A sale is the foundation of any business

Just like building a house, when building a business, you need to start with the foundations. Once the foundations are in place, you can…

Just like building a house, when building a business, you need to start with the foundations. Once the foundations are in place, you can move above ground to add the walls, windows, doors and all the other beautiful things that people will see.

The foundations of a business may not be what you’d expect. Business processes, policies, HR, comprehensive shareholder agreements and even a working product are not business foundations.

The foundation of all business is sales. Without something that people buy, no company can survive.

A friend of mine recently made the mistake of thinking that business starts with the final product, the business structure and the exit plan, and ends with the sale.

He spent large quantities of money building and promoting a fantastic app. The tech is slick, smooth and clean. He has documents explaining the vanity metrics that the app will chase and how they translate to a big sale of the business to Tinder, Facebook or Snap Inc.

The problem: he’s the only person using the app.

He invested too much money and is now publicly flogging a dead horse. He’s adding updates (spending more money), pushing his product on social media and is trying everything he can to spark some interest. Everyone can see the writing on the wall but him.

In a perfect world, he should have launched a Minimum Viable Product (MVP) to prove that his idea has merit and position himself as the only person with the practical knowledge to execute the business. He should then have convinced one of the big companies that would benefit from the vanity metrics to pay him to launch the app.

With a sale to a big brother, his business would have its foundations. He’d then be ready to build the final product with much less risk of losing money.

Entrepreneurs know that when you’re building a skyscraper, you don’t start with the concrete foundations underground. You start with an anchor tenant, government funding and other pre-sales that ensure that you have cash coming in, customers signed up and organisations with a vested interest in the success of your building backing you.

In business, you can do many great things, but all of them start with a sale.