Unicorns are often criticized as being risky and offering little consideration to investors. How do you create the right kind of unicorn?
6 min read
The opinions expressed by the entrepreneur's contributors are their own.
For the past decade, hunting for unicorns – privately owned startups valued at $ 1 billion or more – has been an obsession for many investors, founders, and the media. Recently, unicorns have come under fire for being high risk and potentially offering little in return. We have learned over the years that high ratings can be meaningless. Just because a founder convinced investors to part with their money doesn't mean they can run a successful and profitable company.
How do you create the right kind of unicorn? What does it take to build a scalable, successful business – even during an economic crisis?
Here are five key strategies to make your startup a success.
1. Help employees see the company as their own
When employees are given the opportunity to participate directly in the company's success through stock options, they take pride in their property. It encourages employees to feel motivated and productive because they actually have a legitimate interest. The more people see the company as their company, the more they do what is right for them. With everyone at play, you can create a culture based on the collective good and eliminate individual interests and agendas that affect the overall health of the company.
Related: How to Recruit Employees With Equity
2. Be honest and transparent
Creating transparency is the key to creating a positive corporate culture and strengthening employee loyalty and engagement. When you hire smart people and deal with them openly and honestly, they invest more in the company's success. Executives can act transparently by keeping employees informed on business issues, large and small. In fact, employees should have access to all company information, including board decks and financial data. As boring as boardroom meetings may be, I encourage our team to attend them and share their concerns or opinions. It is not only their right, but also their obligation. I've always believed that if a team member believes that there is something we can do better – whether to its extent or not – they should say so. A distributed decision-making framework is ideal for growing companies because no one at the top or in the center can see everything.
Related topics: Employee engagement is directly related to successful business results
3. Find the right people to build with you
The companies I have always admired have strong cultures and continue to attract great talent. It's important to work with people who want to build (and know) something from the ground up. That was our ultimate goal when we started our company and I am always looking for people with that attitude.
Some things to keep in mind when setting up:
Assign talents to the most important challenges regardless of their hierarchy. While employees need managers to give directions and set goals, they should hire intelligent, independent employees who aren't afraid to push boundaries.
Hire a group of people from different backgrounds who share common values. Most important is a workforce with a variety of experiences, thoughts and skills. When you bring together a group of people who think differently, your company can reap the benefits that each one brings.
Set "10x people". Some people can do ten times more than others, and not because they have ten times more time. That's because they make fewer mistakes. You focus on the important parts of the business. If you can pay a little more to get those 10x people it's worth it. By recruiting very talented people, your company can maintain a culture of excellence. As a side benefit, you can follow a high-income, low-spend formula.
Related Topics: Top Trends In Hiring Employees In 2020
4. Build sustainable profits at a reasonable rate
While growth is important, it should not be done at any cost. Having a clear, timely path to generating positive cash flow is critical. Whether you pull this lever or not, the no more leverage option can give you a higher valuation.
After going through this process with our company, we developed some important insights. Our contemporaries may take a different approach. We know this.
A high average selling price is important: we sell to relatively few customers, but we sell a lot to everyone. This allows us to maintain high levels of sales while employing fewer salespeople.
Income dollars are more important than business size. It doesn't matter how big your contract is, but how much profit you take home with you. A $ 2 million deal with a 20% gross margin and a $ 500,000 deal with an 80% gross margin are the same. What matters is more dollars flowing in how big the deal isn't.
Hire the right people. As mentioned above, a 10x person can ask for a higher salary, but they can also do a lot more. Less overheard enables your company to remain agile.
5. Stay focused.
Maintaining a sharp focus is critical to building a successful business. With so much to do, focus is the only advantage a startup has over a large company. Often this means knowing what not to spend time on. Make intentional decisions about the opportunities you pursue and make sure you understand your customer base.
There is no magic formula that will guarantee my company's growth, and how founders and investors predict whether an idea will turn into a billion-dollar company remains a billion-dollar question. With so many factors, many things remain out of our control. However, if you focus on the aspects of your business that you can control, invest in the people behind your business, and build a culture of trust and transparency, it can surely fuel your path to success.