Unlike the remote employee who operates in the gig economy, many employees working in traditional settings, and annual performance reviews are a normal part of their work-life as coffee breaks and paid time off. However, these annual performance reviews have proven to be highly ineffective and painful for both managers and employees.
Performance management in the gig economy is worlds different than performance reviews. It includes making your employees feel included, giving recognition, and encouraging open discussions, among other things.
As a result, many companies are slowly replacing them with other forms of performance assessment, such as regular employee feedback. According to The Washington Post, roughly 10% of Fortune 500 companies have abandoned annual performance reviews.
But there’s one group of employees who don’t benefit from either annual performance reviews and regular feedback. They’re the gig workers or the independent contractors who work on side gigs.
If once the term “gig” was associated with jazz musicians, today, that term is used to describe external professionals across all industries, such as software engineering, graphic design, SEO specialists, and more.
Estimations tell that roughly 150 million workers in North America and Western Europe have quit their 9-to-5 lives to join the gig economy.
The tech giant Microsoft, for example, has two-thirds as many contractors as employees. Uber, the ride-hailing company, has 160,000 contractors but only 2,000 employees.
As gig workers are becoming the new normal, companies that employ this kind of talent often report having issues with improving engagement and productivity.
If you’re in the same situation and are looking for a solution, the answer is that what your gig employees need is on-point performance management.
Here’s how you can implement it in your company:
Make Gig Workers Feel Included
There’s something called “social pain” and neuroscientists think it’s crucial for people’s happiness to take care of their social pain. Social pain can be caused due to rejection or feeling excluded from social activities.
Meaning, if your external employees feel like they’re not part of your company, their engagement and productivity might suffer.
For that reason, it’s crucial that you make your gig workers feel included and as a relevant part of your workforce.
Share with them all news and relevant information about the business. Whenever you have a big meeting, invite them to take part virtually. Apart from being present, make sure you give them a voice in meetings.
Treating them like you do everyone else will be a form of appreciation.
Encourage Open Discussion
Open discussion is a powerful method for performance management, ensuring employees are expressing their ideas, views, and concerns.
To avoid dealing with issues only after they become serious, encourage your gig workers to communicate their views and concerns without fear of being punished or ignored.
If employees see that the company is open to hearing those concerns, they will feel comfortable speaking out loud.
Schedule regular one-on-one meetings, as well as team meetings, where everyone will get the chance to express themselves. Frequent check-ins also leave room for giving recognition and acknowledgment of what each employee is working on and how they’re contributing to the team.
Maintain an environment with several channels of communication. Touching base with more than one platform will allow your external employees to communicate with you in the best way for them, whether via Slack, email, or Zoom.
Maintain Effective Two-Way Feedback
Managers must remember that feedback is a two-way street.
Instead of only managers giving feedback to employees, there should be room for employees to provide feedback to their managers.
Here are a few suggestions for avoiding one-way feedback scenarios:
- Ask the gig workers what they did right this week. Let them give more details.
- You, as the manager, give your own feedback about what you think the employee did right. Try to provide examples.
- Discuss what the employee can do differently next time.
- You, as the manager, talk about what you can do differently next time.
- Ask the employee what he thinks you can do differently next time.
This type of two-way feedback can help the employee build confidence and be challenged to try new and different ways of doing things.
For the manager, it helps them become more active listeners, be more receptive to constructive criticism, and be willing to adjust their supervisory style.
Have the Right Managers Supervising the Gig Workers
Every company that employs an external talent must ensure that it has the right manager/supervisor to monitor the gig workers and their work.
But what makes an effective supervisor?
In a nutshell, the effective supervisor is someone:
- Employees are comfortable taking to without fear or shame;
- The team trusts. Supervisors must stay true to their words and maintain a high level of transparency. Otherwise, the team might become lose respect and work without giving their 100%;
- Who invests in the development of every employee. They want to see each employee grow as an individual. They enhance a team’s strengths and improve upon their weaknesses;
- Who is held accountable for their actions, even when things go right and when they go wrong. When employees see this, they will be inspired to be more accountable and more mindful of their role on the team.
Give Recognition Where Is Due
Team morale is an essential ingredient of every company culture. Regardless of whether you’re a small startup or an enterprise company, you have to show your employees their work is valued and appreciated to boost productivity and engagement.
