Five lessons from a seasoned entrepreneur and mentor
Over the course of his 14-year long entrepreneurial career, Clarke has learnt a number of lessons which he shares with the emerging entrepreneurs he mentors, and reveals his top five with FastCompany (SA):
1. Revenue, revenue, revenue. The entrepreneurial community often references funding as a measure of success. But, in reality, the true measure of a business’ success is revenue. Funding may be necessary and it is a sure sign that someone thinks there is a strong chance of future success, but in itself, it’s not the true benchmark.
2. Keeping a finger on unit economics. Understanding the costs and revenue of each and every deal helps a business to understand how much each deal contributes to R&D and overheads. Once a business comprehends its unit economics, it can show that, at a given scale, it will be profitable, even if it isn’t profitable today. Investors need to understand at what point the business will go from needing further funding to being profitable. This conversation starts with solid unit economics.
3. Hire the right people. Hiring the wrong person can be a costly exercise, especially with the Small-, Medium-, and Micro-Enterprise sector accounting for 75% of jobs lost in the overall economy 1 . Take the time to hire and onboard new employees and ensure that a lot of time is spent with them, so they understand the business and its objectives.
4. Focus on a small beachhead. This is a market segment in which a business gains a dominant market share as well as the strength to attack adjacent markets with different opportunities. The temptation amongst entrepreneurs is for their product to have broad appeal initially so that they can build a big business overnight. Rather, they should start small and become the leader in a particular market before expanding into others. The earlier they can determine who their ideal customer is and zoom in on them, the cheaper it will be to build the business.
5. Be coachable. Seasoned entrepreneurs are generally eager to share the wealth of experience they have accumulated, so budding entrepreneurs should join and take advantage of entrepreneurial networks. One way of doing so would be to plug into the network of other entrepreneurs supported by their funders.
Sam Clarke, CEO of Skynamo.