The small business first step is knowing why you’re starting your company in the first place. The first step is to define your why. One of the most popular TED Talks is called Start With Why by Simon Sinek. This short video explains the concept of the Golden Circle which starts with three concentric circles. The center circle being your business why. Then moving outwardly to your how and what. The idea is the center is always your why. Your purpose.
This same concept was also popularized by David Packard in a speech (founder of H.P) to employees in the early 1960’s – “…why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being… Purpose…” To summarize – If starting a business was all about making money, then most would quit after the first few years.
When we establish purpose for our business it helps us establish things like our – business intent, reason for being, slogan, marketing plans and even our mission statement. Knowing our why is the thing that gets us to do what we do. It’s the motivational factor that helps see through the good and bad. The great thing about starting your own business is we can make money, fulfill our purpose and have fun while doing it. As a small business first step, here’s a few good quotes about the importance of knowing your why.
- “He who has a why can endure any how.” – Frederick Nietzsche
- “There are two great days in a person’s life – the day we’re born and the day we discover why” – William Barclay
- “Purpose provides direction. Passion gets you there.” – Chris Rither
Business typically take 5 years to establish
Year 1: START-UP: It’s the making plans and getting everything together phase. Basically, you start with lots of money going out, and end with some money hopefully coming in. This is typically a tough year do increased tax requirements, insurance needs, overhead issues etc. But knowing our why helps keep us motivated and keeps doubts away.
Year 2: SET-UP: It’s trial and error phase. Where you begin to find out what works and what doesn’t. It’s where the rubber meets the road. When you’ll be tempted to question why you started in the first place. Hopefully you’ll have set up a process that works and overcome the fear of failure that typically plague second year startups.
Year 3: FOLLOW-UP: By now, you should have found some kind of rhythm. Focusing on the areas that work. Forgetting what doesn’t. Often this is the make-or-break year. Here is when we evaluate strategy, clarify our purpose and make the changes that are necessary to move on.
Year 4 & 5: MOVE-UP: By now, we should have a pretty good idea on the status of our business and hopefully have become cash flow positive. Or at least know how to get there. It’s when we see the fruition of the reason why we started. And if we want to continue, expand or move on to something else.
Luckily making money does happen if you provide what people need; the way they want it.
A few good ways to define your why
- Put together your personal vision statement Tools for Better Living – Personal Vision Statement Guide pdf
- Write down your goals for starting your own business.
- Buy some business plan software and start filling in the blanks.
Make sure you can answer these questions to define your why:
- Why are you leaving your job and how working on your own is any better?
- Will it affect your spouse or children, and if yes are they onboard?
- Why will your business do what it does?
- What are your alternatives, and can they fulfill the same desires?
- Is your passion or hobby really a business, or even a good idea?
- Where is the potential competitors location, and can you fulfill the needs of this area better?
- Are you really, honestly, absolutely, positively sure you’re going to be committed to this new venture?
Mission Statements of Companies who defined their why
Google – To organize the world’s information and make it universally
Microsoft – To enable people and businesses throughout the world to realize their full potential.
Mary Kay – To help women achieve personal grown and financial success
Nike’s Mission: To bring inspiration and innovation to every athlete in the world
Johnson & Johnson – To advance the health and well-being of people
Sony – To experience the joy of advancing and applying technology for the benefit of the public.
Starbucks – To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
Remember this. Vision provides direction. Passion gets you there.
Looking at these companies as example, you can see it took them time to “define your why”.
Define your why – 3 Successful companies who stayed true.
Google only took 3 years to become profitable 1998-2001 because they focused on their why (focusing on building the best search engine). Today they hold 92.58% market share world wide.
Microsoft original why was to develop and sell BASIC Interpreters for the Altair 8800. Over time their why focused on establishing MS-Dos to dominate computers operating systems. Today they still dominate.
Mary Kay found her why by establishing 3 goals: Develop opportunities for women, offer irresistible products, make the world a better place. It seemed she succeeded and still maintain the companies why.
Define your why – 3 companies who failed to live up to their why.
Sears original purpose, or why, was selling watches by mail order. Over the years they became the largest mail order/retail company in the world. Today, instead of the name Sears, Amazon is the word we use for the king of mail order (now done online). Sears failed to live up to their why.
Blockbuster was the king of content. Bringing movies and TV more easily to the masses was their why. Today Netflix is on the throne. If only Blockbuster stayed true to their supply chain and content delivery systems they’d still be king.
Polaroids’ purpose was to provide film and cameras that provided instant results. One would think that the move to digital would have been a no brainier. This would stay true to their why. Failing to see the impact of digital imaging on their brand is a true failure of leadership. And why they went bankrupt on 2001.