5 Essential Keys To Building a Multi-Million Dollar Company
1. The Right Product
The biggest question is whether if there is a sufficiently large market for your offering. Many companies spend a lot of time building up a product without first validating whether there is a sufficiently large market for it. A far more practical approach is to do enough market research before building your product. Then you should validate the offering my releasing an MVP (Minimum Viable Product). Be ready to pivot if your product does not perform as well as you had expected.
If your goal is to build a multi-million dollar company, your focus should not be on what you want to sell, but on what the market wants to buy. Many entrepreneurs become too attached to their creations to realize that they need to adapt themselves to the market’s needs. If you don’t have the right offering, whatever do in execution doesn’t matter!
Building a multi-million dollar business is about building a scalable business. There are two parts to scaling up effectively- identifying key things that work and doing those key things repeatedly.
For instance, once you discover that there is a component of your offering that most of your customers find more useful, you should focus your efforts on developing that component further. You might even want to position your company around that particular component. You marketing campaigns should be centered around it, your sales teams should frame their pitches around how that component will benefit customers and your support team should be better prepared to handle queries about that component.
Essentially, scaling up is easier when you have fewer things to focus on. Once you discover what the market really wants, focus your energies on that and don’t be distracted by smaller opportunities.
Capital is a crucial aspect because of a very specific reason - speed. Today, market conditions change incredibly quickly, and a company without sufficient capital might not have the ability to adapt to those market conditions. The reality is that capital is essential not just for growth, but for the very survival of your company.
Most businesses (with the exception of some services businesses) have to spend a significant amount of money before they begin to generate revenues. In the initial few months, capital gives you the peace of mind to focus on your long term goals rather than be worried by how to make sure that salaries are paid on time.
If your market is large enough, it will naturally have lots of competitors. Even if your product is innovative it’s only a matter of time until it attracts competitors, many of whom will have deep pockets.
To compete effectively, you will have to invest large amounts of capital in continually improving your product. You will also have to invest sufficient money for marketing. The amount of traction you get depends entirely on the size of your marketing budget. A large budget gives you the freedom to experiment with different channels and figure out which ones are driving the maximum ROI.
The right people are crucial to building a high growth business. You need people who have the right skills, the right attitude and are committed to your company’s success. Hiring the first few non-founding employees is one of the most important decisions you will ever make, because they will have a huge impact on your company’s culture.
To hire good talent, you should be prepared to pay well, and above market value. Many entrepreneurs make the mistake of assuming that they offering equity, the promise of growth and the founders’ backgrounds is sufficient to attract great people. These three things are important, but the reality is that talented people have no dearth of good startups to join which will also offer all the above and pay a high salary.
But only salary is naturally not enough. You need to be able to demonstrate to a candidate how working at your company can shape their career - by offering an invaluable opportunity for learning and growth.
5. Purpose and Clarity
One of the biggest human needs is to have a sense of meaning about our lives, to feel part of something bigger. Employees spend a third of their waking lives in office and what they accomplish at work bears a huge influence on that sense of meaning.
Each team member should clearly understand how his/her individual goals contribute to the larger organizational goals. Having that clarity gives employees a deeper sense of meaning and purpose in their work and is a great way to ensure that people stay productive.
The biggest detriment to this sense of purpose is lack of clarity about goals. This is very common in a startup where goals can keep shifting very rapidly. Some of these shifts might cause a considerable amount of confusion within the team.
The founders should invest time in determining and documenting the right goals and arrive at a consensus about those goals. Then, these goals should also be appropriately communicated to the respective teams by translating the larger strategic goals into departmental and team goals.
A clear direction will do wonders for your employees’ motivation, their productivity and hence the success of your company.
Building a company valued at over a hundred million dollars is hard, but if you have the above 5 elements in place, your chances of success will be far higher.