In fact, employees who do not feel recognized are twice as likely to say they’ll quit.
When an employee feels that their work is valued, their satisfaction levels rise, and they become motivated to work towards improving their work quality even more.
Employee recognition is a low-cost performance management method but has a high impact. And if you thought that money is the only or the top form of recognition, you would be wrong.
A small personal note, a public recognition via a Slack chat, or promotion are all fantastic forms of recognition that employees love.
But apart from how the employee is recognized, another important part is who is doing the recognizing.
In a Gallup workplace survey, employees were asked to say who gave them the most meaningful recognition. Around 28% said their most meaningful recognition came from a manager, 24% said it came from a high-level leader or CEO, 12% said it came from a manager’s manager, and 9% said it came from peers.
So, the next time one of your gig workers does an amazing job, make sure you let them know their work is valued and appreciated. Doing so can lead to many positive workplace outcomes.
Create Virtual Water Coolers
Human beings crave relationships and close connections. They want to feel like part of a group, and when they do, their overall well-being significantly improves.
As 20% of remote employees are battling loneliness, companies that hire remotely should exert double the effort to help create a sense of community.
In-office teams have their trust falls and watercooler conversations. Thanks to tools such as Slack and Zoom, gig workers can have their own virtual team-building activities.
Some great ways to bond when working remotely include:
- playing online games
- dedicating regular meetings for personal sharing
- hosting a virtual book club
- hosting themed events
If you have a community manager at your company, encourage them to think of fun and engaging ways to bring the employees together, whether that is for a virtual coffee meeting or a company trivia session.
The popularity of the gig talent is on the rise and doesn’t show any signs of stopping. Eager to hire more rapidly and cost-effectively, companies worldwide are reaching out to external experts.
However, hiring an external expert is only one step closer to your goals. In order to experience the full benefits of employing a gig worker, companies must implement effective performance management to ensure gig talent is fully engaged and productive.
To do so, simply use the steps we outlined below. Encourage open discussions, assign good managers, and give recognition where is due. Taking these steps can lead to content and motivated workforce who’s invested in the company’s success and wants to see it flourish.
10+ Social Media Ideas that Startups Must Follow in 2021 – ReadWrite
Social media is a weapon of mass marketing. Brands like Nike, GoPro, Starbucks, have been dominating the social media space and encashing on the social media addiction of humans. Leading marketing aficionados agree that social media is a powerful tool that every brand must utilize to rule the digital world. But all these super successful bands have such unique social media feeds. How do you come up with such amazing social media ideas?
If the same question has been bugging you, we have got it covered for you.
In this write-up, we have mentioned some simple yet interesting social media ideas to keep your brand’s feed fresh.
1. Channelize the Power Of Micro-Influencers
Reaching out to industry influencers is an effective way to promote your products among a target audience. However, most influencers with a blue tick charge a hefty amount for a single Instagram post or tweet. Startups don’t have such an amount reserved for their marketing campaign. This is where micro-influencers can come to their rescue.
These are people who have a following between 10k and 100k. However, their following is much more loyal. Their conversion rate is much higher as they have a greater engagement with their following. These micro-influencers connect with their fans on a much more personal level.
Out of so many social media ideas, another great one is to get the micro-influencers to use your products and promote them in front of their fans. You can always share their posts using your product on your page to give a fresh look to your brand page and fill it with real-life people using your product.
2. Personalize the Feed With Selfies or Videos
While most brands like to keep their social media pages like Instagram, Facebook, and Twitter professional, it is a great way to add a personal touch to personally connect with your fans on a personal level. In addition to having product images or ad copies and other things, you can add your pictures of videos.
Don’t go all out and put your personal life on display on your business social media page. One in every 10-15 posts is fine for social media. Even if you are creating videos, make sure your videos don’t go overboard. They should be well-balanced with your business profile yet give a breath of fresh air to your business’s social media presence.
3. Generate Curiosity With BTS Video Stories
With 92% of the marketers rooting for videos in their marketing strategy, it is important to have some kind of video on your page. BTS videos or Behind The Scene videos are a great way to keep your followers engaged and curious about your next campaign.
