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About 42 percent of startups fail because there’s no market need for their product, and almost 30 percent don’t make it because they run out of money. So, what does it really take to succeed in business, especially when you’re bootstrapping?
We asked these top entrepreneurs and advisors in The Oracles, including Hint Water’s Kara Goldin, investor Tai Lopez, and designers Emily Current and Meritt Elliott, to let us in on their secrets.
Surround yourself with people you trust
When you’re bootstrapping a business, it’s paramount that you work with people you really trust. We self-funded initially so that we could stay true to our vision and control the quality of our products no matter what the conventional wisdom dictated.
People told us unsweetened flavored water would never work, but we were determined to help people lead healthier lives and remove all the ingredients that contradicted that goal, like sugar, diet sweeteners, preservatives, and more. Now we are the No. 1 independently owned non-alcoholic beverage company in the U.S.
Calculate your VRIN score
Select a business idea that will generate cash flow quickly, which you can estimate with a VRIN score. “V” stands for value, meaning it’s something many people want. “R” stands for rarity; so the market is not flooded with that exact product or service. “I” stands for inimitability, meaning your ideal customer can’t do it on their own. “N” stands for non-substitution; so no one is doing anything similar.
Rank those factors on a scale from 1 to 10. If the average isn’t eight or higher, it won’t have a positive cash flow for a while. For example, consider the NBA. People love it, so its value is high. It is the only professional basketball league in the U.S., so it’s rare. I can’t get people together to play basketball and entertain me like that, so the inimitability is high. Can I substitute other things? Yes, I could watch football, baseball, or hockey instead. So, non-substitution might be a seven out of 10. But the overall average is high, which is why the NBA is a multibillion-dollar industry.
Get your hands dirty
Roll up your sleeves! One of our mentors always talks about how a successful business starts with leaders who are both the “chief cook” and “bottle washer.” No job is too small or insignificant in a startup.
If you start this way, you’ll have a full understanding of how your organization works from the bottom to the top as you grow. This also sends a message to your team to think outside their job responsibilities, be comfortable doing tasks below or above their pay grade, and pitch in whenever, wherever, is needed.
Master direct response marketing
Even if you are low on funds, my No. 1 tip is to master direct response marketing or find someone who has and give them a key role in the business. For five years, I struggled with my business and stayed around six figures. Once I mastered direct response marketing, where consumers are prompted to respond immediately to your pitch by signing up for a newsletter, for instance, I grew to multiple millions in less than two years.
Since then, I’ve used my direct response marketing techniques to grow another million-dollar business and help dozens of others scale to tens of millions. Like sales, I believe direct response marketing is a vital skill to master as a business owner, or at least understand.
Burn the ships
When Hernán Cortés arrived in Veracruz, Mexico, in the 1500s, he ordered his crew to burn the ships. Forward was the only way off the beach; there was no turning back. After advising and running a number of businesses in a variety of industries, that is my advice: burn the ships.
If you are trying to start a business while keeping your old job, don’t. Quit your job so there is no going back. If you see so many opportunities you can’t decide which to choose, pick one and burn the ships. Trying to be everything to everyone will never get you where you need to go. Do just one thing you’re passionate about, and do it better than anyone else.
Don’t let your ego and sense of control take over. Be willing to let go. Make it easy for investors to help grow your company by being willing to burn the ships again and move forward.
— James Daily, founding partner of Daily Law Group, which helps high-profile clients with fiduciary abuse litigation, including fraud, crisis management, and business and family disputes; connect with James on LinkedIn
Want to share your insights in a future article? Join The Oracles, a mastermind group of the world’s leading entrepreneurs who share their success strategies to help others grow their businesses and build better lives. Apply here.
Originally published on Entrepreneur.com. Copyright © 2019 Entrepreneur Media, Inc. All rights reserved.