Don’t Forget To Study More Mature Companies Too

People who want to be successful at starting their own company naturally want to hear from people who have just done it. Budding entrepreneurs tend to focus on presentations, articles and participate in AMAs by others just like them who have enjoyed some measure of recent success.

Sure, you can learn a lot from your peers who have done in the last few months or years the things you’re trying to do right now:

• How they came up with the idea for their product or service.
• How they got people to pay attention to them and give them funding.
• How they attracted and onboarded customers.
• How they hired their staff.

It’s tempting to gravitate to successful people of a similar demographic. But it’s critical to remember two things:

• That’s THEIR story. Every business is different.
• They’re just a few steps ahead of you. There’s a lot they haven’t seen yet. It takes time to see whether any business will be truly successful.

There’s a lot of glib talk out there, and some early celebrations and raising of victory flags are happening before they’re warranted.

So, it’s important to remember when hearing from the founders of these hot new companies that there are a lot of chapters yet to be written in their stories:

• Interest in a company measured by views and click-throughs is not the same as real business success. Buzz does not necessarily translate to revenue from the sale of products and services to customers.
• Early success is often a function of convincing funding sources to take a chance on your business. Even an acquisition by a big player can signal nothing more than a decision to invest a finite amount of money in speculative and high-risk enterprises that show promise. Winning a round of funding or getting acquired is not by itself proof of business success.
• Customers don’t become profitable till they’ve been with you for awhile. Acquisition costs mean you can actually be losing money in the early going on each new customer you get.
• Keeping customers takes different skills and behaviors than attracting them.
• No matter how unique your product, it’s relatively easy for competitors to copy it once it’s out there. Customers are fickle and can change their minds quickly.
• Revenue is not the same as profitability, which takes real management of costs to produce your product, provide services and run your company.
• Many founders don’t have business skills or experience, and the consequences of that shortcoming may not show up for some time. Rapid tech advances have made it possible for someone with a great idea and programming skills to set up a company with little more than a laptop. Sustained business success will require that the founders acquire some serious marketing, operations, management and financial skills, or bring in some outsiders who have it.
• In addition to being a vehicle to sell products and services, even a tiny company starting out as friends working together on an idea, quickly becomes its own social institution. Continued success will require that it have structure, rules and discipline and attention to the needs of the people who work there.

It’s a good idea to spend time looking at older, more mature businesses, large and small, in all industries. See what they’ve done to attract and keep customers, have good people working there and grow and sustain their companies over time.

Look more closely at the place where you get your gas and have your car serviced. Motorists are sensitive to gas prices and might switch when someone offers a cheaper price. How has this one hung in there for 20 years?

Or the restaurant that’s been there for generations. People dining out will move on after a single bad experience. Yet that place has carried on. How?

With all that’s new in the marketing and delivery of products and services, it’s tempting to say there’s a new formula, and to try to emulate the latest success stories. But there are some time-honored constants you can learn from tried-and-true establishments, like offering a solid, dependable product at a fair price and showing customers you really care about them, that transcend new technologies and the passage of time.