Whether you are shooting for an upcoming advertisement, planning for your next video, packing products, work-in-progress, or simply a BTS of people working in your office, such videos always generate curiosity. Give them a sneak peek into the creative process, the set-up, and the people to make them come back for more updates.
4. Regram, Retweet, And Share What Inspires You
Your brand’s social media page might become too overwhelmed with your product images and video. Give your audience some breathing space by posting content created by others once in a while. It would not just be something different for the followers but lessen your efforts too.
All you need to do is find some good quotes and share them on your page. Anything that inspires you, news about your industry, meaningful post, or anything else can be reshared on your social media. Not just that, you can also find people who have tagged you on social media and share their posts on your feed.
You don’t have to be all in-depth with each of your posts. It can be anything light, entertaining, or interactive.
Don’t shy away from regramming (reprogramming), retweeting, repinning, or resharing other’s content. And make sure you have given due credit to the original creator. By taking the “re” spin — it breaks the flow of your posts and gives you some time to create something more creative.
Also, it’s a great way to show your followers that you are a part of a conversation, and tagging you would get them featured on your page.
5. Make Use Of Reels & Short Stories
We all know that video content will reign in the coming years. And social media platforms are not shying away from encashing on this user behavior. Instagram and Facebook have come up with a short video concept in the form of reels and short stories respectively.
The human attention span needs a little excitement. People are no longer interested in spending minutes on a single video. Such short video content can be great for catching their attention.
You can use these reels or short stories to showcase more about your product or services. These can also be used for showing the testimonials of your clients. There are several filters, stickers, audios, and other things. There are different challenges as well on social media. You can always use the trending ones in a creative way to gain popularity for your brand.
6. Co-Marketing Goes a Long Way
A great way to amp up your business’s social media profile is by teaming up with another popular brand. There are different brands around you that are also looking to add versatility to their social media page. Co-marketing saves your efforts and helps you reach out to a newer audience base.
For example, a fitness brand can collaborate with a fashion designer to launch its own line of fitness wear. This way, you can have your name promoted on their social media and vice versa.
You can always team up with another brand that targets the same niche. This way, you’ll be able to reach out to their audience with synced efforts.
7. Tag-A-Friend Always Enhances Visibility
People love sharing pictures with their friends and tagging them on awesome posts. An amazing post idea is to get more engagement with ‘tag-a-friend’ posts. These posts could be all about some habits of people, memes, quotes, incidents, places, gifting options, or anything based on the industry you are in.
All you need to do is ask people to ‘tag-a-friend’ who comes to their mind first on seeing the post.
Such posts get conversations started in the comments and can boost your social media engagement. They gain much more visibility and your brand easily reaches out to more people that might become loyal followers really quick. Create posts that compel to be shared and ensure
8. Get Your Followers to Generate Content
Zomato, a leading food delivery app in India, recently announced a campaign. It asked its followers to create video ads for the brand and the best ad would win Rs 25 lakhs. This initiative got the brand a huge increase in following and gave it a whole new feed to showcase the followers. People loved the videos it kept sharing from the creators and it gave the feed a fresh look.
As a startup, you need not announce such a big-scale campaign. You can simply give away some freebies, a monthly membership, or similar things to your followers to create content. Encourage your followers to generate content for you and showcase that on your feed. This would not just create a new look for your feed but also help build trust that people are actually using your product.
9. Data-Rich Posts Get Maximum Shares
Have you recently conducted a survey or research? Do you have some numbers that can help others in the industry? Go ahead and create some interesting infographics or simple pictures with some interesting findings. These are sure to get a lot of shares among the industry peeps.
There are many tools in the market like Canva that can help you go innovative with the post. Make sure to use your brand colors to personalize the picture. Take inspiration from Hubspot’s Instagram page. They’ve brilliantly used their brand colors in creating info-rich pictures. Industry peeps love sharing them and get a lot of engagement online.
You can even have important numbers from your blogs or similar stuff and convert them into pictures to share on your social media pages.
10. Previews and Teasers are Great for Curiosity
Before launching any product, creating excitement for the same is imperative. This can be a great way to break the monotony of your social media feed and ignite excitement. Whatever new you are planning to announce, share a glimpse of it on your social media. It could be a simple BTS video, launch teaser, event preparation, or anything.
