When I started Videomaker, Inc. in 1985 I wasn’t really aware of what was required to achieve success. Ignorance was bliss at age 29. I loved the concept of entrepreneurship but I did not really understand the meaning to be: one who assumes the risk and responsibility of a business.
The first two years were very difficult. I learned that there were multiple levels below hopeless (or at least what I thought that word meant at the time). I owed so much money to creditors and had too few reliable revenue streams that I thought for sure that the venture was doomed, so I quit one night. The next morning I decided to go back into the office anyway and keep working until I was physically prevented from continuing to try to succeed (evicted by the landlord or the printing company refused to print the next issue of the magazine).
Eventually I met with success with the first order of business, which is sustainability. I am not referring to a green business (ecologically), I am referring to providing things needed for the company to exist, continue, etc.
The brutal reality is that most new businesses fail. Very few businesses are launched with sufficient cash flow for operations, so venture capital is required to allow for enough runway until revenues are sufficient to meet expenses. You can do all the forecasting that you can dream up until you launch the company and then only one thing matters: you need to sell things or services or both. A new business start up must make ends meet, to have just enough money to pay for the things that are needed. Initially I was not focused on the most important actions, so one of my investors gave me three key pieces of advice. Sell, sell, sell.
“Nothing happens until someone sells something,” is a famous quote attributed to at least three people including Peter Drucker, IBM's Thomas J. Watson, and Arthur "Red" Motley, the former Publisher of Parade Magazine.
Pick a great name for your business because you will not likely change it for a very long time (or ever). Don’t box yourself in with a name that is too narrow to allow you to expand the scope of the new enterprise. On the other extreme, don’t choose a name so broad that your potential customers can’t quickly understand the purpose of the business.
In the book Good to Great, Jim Collins writes, "… to build a successful organization and team you must get the right people on the bus." He claims that great companies and organizations not only follow this, but they also put them in the right seats. The unique challenge with a start up is that you have too few seats (until there’s sufficient cash flow), so early employees are doing two or three jobs, working long hours, jumping from one urgent matter to another crisis all day and into the evening. Early-stage companies will change, pivot and serpentine so many times that it confuses even the most nimble team members. If the early staff is not resilient to the multiple iterations of the fledgling enterprise, the venture is bound to fail.
In the video business specifically, the investment in equipment is incredibly complex. Often equipment is outdated within a few short years (or even months). You have to consider the merits of renting vs. buying, but equipment is very affordable these days. You have to know when to sell equipment on the used market before its value sinks too low. It is very tempting to get overly focused upon the equipment, which can take your eye off the ball of selling your services. The creative process of producing video can also distract your attention from selling. It’s so easy to spend more hours editing to get things just right, when you really need to be perfecting relationships with your best customers of cultivating tomorrow’s customers.
The keys to success include character traits like grit (tenacity) and fortitude (courage in adversity). Starting a new business will be one of the most difficult things you’ll ever do, but it can also be the most rewarding.
Matthew York is Videomaker's Publisher/Editor.