You can never guarantee the success of a new business but there are essentials that, done right, make success likely.
When it comes to building a successful business (and an inspiring personal brand), there are few case studies as enlightening as the story of Daymond John, entrepreneur, investor, author, motivational speaker and television personality on the ABC reality television series Shark Tank.
Not only has John done what every aspiring entrepreneur hopes to someday accomplish; he has also become a leader in sharing his business acumen.
I recently sat down with John to talk about what it takes to build a successful business and the things he looks for prior to investing in a company.
1. The person behind the company drives its success.
John pays close attention to the person leading the charge, not just the company itself. “Before I lend credibility towards other brands and labels, I consider the person running the company -- how that person is going to operate that company,” John said.
He also asks how long the person is going to operate the company. He examines whether they have a strong passion for the company and the idea, or if they are just trying to follow a trend.
“I test their resourcefulness, and whether they have a history in that area of business. I like to know whether they have failed enough to have learned what works and what doesn’t,” John explained.
It is often said that the person behind the company is a much larger indication of potential success than even the company itself. After all, the best ideas can be ruined by the wrong founder. The opposite is also true: a great founder can make the most of a simple idea or offering.
If you want to build a successful business, focus on investing in yourself just as much as in your company. You are, after all, a vital asset.
2. Understand where your business is in its life cycle.
In our interview, John reflected on past experiences with FUBU (of which he is the CEO), and how at certain points the company needed to understand how to pivot.
For example, a few years ago, FUBU’s growth was slowing further than what was considered normal for a fashion brand around the 5-year mark.
After some market research, the FUBU team realized that what people were talking about on social media concerning the brand had to do with three things: rumors that the company had been sold, negative feedback on current products and the assumption that FUBU only made “baggy jeans.”
As John pointed out, it is important to understand where FUBU was at the time and the need to address those concerns. “This was much more important than throwing more and more advertising money behind the brand,” John said.
“We could’ve gone on with the advertising: ‘Buy FUBU today; buy FUBU today because of this,’ but we had to address those things first and say, ‘Number one, we don’t make only baggy jeans.’” By understanding this point in the life cycle, FUBU was able to pivot effectively.
When it comes to starting, growing or pivoting your business, remember the importance of getting clear on where you are in the life cycle. What stage is your business at, and what does it most need right now?
3. Always look at the numbers.
If the numbers don’t make sense, nothing else matters. The best branding in the world can’t fix a broken company.
“It’s much better to be doing 1 million dollars of business and be positive half a million than to be doing 10 million dollars of business but negative 2 million dollars every year,” John said. “Some people mistake size for success, and that’s simply not the case.”
According to John, another pitfall aspiring entrepreneurs encounter is thinking too much about scaling before they even discover what is profitable. They focus on user acquisition, awareness or even branding and perception, instead of asking the tough question: “How is this going to make money?”
4. Be resourceful.
One of the examples that John used from his latest book, The Power of Broke, was of a kid with an audience of 100,000 fans on Instagram. Every Monday, he paints a unique shirt design that is only available for sale for the next 24 hours.
“On Tuesday, he goes to the local printer, copies all the shirts that have been ordered, and Wednesday, Thursday, Friday mails them out,” John said.
He repeats this the next Monday. According to John, he is set to earn about $1.2 million this year.
This is a perfect example of how being resourceful can lead to some of the best ideas and the greatest success: Use your gifts and talents, build your audience and deliver something of value.
5. Use the power of branding.
Arguably the most important piece of advice John shares has to do with branding, since he himself is a branding guru.
When it comes to branding, John constantly reinforces the importance of being honest. “If you put up a front that you are all about changing the world, when all you really want to do is make money, then eventually that will come out,” John said. “People will see it, and no longer want to support you.”
He is a firm believer in staying true to yourself. Be honest and genuine with your pursuits and goals. As he shared, there is something to be said for “faking it until you make it.” This phrase really just means being proud of yourself for what you are doing long before you see any tangible success. But that is very different from pretending to be something you’re not.
Branding yourself and your company is part of standing out, and is vital to the success of any business venture. But if you do so in a way that doesn’t really align with your goals or mission, then you are destined for failure.