With the new feature of short videos like Reels, Short Videos, and Fleet, it is easier to create a video on the spot and share it with your followers. Create a buzz with it. Create FOMO or countdown for any new event, sale, launch, etc., to get maximum presence. Posts like launching soon, stay tuned, half pictures, etc., also look great when used smartly on social media to generate curiosity.
11. Maintain Consistency Around Brand Image
While it is great to experiment with your social media feed, a little bit of consistency would be great to create a lasting impression. Whether you use the brand colors, logos, fonts, images, or anything else, make sure that it has some element to reflect your brand.
Your brand voice needs to be consistent. There are many followers that might recognize your brand through visual means only – by the way your posts look, your style, etc. Make sure to retain such visual elements to ensure these followers can tell your brand out.
Other Social Media Strategies for Startups
While those are some awesome social media ideas for your feed, there are other social media strategies that can help strengthen your brand image. Be it Instagram, Facebook, Snapchat, Twitter, LinkedIn, or any other platform, here are some simple and cool social media strategies for startups.
Just the mention of the word ‘FREE’ grasps instant attention. And as a startup, you need not offer something extravagant in such giveaways. You can keep it small, even a discount coupon, trial membership, demo, or something similar. Announce it on social media and get more tags, mentions, and likes through such giveaways.
Video content is going to grow exponentially in 2021 and live videos will be a large part of it. The Covid times have made live videos even more popular. Almost every industry is pivoting its way of interacting with its customers and live videos are one of the most effective means. You can also make your followers participate in your events or simply have sessions with them talking about your brand answering their questions, etc.
AMAs Are Great For Engagement
A new trend that set out on social media was about AMA or Ask Me Anything. Whether we take Twitter, Instagram, or any other social media, many brands and celebrities are hosting such sessions to increase their engagement. This way you can engage with them and answer their questions about your brand.
Takeovers Are Effortlessly Raging
Another thing that many of the social media pages are doing currently is takeovers. That is, you give your social media page to be handled by someone else. They bring a fresh perspective to your brand and give it a new look to your feed. This takeover could be for a day or a week. And the best part is, you have to put in zero effort. The person taking over would handle your social media feed for the time period.
Ask For Followers’ Opinions With Polls
People love it when their opinions are valued. Get polls before starting with a new product. You can have polls for different things and get to know their interests, likes, dislikes, and much more. This would help you get a closer insight into what’s going on in your followers’ mind about your brand,
Organize Highlights For Professional Look
Another cool way to make your social media brand page look even more professional is to organize the entire page. Don’t make it look cluttered and unkept. A quick way to do the same is by organizing the highlights that are present on your profile.
Ephemeral Content Never Dies
As ironic as it is, ephemeral content has been increasing in popularity since Snapchat came up with the idea. And this concept of short-lived, disappearing content is going to be here for a long time. Twitter, Instagram, Facebook, Snapchat, all have the concept of disappearing content. Make use of this amazing social media idea to infuse the fear of missing out in your audience.
On an Ending Note
Social media is a double-edged sword. It can help build massive loyalty for your brand in a short time. But at the same time, a small error in messaging can instantly hurt their sentiments, leading to PR nightmares.
Follow the 80:20 rule on social media to keep churning out new content without putting too much on the shoulders of the content creators. It is important that your brand’s feed remains versatile yet consistent to offer new content but remind them that it’s your brand in the end.
Make sure that you are regular with posting. Plan ahead and have a social media calendar in place. Make sure your feed never dies and is consistently offering some content to keep your brand alive in their memory.
Do People Prefer Chatbots or Humans? It Depends. – ReadWrite
Chatbots are seemingly taking over the internet and mobile applications. First-time visitors to a site or app now are often greeted by a cheery chatbot seeking to answer questions or guide them through an onboarding process.
When site or app users have problems, retailers, banks, and other businesses are asking users if they want to chat rather than call. More often than not, this routes the users into an initial conversation with a chatbot.
Is sending a customer or user to a chatbot something they actually want?
A debate continues to rage about whether chatbots are viewed as annoying or helpful by customers. In fact, both views are true. And the determining factor for whether a user likes interacting with a chatbot — or even prefers it to a human interaction — depends entirely on the context.
