King Digital Entertainment Plc, the maker of the addicting Candy Crush Saga game, took the company public this week. As long time stock market analysts know, any IPO is unpredictable. Countless millionaires have been created when they took their small businesses public. Yet, even Facebook disappointed when it first went public, and Zynga, which created the wildly played Farmville, quickly lost much of its initial valuation.
Unfortunately, the market soured on the Candy Crush maker, as its shares fell more than 15% from its initial price of $22.50. One of the problems is that many investors viewed King Digital as a one-trick pony with only one hit game in its stable. Obviously, there were concerns about future growth.
So what are some of the keys to success if you want to build your company and make an initial public offering (IPO)?
1) Have a Great Name
What’s in a name? Everything.
One thing Candy Crush had going for it was a catchy name. It’s easy to remember and reminds people of something that they like. The name of your company is essential for your business plan, which sets the road map for future success and helps raise startup capital.
It is important to register that company name as an LLC, which can be done by a service provider such as The Company Corporation. Just as important, make sure to see if the domain name is available and do not stall in registering it before cyber squatters take it out from underneath you.
2) Don’t Be Afraid of Competition
Despite its competitiveness, online gaming is a very attractive industry for investors. If you enter into a marketplace where there are few players, investors often take that as a signal that there is little growth in the industry.
3) Write a Professional Business Plan and Continually Update Your Targets
Many entrepreneurs write their business plans in order to secure financing and then once they get their money, don’t look at the plan again. This is unfortunate and shortsighted. A well written business plans sets goals and targets. Once an entrepreneur hits certain milestones, it is then time to set new ones.
Your business plan should be a living document guiding your company down the roadway to success. It’s easy to get philosophical about how rich you some day hope to be.
However, it is more important to look a few quarters and a year or two ahead and reach incremental achievements that will build your company for the long term. Continuously make new offerings to give people a reason to keep coming back.
4) Make a Great Product and Deliver Good Service
It is critical to offer both a great product and great customer service. After all, what good is it to serve great food if it arrives at the table cold or if the waiter is snippy?
Helen Ling, the owner of Enchantments, a gift shop specializing in hand-crafted gifts by American artisans in Fanwood, NJ, believes that spending time with customers is important:
“I like to find out who they are buying gifts for, what they like and then show them possibilities. Business owners cannot forget the human touch.”
A classic dilemma for the founder of any company is when to let go. In the early stages, an entrepreneur tends to do all the work himself or herself. This cannot go on forever, if you intend to grow your business. Encourage them to be responsible and let them make mistakes.
By giving a sense of empowerment to younger workers, you will build loyalty. They will commit to your company rather than think of it as just a job (while potentially looking to make a jump elsewhere). Rewarding with stock options is a good motivator.
An IPO, the common form of equity financing in which stocks are issued to investors, can provide an infusion of capital to help companies grow from small firms to bigger entities. Doing the groundwork – choosing a name, establishing a website, delivering a quality product, building a strong team, and having a constantly updated business plan – will make a difference.
If done right, the rewards are sweet. If not, the market could sour on your offering.
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