Recently as part of our ActionCoach interview series, we met with Larry Galan at Energia to discuss small business and startup ventures. In our conversation we were able to share and discuss the right ways to run a startup business effectively, and how to avoid the common mistakes first-time business owners go through. Discussing topics such as lean startup theory and business tips, this blog will share the 3 best tips to set your startup up for success. 

1. Set up the right team

The first thing you need to do as a startup is to effectively build the right team. Building a team is difficult and important as you have to find the right amount of people to do the right job. As mentioned in our blog How to Interview the Right People at the Right Time managers should utilize the hire slow and fire-fast approach to obtaining and keeping the right talent. According to Larry Galan, startups should look for individuals who fit the company culture, are smart, engaged, and might have a chip on their shoulders. This helps to push your company in new and uncomfortable directions during the early risk-taking and initial learning stage of your business. Another uncomfortable quality that most managers wouldn’t initially think of is to find people who think a little outside the box. Startups need people who can civilly disagree with one another to challenge ideas and push for the best results. Too many team members who agree on everything might lead to groupthink rather than collaboration and finding the best ideas. 

Create the Right Culture

It is vital to find team members who are willing and able to provide and accept feedback. This will help you understand how to become a better manager, both in terms of soft skills and learning how to manage your business's overall objectives. When setting a culture for these employees, you need to encourage people and you need to value them or else they will leave. To set the right culture to build your business with and around your team, motivate, inspire, and create a vision for your people to succeed. 

2. Set up the Right Processes

Along with setting up the right people in your team for success, startups need to set up their business processes and operations for success. As a first-time business owner, it can be challenging learning and managing all the different concentrations of business and keeping a budget. For businesses selling tangible goods especially, time management and production cycles can be extremely difficult to manage and forecast. To overcome this, Larry Galan suggests that startups should focus on the Speed to Market approach in the initial stage of their startup. Good entrepreneurs will know the perfect use case for their product whether it succeeds or fails. The key is to speed up your development so that it can hit the market and receive that initial feedback stage. Don’t worry about building the perfect product or service, get the product into the hands of your ideal customers so they can help you build it better to their needs.  Once your company receives feedback, you will learn more about how to make your operations more efficient, how to price your product, market it, and ultimately improve it. According to Larry, startups need to build their organization quickly so that they can pivot and learn fast.   

Slack Example

Utilizing this learning and pivot behavior Larry shared with us how a failed video game launch was able to turn their business into a popular company software also known as Slack. Slack, under the name of Tiny Speck at the time, was a video game company that invested significant resources into a video game called Glitch. Expecting success at the release of the game, Tiny Speck’s video game sales were shockingly below what they expected and were considered an absolute failure. This put significant pressure on Tiny Speck to avoid significant losses and potential bankruptcy. Gathering all the resources they could and in a move of desperation, they realized they owned a small-scale business communication tool for the office that could be utilized for other businesses. Using this technology, Slack was able to pivot into a new industry and become one of the biggest business communication tools. 

Find Your Niche Audience

Besides being able to quickly learn and adapt, Galan emphasized to us the importance of understanding your target market as it relates to scaling. According to Galan, startups will scale if they find the right niche audience. Instead of chasing a mass market, focus on creating a viable product for the right audience. The key to balancing smaller markets is to make your processes lean and more efficient. Planning budgets and ensuring a positive margin on your goods will help you remain initially profitable. Speaking of planning budgets, your startup will more than likely be more expensive than you initially planned for. As an entrepreneur, you must plan for your own bias that costs may be higher than expected, and your first product iteration may not be perfect. 

3. Gain Customer Feedback and Adapt

The final strategy we discussed on how to build a startup effectively is gaining customer feedback and adapting quickly. According to Galan, the biggest challenge startups face is “not getting enough feedback from your customers quickly enough and learning from it. He continues,  “The ability to quickly pivot when your customers tell you so is critical.” It not only improves your relationship with your customers but also increases your profitability and efficiency. This mindset should be taken in with your key niche audience and will allow you to develop your product, brand, and operations all without having to make inferences whether you are on track or not with your goals. In a marketing context, we used to have to collect data on advertisements using consumer sentiments and polling. Now in this ever-growing online content space, we can directly meet and gauge reactions with customers through social media, podcasts, and new content avenues. While we can directly learn about our customers through online communication, we can also test the product’s demand by running pre-sell product launches to help drive demand and product fit. This can include incorporating waiting lists, forums, and the ever-growing popular keynote events that tech companies are running. 

Thank you again to Larry Galan for meeting with us and discussing startup tips. If you want to learn more about our conversation you can watch our full interview Interview Here.

Larry Galan's Book Recommendation - The Cold Start Problem: How to Start and Scale Network Effects by Andrew Chen