Two Paths Diverged in the AI Chatbot Road: T-Mobile’s “No Robots” vs. BofA’s Erica Personal AI
On August 15, 2018, upstart mobile voice and data provider T-Mobile announced it would ban all robots and automated systems from direct interactions with customers on support calls and chats.
“There are no robots or automated phone menus. No getting bounced around from department to department. No shouting “representative,” crowed T-Mobile in a press release.
At the same time, T-Mobile expanded its live customer support hours to 24/7, going counter to trends limiting human support agent times to working hours. Since the move, T-Mobile claims it has achieved higher levels of customer satisfaction and improved customer retention/
Survey after survey has found people tolerate automated customer support through conversational AI and chatbots but don’t love it and don’t prefer it.
On the other extreme, some large enterprises have taken an alternative path of going all-in-on Conversational AI and chatbots. In June 2018, Bank of America launched Erica (a play on the last part of the word America).
The bot resides within Bank of America’s mobile banking app rolled out to all users. By December 2019, 10 million of the Bank of America’s mobile users had activated Erica within their apps and were interacting with the chatbot.
One of the more sophisticated chatbots on the market, Erica allows users to ask questions by voice by text messages, or simply to navigate through tap menus.
Surveys of users showed satisfaction with Erica of over 80%, which is a staggering figure in the often challenging world of financial services NPS scores.
So, which is the right way to deliver a superior Customer Experience in the most efficient manner? T-Mobile’s add-more-humans approach or Bank of America’s deep embrace of expensive but powerful AI?
Do customers prefer to work with bots or humans? The truth is complicated.
Surveys have indicated that customers prefer to speak with humans for support needs.
Conversely, by a variety of metrics, customers are growing more accustomed to chatbots and Conversational AI.
Over time, the reality is chatbots will handle a greater and greater portion of customer interactions and will also become an indispensable tool for human support and sales agents – virtually merging into one support continuum.
Equally important, in technology the true test of adoption is not what surveys say but what users do. Increasingly, that means talking or texting with chatbots rather than waiting to talk to a human,
Consumer Trends Driving Growth of Chatbots
More and more customers are choosing to interact with a chatbot over traditional phone support. This choice is being driven by broad technology user trends.
- Text More Popular Than Voice: We are more used to texting to communicate and even prefer it over voice calls. For large swathes of the populace, these modes are preferred over live conversations with humans. The rise of WhatsApp and Facebook Messenger, which have collectively over 3 billion users and are primarily used for chatting to avoid SMS fees, has further accelerated the trend.
- More Comfortable Interacting With Machines: We are growing more and more used to interacting with machines to ask questions or make requests. Asking Alexa to turn off the lights or telling Siri to call your mother is great. Asking an airline chatbot if any flights going into Denver are delayed has human-machine interactions that are now a normal part of our lives.
- Less Patience: We are becoming less patient. Netflix brings us millions of movie titles in a search window. We use an app to tell our Roomba to clean the house before we get home from work – and get our wish.Technology brings us instant gratification. As a result, we are less likely to be willing to spend time on hold or wait for a call back if a chatbot can answer our questions or take care of our problems. Related to this point is the fact that chatbots run 24/7 every day of the year. They scale up or down to meet demand and are always available. For consumers used to instant gratification, this is a powerful draw.
- Better Algorithms: The technology behind chatbots, Natural Language Processing (NLP), has progressed in leaps and bounds. This means we impatient humans can more easily interact with chatbots without having to repeat ourselves or resort to using multiple phrasings to get our request to register.New algorithms – most notably GPT3 – have come out that can reliably and economically be trained to understand specific types of subject matter and respond in ways that are remarkably close to normal human response.
According to the 2019 AI Index Report, published by a global consortium including Stanford University and Google, NLP can now comprehend passages of text better than humans. This also has allowed more advanced chatbots to handle complex, multi-step support tasks.
Chatbots can provide proactive guidance and even anticipate needs. A flight delay question might prompt an advanced chatbot to offer to book a hotel room for the night because it knew a late flight might mean a missed connection.
Three Simple Questions to Determine Context
Clearly, chatbot usage is growing and users are voting with their texts and their voices, indicating preference. That said, the desire for a human versus a bot remains highly context-dependent.
Context dictates what the chatbot is capable of doing in any given situation. Context is also variable and can shift with the state of the user as they run through a customer or support journey.
