everyone from dairy farmers to artists from the local community. (In fact, when the company went public in 1984, the founders, Ben Cohen and Jerry Greenfield, offered the people of Vermont priority when buying stock, in order to reward them for their early support.) Building on those relationships, the company advocated for good causes that came to its attention, promoting organizations such as Farm Aid to support family farmers; after a few years Ben and Jerry’s began to donate 7.5 percent of its annual pre-tax profits to community-oriented projects. While the company became part of the multinational consumer goods company Unilever in 2000, it still retains its local connection, its mission and its reputation. And in today’s global and fiercely competitive market, this makes the Ben & Jerry’s brand stand out from the crowd – a very valuable asset. Seeing this process at work can be a powerful experience. On a recent trip to South Africa I visited Virgin Active, our health club business, and got an update on some of its local community activities. The team at our flagship club in Soweto amazes me with their focus on helping people to live healthier, more productivelives. Working with the government, they recently launched a youth development program called Future Crew, which helps local high schools to get physical activity back on school curriculums, as many schools in South Africa do not have adequate sports facilities and many students are not active.
On the other hand, it is important for everyone to avoid common business start up mistakes e.g. Stay locked on your goal and control your costs effectively:
Richard Branson on How to Avoid Common Startup Mistakes …
Step 1: Stay on Target
A mistake often associated with the first step is signaled by an entrepreneur‘s inability to clearly and concisely convey his idea. You have to be able to generate buy-in from investors, partners and potential employees, so nail down your “elevator speech” — what you would say if you ran into an important potential investor in an elevator. Try using a Twitter-like template to refine the essence of your concept into just 140 characters. Once you’ve done that, expand your message to a maximum of 500 characters. Remember, the shorter your pitch is, the clearer it will be.
Step 2: Be Realistic About Costs
Don’t shortchange your start-up when estimating the funds you will require — you’ll just diminish your chances of success. Keeping your expenses under control is vital, but don’t confuse capitalization with costs. The playing field is littered with undercapitalized start-ups that were doomed from the outset.
Step 3: Hire the People You Need, Not the People You Like
As tempting as it may be to staff your new business with friends and relatives, this is likely to be a serious mistake. If they don’t work out, asking them to leave will be very tough.
Step 4: Know When to Say Goodbye
A great entrepreneur knows when the time has come to leave the CEO role. It’s seldom easy, but it has to be done: few entrepreneurs make great managers. In my own case, managing the daily operations of a business simply isn’t in my DNA. (Or, as I’ve said to friends, “It’s not bloody likely.”) Stepping back doesn’t mean turning your back on your business. At Virgin, I’m always involved in the launch of a new business, and then I gradually hand over control to the new management team as it starts to jell. But no matter how long it has been since I was at the helm, if I see something that I don’t like, I’m not at all shy about making my thoughts known and asking some very pointed questions. Founders shouldn’t hesitate to re-insert themselves into their businesses when necessary — look at Larry Page, who temporarily returned to the CEO role at Google in April. That said, I had to laugh when I heard this news, wondering how many managers at Virgin businesses had thought, “Wow, I hope this doesn’t give Richard any ideas.”
Finally, you have to take the decision. After proper decision-making it is time for action. Richard Branson is here…