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In my last post, I shared some of the personal qualities that underlie entrepreneurial success, which I spoke about in a recent speech at my alma mater, Cornell. I’d now like to share some of the business advice that I gave in the same speech. Once you perfect the personal qualities of success, you still must understand the strategies that contribute to growing a successful company.
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Each of these strategies have something in common: They are focused on not just growth at any cost, but on sustainable growth that will maintain your independence. After all, most entrepreneurs get into the game because they want personal freedom and control over their own destiny. It’s important to never give that up.
Related: 7 Steps to Finding Freedom in Your Business
1. Don’t eat the free lunch
That’s why the first strategy is to never eat the free lunch. In truth, nothing is free. The minute you accept someone else’s hospitality or gift, you take a subservient role.
As a new entrepreneur, when I would go to a lunch or dinner, I aggressively fought to pick up the check, even when we didn’t have much money. The law of reciprocity holds true in business as well as life: If you are generous, people will be generous to you. If you live off the generosity of others, they will own you.
This is why my company has never received any venture capital money, and I always recommend that other entrepreneurs resist the temptation as well. In many ways, you can’t be a pure founder if you take the easy money. As soon as you accept big bucks from the financiers, you work for them. You are limited in your ability to call shots.
So, how do you avoid relying on venture capital or private equity? The key is to be thrifty and prioritize organic growth. If you don’t waste money, you don’t need to take other people’s money.
Yes, capital is still required for many businesses. You might need some bank financing or money from friends and family. But a little bit of money is all it takes to test your idea and build proof of concept. And, of course, put as much of your own money in as you can.
When I was able to pay my friends and family back for their investments in my company, it was one of the most rewarding things in my life. We got them their money back at 21x their original investment. It took us about 6 or 7 years, but rewarding the risk they took on our company was a form of success in itself. I’d always much rather reward friends and family than financiers who see you as just another cash cow — and treat you accordingly.
2. Cultivate diverse revenue streams
The second rule, and another crucial way to maintain independence, is to diversify your revenue streams. Diversity is good in all things, whether in the teams you hire or the revenue streams you create.
A business built around a single cash source lacks resilience. I learned that the hard way during the pandemic. We were the largest online group hotel booking platform in the world. That’s a status you don’t want during a global pandemic when everyone’s locked down and not traveling in groups. We had to do a major pivot and switch from group to individual hotel sales. We set up a first-of-its-kind “gig economy” call center, where remote agents can answer inbound customer calls, which has resulted in much higher booking conversion rates for us compared to online. Now, we’re a much stronger company because we’ve built up an alternative revenue stream.
Building a diverse business allows you to maintain your independence even when the going gets tough. The temptation to take venture capital or private equity money isn’t only strong in the beginning, it can also come up when you face hard times. That’s why it’s so important to plan ahead and maintain your rugged independence. Think of yourself like the Henry David Thoreau of your industry.
Ultimately, taking the easy financing is a shortcut that leads to a trap. It’s like an athlete who takes steroids rather than putting in the work. Easy growth rarely leads to sustainable or enduring growth. There have been a lot of rewards for “blitz growth” in recent years, particularly in the tech industry. But that has changed in the last year with a big market correction. It’s best to put in the work, take the longer road and set yourself up for sustainable and lasting success.
Related: 4 Ways To Achieve Sustainable Growth
3. Be an expert — and act like one
The final rule I’d like to highlight is the importance of developing your own expertise. This is also where people become tempted by dangerous shortcuts. It may seem appealing to hire someone else to be the resident expert in your industry, but then you risk forfeiting control over your business.
Your clients or customers need you to be an expert. This requires putting in the work by constantly learning, meeting new people in your industry and staying on top of the latest innovations and trends. I like to tell aspiring entrepreneurs: You should always attend that industry conference or next event, no matter how tired you are. You can find time for sleep later.
One of the reasons my company succeeded was by becoming the group hotel booking engine for sites like Priceline, Expedia and Hotels.com, and that came from being at every conference. The minute the big CEO walked in the room, I went up to them. I would reach out and say, “That was a great speech. I loved what you had to say. Oh, we work with your company” or “We would like to work with your company.” I probably did it to the point of being annoying, but it worked.
If you’re a founder entrepreneur, nobody’s going to come up to you and introduce themselves — at least not at first. You’re going to have to open those doors yourself. That requires not being shy and going everywhere you possibly can.
Of course, being an expert doesn’t mean developing expertise in every area. Hiring smart people and delegating is critical, as long as you don’t become lazy and outsource all of your company’s strategic thinking and hustle to others.
At the end of the day, the only true way to be a leader is to be worthy of the respect of those who follow you. That requires being the expert — and acting like it. It doesn’t mean you are arrogant or a know-it-all; it simply means you have confidence in your own ability to identify trends, make decisions and lead your company forward.
Related: 5 Essentials for Succeeding When You Become Your Own Boss
By following each of these rules, you will not only grow your company but maintain full control, even in the face of hardship. You will preserve your rugged independence while still working effectively with others.
If you are ever tempted to take the shortcut, just remember why you became an entrepreneur in the first place. You started a business to work for yourself and be the master of your own fate. Never give that up, no matter what.
