Ideas come from everywhere. But often ideas are simply not enough to translate into great businesses. Last year, the team from “The Living Room” came to visit me, and Amanda Keller pitched me some outrageous business ideas. Needless to say, I gave her some pretty frank feedback!
We are back in the Shark Tank to meet many business owners eager for our time, investment, and advice. I can’t help but reflect on the advice I gave last year’s businesses — and the advice was grouped into where they each were on their journey:
You have a great idea, and your friends love it, but is it a business?
How often have you been shopping with a friend and you are trying something on you are sure doesn’t look right … and your friend insists that it looks lovely? The same often goes for a great idea you share with them! It is human nature to avoid confrontation or to give harsh, but constructive feedback. After all, no one wants to hurt another’s feelings.
The number of businesses that walked into the Shark Tank last year energised and excited by their idea — only because their friends had been encouraging them for years. Some hadn’t shown their idea or pitch or business to a potential customer outside their immediate network, and yet had been prepared to pour hundreds of thousands of dollars into it in some cases … and we were the ones who gave the constructive feedback necessary, and advised them that what they were presenting was not a business, it was just a great idea.
My advice for striking out on your own? Run your idea past people who don’t know you and have no vested interest in the outcome; test it with potential consumers; seek feedback; refine and improve — social media can work well for testing an idea (though the challenge can be that you don’t want someone to steal your idea). Test again.
These are actions of a mature ‘Boss’ of their own destiny. Someone who can take feedback and grow and develop their idea into an actual business that is investable. Perhaps, if you’re not making mistakes, you might not be trying hard enough.
You have a business that is turning over some good figures, but is it scalable?
One thing that attracted me to HEGS in Shark Tank series one was because the business is scalable. Scott Boocock, the founder, had plans to take it global (which he has since done in a big way) with international trademarks and patents, and international orders already with that wonderful story of homegrown innovation.
Scott is open to feedback, he listens deeply, and overall I knew we could work well together. These are the three qualities of a ‘Boss’ an investor needs to see before they are prepared to pull out his or her cheque book.
Many of the businesses we saw were great concepts, had started turning profits but our challenge was they had no plans to scale. For me as an investor, being the ‘Boss’ means I want to see business owners keeping their ears to the ground, always looking for innovative ways to grow the business and encourage investment where needed.
There is a gamut of support and resources out there. One of which I highly encourage business owners at this stage of their journey to explore is BSchool’s Entrepreneur Program. BSchool packages the lessons, the advice, and guidance of Australia’s best business minds into a practical 12-month course that takes you through eight essential units of creating, starting, and scaling your business. If only a program like this existed when I started out! Harnessing the guidance of entrepreneurs who have ‘made it’ is priceless — and highly valuable.
You have a sizeable business, but people are not sticking around, are you the the leader your business needs?
It goes without saying that when people leave, often vast amounts of corporate intelligence leaves with them — and ultimately that can be expensive for the business. There is a whole industry focused on attracting, retaining, finding, recruiting, hiring, and firing employees. The Australian staffing market was estimated to be worth $21 billion in 2013. According to the Redii ebook “9 Steps to Build a Dream Team” (you can download it here), it costs 30-50% of the annual salary of an entry-level employee to replace them and up to 400% for specialised, high-level employees. If you’re attrition rate is at 30%, what is that cost doing to your bottom line?
Often, in a sizeable business, you will be oblivious to what is really going down on the ground because there is often a ‘middle-man’ between you and your people — and they are more likely to talk with their feet, than approach you themselves if they are not feeling aligned with your values or your strategy.
If you are a ‘Boss’ who does see this happening in your organisation, then it is time to do some work on yourself. Your business is going nowhere fast if this continues … Now is the perfect time to evaluate yourself as a leader. August Turak writes that professional development should not be an “out of hours” thing, nor should it be a means to an end, or a means to success. He shares that personal development should be an ongoing and central part of our entire life mission. Turak explores that our personal, organizational, and business lives are all subsets of the one overarching mission — that is becoming the best human beings they can possibly be.
If you find during this process that you aren’t really cut out to be a ‘people’ leader and your strengths are in the numbers and in organisational strategy — then play to that! Hire someone who is outstanding in that role and let them run the show.
You have owned and operated a business for a number of years, but is it time to get out of your own way?
By this time on your journey, you’ve done more than a few tax returns, your business is starting to show growth and hey, you even have enough in the bank to pay yourself a salary along with the rest of the people in your team! You also have grown a team big enough and responsible enough to run the business effectively without you watching their every move.
Now is the time to be the boss that your people inspire to be; empower them to step up and lead. The accountability is in their hands — don’t ever forget how you felt when you had an opportunity to demonstrate your leadership along your journey. Sometimes you really do need to get out of your own way. In Shark Tank, we saw too many businesses that we, the investors, had grave concerns that the owners were far too “in the way” to see the wood for the trees. They were stuck and weren’t open to our suggestions because they wanted to do things their own way. Which is fair enough, they are the ‘Boss’ — however great leaders continually learn — and listen.
I can relate to the special relationship business owners have with their ‘babies’ – after all, it is the owner/s who have born, nurtured, suffered the trials and tribulations along the way, experienced the down times and the really great times — it is a huge demonstration of trust and leadership to get out of your own way, and let someone else steer the ship. No one will ever ask you to truly get out of the way — you then have the opportunity to take a round-table seat at the board table and influence strategy and direction from that leadership role. You just don’t need to be involved with the cost of stationary or performance review processes you once did. It is time to sit up in the helicopter with sage advice.
This article was first published on Naomi’s LinkedIn page and has been republished with full permission.
Naomi Simson is the founding director of Australian online tech success story RedBalloon and Redii. She has written more than 1000 blog posts at NaomiSimson.com, is a professional speaker, author of Live What You Love & Ready To Soar and is one of five “Sharks” on TEN’s business reality show Shark Tank.
Naomi has been a Business Chicks Premium member and supporter for more than a decade.
Connect with Naomi here.