The Three C’s of a New Venture
Jonathan Hinton is the Founder and CEO of Apex Controls in McDonough, GA and a member of the MIT EMBA class of 2015.
When embarking on a new venture, an aspiring entrepreneur asks, “What does it take to have a successful business?” Sure, there are plethora of books, seminars and other resources that offer detailed information on all aspects of the subject (of which their authors are hoping to successfully make a lot of money by selling their concepts to you). But to get a new idea off the ground and allow you to generate your first profits, I offer a simple guide to success – The Three C’s of a New Venture: Customers, Cash and Commitment.
Without them, there is no business. Plain and simple. However, it seems that businesses – especially large ones – tend to forget this crucial element. It is not just about your product, your stock price or your employees. You are in business BECAUSE of and FOR the service to your customers. Whether a startup or a large corporation, it is imperative for long term success that you instill a deep sense of customer service within your workforce. Publix Super Markets and Chick-Fil-A immediately come to mind as great companies that attribute their success to having superior customer service entrenched in their culture. The visionaries that started these companies built their first stores off their insatiable appetite to serve the customer, and they were able to pass that passion on to the generations that followed (It is also not a coincidence that both businesses continue to thrive as privately owned companies where their families have maintained management control – and their love for the customer – throughout the growth of the companies).
Let’s face it, you can’t survive without it! Business leaders love to throw out fancy terms like revenue, debt-to-income ratios, and profits; yet rarely do you hear them mention cash. MIT accounting professor Joe Webber makes a big point to highlight how revenue recognition, accounts receivables, depreciation, and other concepts do not reflect cash flow. When starting out, you need cash to make the best product for the customers, or to be able to serve them in a way that brings them back to you again and again. With that in mind, you will be tempted to grab the cash when you can, but you will be rewarded by being patient and finding investors that share the same passion for service and perfection that you do.
The piston that drives the business. There will be many days that the road to success will look and feel a lot like failure. There will be customer rejections, product failures, disgruntled employees, and maybe even payrolls funded by credit cards, not to mention my favorite – bad debt expense (if you don’t know what that is, I recommend Mr. Webber’s class). Therefore, you must stay committed to your purpose, committed to your drive, and committed to excellence during challenging periods. And as a visionary yourself, I encourage you along your journey to listen to advice of others, but ultimately you need to commit to trusting your instincts, to stand for your convictions, and to have the strength to push through the obstacles that undoubtedly will come.
While each of the three C’s are important in their own right, they cannot operate in silos. Ultimate success comes from a proper blending of the three. After all, you can’t be so committed to completely satisfying your customer in the short-term that you burn through your cash by trying to meet all their needs. Otherwise, your new venture will quickly go bankrupt. Since you are the founder, everyone involved (customers, employees, investors, et al) will be carefully watching every step you make to find signs of weakness. So, keep your head up, put on your work boots, and stay focused on the Three C’s. If you do, a successful business will be yours.