Chapter 13 Isolating Start-Ups and Strategic Rules – The Rainmaker


Isolating Start-Ups and Strategic Rules

The Rainmaker has a different approach to identifying critical success factors for start-ups from those success factors for established businesses. So before looking at general rules for strategy implementation, the difference between start-ups and established companies is highlighted.

Start-Ups versus Established Companies


Summary of critical success factors for start-ups




Identify an opportunity.


Conduct market research.


What makes this opportunity different?


What strategy tool do you use to draft your business model?


What is your strategy?


Conduct feasibility.


Draft a business plan.


Carefully select and set up your business location.


Determine source of start-up capital.


Conclude, make a decision, and launch.

Note from the foregoing table that planning of business strategies forms the focus, which helps to emphasize the importance of such strategies and methods in the success of any new venture. In the table that follows, management skills and experience required for an established business are particularly highlighted and stressed.

Start-Up Costs

In addition to costs associated to running an established company, the following need to be considered for start-ups:

Product development costs.

Market research and development of the product idea.

Legal costs for registration of the company and any intellectual property protection required, such as patents or trademarks.

Cost of purchasing or leasing premises, including fixed assets.

Office equipment.

Provision for operating costs, among other:

Salaries and wages.

Rental interest.


Provision for unforeseen expenses.

Current assets, such as stock and debtors.

The initial calculation of the foregoing establishment costs will enable you to determine the total costs required to start your business. At this early stage you can then decide whether you have enough funds to start the business and/or whether you need bridging capital or long-term loans.

Established Firms

Summary of critical success factors for established businesses.




Set out management skills or experience.


Establish strategic skills.


Establish technical skills.


Review your organizational structure.


Ensure financial management systems.


Promote leadership and communication skills.


Inventory and cash-flow management systems


Marketing and advertising skills.


Establish contingency plans.


Controls and systems.


Growth-orientated focus.

There is clearly a difference between what is important for start-up and established enterprises, and the entrepreneur and the funder both need to understand the shift that occurs as the business transitions from a start-up to an established company.

From a macroeconomic perspective, an entrepreneur’s creativity is the driving force for development of new products or services and thus economic growth. In addition, dedication and determination to succeed drive the individual to achieve their goals. For the true entrepreneur, success is the motivator and profits are the reward.

To take the definition further, a successful entrepreneur tends to be one with leadership qualities. This is the ability to create rules and to set realistic goals. It is then their endeavor to follow through to see that their self-established rules are followed and goals accomplished.

Strategy Rules

Follow the Simple Basics

Keep it simple. Avoid complex and drawn-out descriptions of goals. Just state what your company will accept and what it will not.

Challenge every decision. Ensure that decisions influencing your long-term strategic plans reflect real market economics and your organization’s actual performance relative to competitors’.

Communicate. Unite all key players with strategy, marketing, and finance in a common communication framework for continually assessing performance.

Allocation of resources. Business units should have a manager who communicates (before required) the need for additional resources required to execute their strategy.

Set priorities. Delivering planned performance requires a few key actions taken timeously and effectively. Make strategic priorities and goals clear and unambiguous so that all key players know what and when to focus on implementation.

Monitor everything. Use management systems to track results in real time and establish a timeline of results to set objectives. This enables effective monitoring and, where need be, a strategy for cash flow involving a change in resources.

Execution. Make selection and development of key managers a priority.

Rainmaker Observation: Every entrepreneur has these qualities in different degrees. While many of these skills can be taught, the innate desire to succeed seems to be the intangible quality that separates those who build on their successes and those who fail.