Understanding where a user is on the journey and their context can inform expectations of and proper usage of chatbots. Here are some simple questions to determine whether to use a chatbot or to what the limitations of a chatbot might be in a given situation.
Does the user want to talk to (or likely prefer to talk to) a representative?
This is a no-brainer. If they don’t want to chat, don’t make them chat. Ironically, many companies still push hard to drive users into chat support queues under the thesis that users will learn how to chat and adopt it (and save the company money).
Usually the act of saying “representative” is intentional enough that a company is far better off complying with their wishes. Here, too, AI can provide a guide.
Over time, companies can gather data about customer preferences and use that to better understand which conversational mode is best for what type of users based on any descriptive characteristics.
Can a chatbot recognize the user?
If a chatbot can recognize the identity of a user, then it can tap profile and historical data about the user to generate more bespoke solutions and conversation. Identifying the user is far easier when the user is on a mobile app or logged into a website or calling from a known phone number.
This question does limit advanced support to existing users rather than new users for which there is little history. But when it is possible to recognize the user and match them to a profile? If you can get a profile, then the canvas for chatbot to operate with is much more broad and interactions can be much more detailed rather than limited to simple keyword and menu-driven interactions.
Is the user asking a complicated or simple question?
Chatbots can quickly and easily dispatch more personalized answers to many simple questions. “When is my reservation?” or “What is my order status?” are easy to answer when the identity of a user is known and they are operating inside of a controlled environment.
In a similar manner, when the company is using a chatbot to replace a form or other structured information gathering exercise, then chatbots or Conversational AI can operate very effectively.
For more complex questions that involve multiple variables and may not be as easy to understand based on pure keyword analysis, more advanced chatbots that leverage NLP and conversational AI can increasingly provide back-and-forth support that is on par or better than human agents.
This is riding the curve of rapid improvements in AI, as demonstrated through the steady increase in the ability of AI systems to understanding complete even more complex natural language tasks as well or better than humans.
Conclusion: The Future of Customer Conversations Is A Hybrid Between Chatbots and Humans
T-Mobile may claim that it does not force anyone to talk to robots but in reality, its system can recognize automatically whether you are calling from your own device.
Behind the scenes, T-Mobile uses analytics and automation to help customer service agents do their jobs more quickly and efficiently. In this case, the chatbots may not be visible on the front but their output and enablement are visible on the back. Agents happen to act as the intermediary between the two.
This is the true future of chatbots – a technology that acts as a fluid interface somewhere in the customer journey to provide assistance. The recipient may be a customer talking to a chatbot or a support agent that has a chatbot automatically populating conversational snippets.
In this scenario, a company like T-Mobile can help agents work faster, answer questions more quickly, and breeze through the simplest queries. They can then save more time for the harder customers and questions that internal systems cannot automatically address.
BofA’s Erica can serve as a more forward presence, intercepting and deflecting simple inquiries. When a query grows too complex — and out of context for Erica — then the AI chatbot can easily route the request to a human support agent spending most of their time on tougher cases.
So which is right? Do customers prefer to talk to human agents rather than chatbots as the surveys indicate? Or do customers prefer to use chatbots to waiting to talk to humans, as the usage trends clearly indicate?
The answer is both. If customers are voting with their time spent and their immediate menu choices, they clearly do like intelligent chatbots more than waiting for a human. Meaning, they prefer chatbots and AI, given the right context and the right situation.
On the other hand, humans still and probably always will prefer live support agents when they have complex, nested and conditional questions to resolve.
These types of questions require the most advanced sort of conversational intelligence — one that even agents do better fulfilling when assisted by technology and AI behind the scene. The irony is that either way, customers are talking to chatbots — directly or indirectly.
The technology to improve both the experiences of T-Mobile and Bank of America customers is invariably the same under the covers. The sooner businesses realize that this is never an either-or-equation, the sooner they can determine where AI should sit in their Customer Experience stack.
The Benefits of Bootstrapping: 6 Things You Need to do in Order to Succeed Without Investors – ReadWrite
Have you ever seen the show Shark Tank? If you haven’t, it is a reality show that features various inventors and business owners pitching their businesses to a panel of entrepreneurs (sharks). The goal is to strike a deal that exchanges entrepreneurial funding for a percentage of the business.
