By Wain Kellum, CEO of Vocalocity
I grew the business that I currently lead as CEO from a start-up to more than 60 million dollars in revenue in less than six years. Because of this, fellow entrepreneurs are always asking me the proverbial question that is woven into the media interview of every successful CEO, “So, what’s your secret?”
I have more than 25 years of experience in leading fast-growth technology companies, and Vocalocity’s success follows on the heels of a long-standing track record of rapidly growing small business/start-ups.
From my experiences – doing many things right and making many mistakes – I have developed a five-step method that I use for building a successful company. My simple process has worked to spur growth and revenue for every business I have headed. I also invested in more than a dozen other companies, and the ones that have performed poorly, missed one of the key steps along the way.
1. Identify a Large Total Addressable Market.
Many businesses don’t spend enough time thinking through the market that they potentially could address. I like to take a significant amount of my time to think about how broad my horizons could be expanded. I obsess with data and competitive analysis so I learn everything I can before I invest my time and money into going after the marketplace. Once I feel that I have a large enough market to go after and I understand the potential of that market and what it will take to be successful, I immediately shift gears to find a narrow starting point within that marketplace. You could call this first step of the five-step method the Goldilocks step because you want to make sure the narrow starting point you have chosen is not too big or too small – you want it to be just right. You want the starting market you have chosen to be narrow enough to allow your product/service to be easily differentiated, but not so narrow that there isn’t enough market for the business to be viable.
Some questions to ask yourself during this phase include; what are the trends driving this industry? What need am I addressing that is unique? Is there a trend that is percolating that others have yet to recognize? What can I learn from adjacent markets that will help me? Pretend you are on a date with your marketplace; get to know it so you can have a lifelong successful relationship with it. Intimate familiarity is the key at this phase
2. Develop an offering with a Distinct Value Proposition.
Now with your deep insights, you can start to define the unique value you bring to the customer. Here, you need to step into the customer’s shoes and ask yourself, “As a buyer, why would I want my product/service, and, more importantly, why wouldn’t I want my product/service?” Remember, you’re not only competing against other businesses, you’re competing against your customers’ other financial obligations or the status quo. How can you make it worth it for them to spend their hard-earned money on what you’re selling? One of the most frequent traps of a business leaders is they believe their own propaganda but don’t take the time to listen to objective but critical feedback from customers, prospects and competitors.
As you develop your value proposition, think about the following questions. Can a competitor’s product name be easily substituted for my company’s brand? Meaning, if you branded your company’s product/service with that of your competitor’s, would the customer notice a difference? If the answer is no, it’s time to go back to the drawing board. Is there a relationship between the compelling reason to buy and what sets you apart? The critical key at this stage is to remember that the more credible and demonstrable your claims are to your potential customer, the shorter your sales cycle will be and the higher your close percentage will be. Every struggling company I have encountered is usually missing the mark on this step.
3. Get the right team in place.
Don’t settle for the “good enough” employee. Do the proper leg work to get the best. But, more importantly, keep the best. I have employees that have left larger companies to work with me, sometimes taking a pay cut. But, they are genuinely happy to work with me because of the work environment I offer. You will be surprised about the type of person you can recruit into your company when you’re offering an inviting work environment.
As the leader of the company, you need to spend a significant amount of time with your team and make sure your managers are doing the same. A leader isn’t the person behind the desk; they’re the person that is part of the day-to-day, pulling the rope like the rest. You may have a different role, but you are certainly not more important!
4. Build a business model that scales.
Your business model should be scalable and have the capacity to grow beyond the audience sweet spot you identified early on in this process. As you build your business model, dig deep to find the “what ifs.” If you identify problems or issues early on, you can outline action items to address them before they occur.
Try to automate everything so you can grow quickly and cost-effectively. With the advent of cloud-based computing, small start-ups are able to be more nimble with their growth strategies. Take advantage of technology that enables your small business to successfully compete with the big corporations – especially if you plan on being one of those big corporations one day.
5. Always take the long view.
Let s face it, we all have pressing day-to-day issues, and we all work far more than we would like. Still, you have to find a way to spend 20% of your time, every week, thinking about the overall business, and where there are gaps or pitfalls that need to be addressed. The great people you hired are depending on you to expand their horizons, and you are in this for the long term. So, be sure to take proper time out of your week to assess your business and be willing to make the tough decisions that your team looks to you to make. Release the unproductive employee that sucks time of your business and fire the unreasonable customer that is never going to be happy. Sound harsh? I have never let an employee go and not have the team members thank me afterwards. Additionally, an overly difficult customer can be just as costly to your business as an unproductive employee. Some difficult customers can make you better and should be embraced. However, some difficult customers are so problematic that they get in the way of you providing good service to the other customers you are trying to serve.
There you have it, the ingredients of start-up success. And, at only five steps, it’s less complicated than some meatloaf recipes. Growing a business is something anyone can do with the right tools.
Wain Kellum is CEO of Atlanta, Georgia-based VoIP service provider Vocalocity. Prior to joining Vocalocity, Kellum developed a solid track record of rapid revenue growth and successful outcomes for a diverse group of technology companies he has managed.