Ensuring Ongoing Success: 1
It's All About Management
The first thing to realize at this point is that being a talented (or simply lucky) entrepreneur does not make you an effective manager. Indeed, many entrepreneurs thrive on creating a business out of an idea and then turning it over to someone else to run, either because the mundane operational chores hold no interest for them or because they have other ideas that would be more fun (and perhaps more profitable) to pursue. In either case, being able to recruit and retain an effective management team that shares a common vision for the future of the company is one of the chief concerns at this point.
Alternatively, being able to educate oneself about basic business management, either formally or informally, also is an option. But for larger-sized operations where literally millions of dollars may be at stake, handing over the reins to someone with a superior business acumen may prove to be the wisest choice, with the benefit of freeing the owner up to do the things that he or she enjoys.
The analogy that I like to use in this case is that of the restaurant, which, not coincidentally, is the most oft-failed business in America. The reasons for this have little to do with menu selections, average entree prices or location, and everything to do with the actual person starting up the restaurant.
Rather than being a businessperson with experience in managing a restaurant, these entrepreneurs are typically "good cooks" who have been repeatedly told by those enjoying a nice meal that "they should open a restaurant." Many do. Thinking that this is the perfect opportunity since they love to cook, they go into substantial debt to open an eatery, but instead of doing what they enjoy (cooking), they are instead consumed by obtaining linens and laundry services, scheduling wait staff, keeping up with the health codes, purchasing fresh produce and an infinite variety of other tasks that they are wholly unprepared for.
The end result is another closed restaurant (or change of ownership), and not because the food was bad, but because the boss was a lousy manager. Take this lesson to heart, as cyberspace is littered with the bones of companies that made a huge splash when launched but then fizzled off into obscurity, bankruptcy and closure — all due to incompetent management.
While we already examined the basics of growth and marketing as well as the need for capital reinvestment, at this stage in the company's development, these factors need to be taken to a higher level. Again, this is where having an experienced and effective management team comes into play as it allows decision makers to gain from their talents.
With more money coming in, there comes the ability to allow more money to flow out. Money is the lifeblood of any enterprise, and this in-and-out action can be considered "breathing." Capital reinvestment and the resulting increase in net revenue is the mechanism by which this breathing occurs; and there is no shortage of places to spend your money:
Research and development initiatives that either invent new or exploit existing technologies should be pursued with an eye toward gaining market share and consolidating industry dominance. What is the fad du jour? For some, it's blogging, for others it's mobile technologies or iPods or PSPs — and for some, it's all of the above and more. Whether you use next-generation platforms to deliver your content, message or product, or simply use them to advertise their availability, investment in the pursuit of these assets and others often is a wise choice.
Increasing the reach of your marketing efforts, branching them out into various media, acquiring competitors — the list of ways in which your company can increase in size and strength is limited only by your imagination and your budget.
For some organizations, growing the company (or at least its core business) takes second place to diversification. An easy example is the adult paysite. A successful site, built as a labor of love by a hard-working webmaster, offers an affiliate program to help promote it to consumers. Over time, affiliates request multiple properties to promote, which soon spawn additional websites — not necessarily meant to feed the demands of consumers (the company's original "customer"), and not necessarily because the owner has an interest in the subject matter, but because the affiliates (the company's "new" customers) demand it.
In part two, we'll examine core business evolution, asset management, going public and more.