Shark Tank is immensely popular, and when a plucky business owner strikes a deal with one of the sharks, the music swells and the audience is led to believe that this is the beginning of their success.
It makes me cringe.
I have been working as an entrepreneur in Los Angeles for more than twenty years. I have founded and sold a variety of businesses, and the companies I have developed currently exceeds $1.1 billion in valuations.
I have been fortunate to enjoy tremendous success, and in my experience, it is always better to grow a company without the interference of investors. Investment is not the way to launch your company into the stratosphere, despite what most people believe.
Once you accept funds from an investor, you are beholden to them.
Their ideas, desires, and financial considerations cannot be ignored. The moment you accept external funds, you relinquish control of your business. I firmly believe that start-ups will soon have more options for funding, but at the moment, I encourage entrepreneurs to chase success without the support of investors.
After all, bootstrapping is the American way. We need to stop seeing investment as the finish line and start seeing it as an albatross. If more people found ways to keep their start-ups independent, the creative minds that are responsible for these startups could retain control.
I have been starting and running businesses without investment for years, and I have developed a few key practices that have allowed me to avoid outside funding. Here are the six tips every business owner and entrepreneur needs to do in order to achieve success without external investment.
In recent years, businesses operating in the red have become trendy. Amazon famously spent more than they made for over a decade, but companies like Amazon are the exception, not the rule.
I see a lot of business owners overspend on office spaces, branding, marketing stunts, and corporate perks when they should be focused on creating a product or service that people will pay money for. Investor money tends to lull business owners into a false sense of security.
They think: Well I have all of this money, why not go on a golf weekend with my executives to inspire them? Instead, business owners should be using profits to inspire their executive team, not perks.
I see the generation of revenue as the turning point of a business.
Before your company actually starts making money, it is nothing but a foundation. Too many people get stuck on the foundation phase and forget to focus on the build of the actual house. They spend hundreds of thousands on a gorgeous website, rent a luxurious office space, and launch expensive marketing campaigns before ever selling a thing.
As a business owner, you are responsible for setting a profit-first culture. Get your executive leadership aligned on profit goals early, and reinforce them often. Remember that a company does not need a huge trade show installation, catered lunches, or celebrity endorsements to succeed.
All of those things can certainly help to grow a business, but the first stages of any company should consist of a strict strategy that focuses on bringing in more money than is spent.
If you are worried about this attitude creating dejection among your team, don’t be.
People respond to the culture you set up for them. Instead of handing your team perks before they deliver results, offer them perks as a reward for results. Instead of treating your team to lunch every Friday, only treat them to lunch when revenue goals have been met.
So many business owners have this backward. Prioritizing profits is the only way to achieve financial success without relying on external investors.
When most people think of business owners and entrepreneurs, they think of the fun and flashy side of things. They picture Richard Branson and other rockstar entrepreneurs enjoying the spoils of their good ideas and creative leadership.
The reality is that any given snapshot of a business owner’s life should see them pouring over spreadsheets, tracking every single dollar that their company spends.
This tip goes hand-in-hand with the first one on this list. Without a complete understanding of every expense your business is subject to, prioritizing profits becomes difficult if not impossible. Knowing your budget is absolutely vital. If you do not know how much you are spending, you cannot know how much you are making.
Nothing makes me crazier than when I see a budget presentation from a business owner who cannot speak to their entire spend. I like to ask these people things like: How much money does your company spend on coffee on a monthly basis? And What kind of per diem do you offer to employees who travel? How much travel do your employees do in any given month?
If they cannot tell me off the top of their heads what their current spend is, then I know that they do not fully understand their budget, and therefore cannot give me a confident answer about their profits.
Watch your dollars like a hawk!
If you want to grow a business without the interference of investors, then you need to watch your dollars like a hawk. When there is no stream of incoming investor money, it means that you are fully responsible for making and managing your own funds, and both your customers and your employees are relying on you to do it right.
There is no one to call for a bailout. You are the last line before bankruptcy, and you need to take that responsibility seriously.
Success is a game of inches. It does not happen overnight. You can obsess about your budget and prioritize profits all you want, but it is equally important to understand that money will not magically start rolling in. At the beginning of any business, the wins are small.
