Article originally published in the Philadelphia Business Journal on September 14, 2020.
On Sept. 5, I spoke via Zoom to a group of entrepreneurs who are designers in residence at the Philadelphia Fashion Incubator about entrepreneurship and what it takes to build a successful business. The Incubator’s mission is to “nurture emerging fashion entrepreneurs from Philadelphia design schools and the local fashion community.”
When Elissa Bloom, the Fashion Incubator’s executive director, invited me to speak, I had some concerns of whether I would be able to connect with these designers. I do not come from the world of fashion. My background is with technology, manufacturing and service companies. However, given the questions asked by the designers and how my responses were received, it became quickly apparent that regardless of what business you’re in, the principles for success are universal.
So, what are these universal principles?
The four most important questions you should be asking yourself
Entrepreneurs, as well as all businesspeople, should always ask themselves, “Why does the market need my product or service, will people buy what I am offering, how can I give them a great customer experience and how do I differentiate my company from the competition?”
These are fundamental questions that drive all businesses. The answers will change over time as trends change, the market environment changes and competition changes, especially in the ever-changing fashion market. Andy Grove once said, “Only the paranoid survive.” He’s right.
I was asked by one of the participants when she should seek outside investment. I responded that it depended on her business plan. Does she need capital to fully commercialize her product, to grow, or to attain a critical mass to ensure market success?
The most important thing when selecting an outside investor is to perform due diligence on them. What expertise do they have to help the business thrive, and are you comfortable with them as business partners?
After an outside investment, her ownership as the founder will be diluted to a smaller equity position, but in a company that would be growing in value. I also told her that an outside investor will want a board seat. They may also want a preference so in the event of financial difficulties and restructuring, their claims would come before those of the founder.
Under-promise and over-perform
When you are exceeding your goals, your staff is in a positive mood. Your board meetings are shorter, and it is easier to raise additional rounds of capital because you have a track record of delivering the results you committed to.
A March 2018 CNBC article is headlined, “Shark Tank star Kevin O’Leary: Women-run businesses make me the most money – here’s why.” In that article, O’Leary said, “In my portfolio companies, women hit their objectives in sales 95% of the time.
“Men are setting goals … much, much higher and then only achieve them 65% of the time.” O’Leary said, “If employees aren’t meeting their goals, … frustration can lead to turnover, which is particularly costly for small operations. Women are better at avoiding this pitfall.”
O’Leary continued, “When you meet your goals 95% of the time, you change the culture of your business. People feel they’re working in a winning organization. … You don’t have to reach for the stars, you want to win 95% of the time. That’s the secret sauce.”
O’Leary’s advice should be followed by all CEOs.
Learn how to reach out to people and to network
As a high-school student, Apple co-founder Steve Jobs cold-called Bill Hewlett, a co-founder of Hewlett-Packard and asked if he had any spare parts that he could give Jobs to build a frequency counter. Not only did Jobs get the parts, but he also landed a summer job in a Hewlett-Packard factory.
Jobs said, “I’ve never found anyone who has said no or hung up the phone when I called. I just asked. … And that’s what separates the people that do things from the people that just dream about them. You gotta act. And you gotta be willing to fail.” And, you have to be willing to network.
Networking is one of the most important skills you can learn. You should develop the confidence to walk into a room, identify which conversations into which you should not inject yourself, and identify which conversations you can join. Know how to introduce yourself and what you do. Know when to gracefully leave and enter a new conversation. Develop two or three new contacts for future follow up.
You will fail along the way, but you must move forward
Whether you are an entrepreneur leading a startup or working for a traditional company, you will need to take risks to succeed. Albert Einstein once said, “If you have never failed, you have never tried anything new.” One must learn how to take risks, to accept rejection, to get out of one’s comfort zone, to pivot and have the resilience to move forward.
In my professional life, I developed an approach to handling disappointment and failure. After a good night’s sleep and a clear mind, the next morning provided an opportunity to discover a new approach. It was a new day with new possibilities.
The designers in residence at the Philadelphia Fashion Incubator are people who see opportunity and abundance, versus those who see only limitations and scarcity. These designers are the type of people who build successful businesses.
Stan Silverman is founder and CEO of Silverman Leadership and author of “Be Different! The Key to Business and Career Success.” He is also a speaker, advisor and widely read nationally syndicated columnist on leadership, entrepreneurship and corporate governance. He can be reached at Stan@SilvermanLeadership.com.