The goal should be to develop a steady stream of small wins that swell and grow into a massive over-all win. Every dollar of revenue, every sale, and every customer conversion should be celebrated since it contributes to a larger whole.
I said earlier that business owners set up a culture of profit prioritization. Similarly, they set up a culture of celebrating any and all wins so long as each win is understood to be in service of their profit prioritization.
Think of it this way, success on day one may be one customer conversion. Success on day 365 might be 200 customer conversions, but does that make a single customer conversion any less important? It does not, since your success on day 365 is actually made up of 200 small wins.
Incremental improvement is what success is.
It does not look the way most people expect it to since it happens gradually and over time. This fundamental misunderstanding of business success is why so many contestants on Shark Tank are thrilled when they get their investment. They think that a big sum of money equals success when in reality true and independent success happens gradually.
As a business owner, if you take a moment to celebrate each achievement as it comes in and reward your workforce for contributing to your bottom line, eventually your entire business will be a success.
Hard work is absolutely necessary for starting and running a successful business, but unnecessary work can mean the death of a small business.
When I was 13 years old I found work on a cattle farm at the California/Mexican border. It was grueling, dirty work (often in 115-degree heat), and I went home every day absolutely exhausted. One day, my boss approached me about a special project. He asked who I would like to select to help me. I chose the man who was the hardest working and most eager to help out. He never shied away from a task, and always did what was asked of him without complaint.
Shockingly, my boss told me that he believed the hard-working man to be the wrong choice, and gestured to a man who was literally sleeping in the dirt. He explained to me that lazy men were often creative thinkers, and pointed out several homespun inventions and pulley systems around the farm that made our job easier every day.
Up until that moment, I did not realize that the lazy man was actually responsible for these inventions. In his desire to avoid hard work, he had come up with creative solutions that made life easier for all of us.
Man hours are one of your most expensive resources.
That lesson has stuck with me ever since, and I have applied it to every company have I founded and run. Man hours are one of your most expensive resources. Do not waste time doing things manually when they can be automated. Always ask yourself and your team: Is there an easier way to do this? And always, always, always, choose the easier way. As a result, your team will be more efficient, your expenses will be lower, and everyone will come to work happy.
So many successful people claim that they have a “knack” for recognizing a good business opportunity, but the truth is that intuition is nothing more than years of experience at work.
When you are starting a business, you absolutely should not “go with your gut” because your perspective is limited. With every business I have ever started, I have built an airtight model that was designed to generate revenue, and I have lived and died by that model.
Throughout the course of business, people will come up with fun and flashy ideas. They will case study themselves and think: Well if I was the customer, this is what I would want to see. But the thing is, if an idea doesn’t fit the model, it simply is not worth exploring.
Don’t make guesses about your customers.
It is vital to put time and effort into understanding your consumer, build your strategy around that, and then put every new idea through that lens. Do not try to make guesses about what people may like or respond to. Perform tests, lean on what has already been successful, and never let someone’s intuition be the reason behind a major decision.
Foster Strong Relationships
The people you choose to surround yourself with have a massive influence on your life. Your friends, spouse, and business partners will all impact the way you think, the way you make decisions, and how you feel about yourself. It is supremely important to be discerning about who you let have your ear.
By extension, who you choose to form relationships with is incredibly important to success. Hard work is not enough. Knowing the right person can open doors that you didn’t even know were there.
I have found business partners, incredible team members, and tremendous exit opportunities through networking. I am ruthless about keeping my network tight and about only allowing in people with a positive influence, and in that way, I have fostered some fantastic and incredibly beneficial relationships.
Who do you know? Who knows you?
Hard work is only part of the equation. The other part is who you know and who knows you. If you only ever work with your head down, doors of opportunity will always remain closed.
When in Doubt, Don’t Take the Money
An investor flashing a check is incredibly appealing, but remember that all money comes with strings attached. It is possible to found and manage a successful business without venture capitalist funds. I have done it.
The sharks on Shark Tank are referred to that way for a reason. They are not your friends. They will keep you lean, hungry, and constantly chasing their goals instead of your own.
Before you find yourself on ABC celebrating a new burden disguised as an opportunity — try these six tactics and see if you can’t do it by yourself. You may be surprised by what you can accomplish.
Image Credit: karolina grabows; pexels