10 Things You Need to Remember when Starting a Business
Setting up a new and successful business can be one of the most deeply satisfying things we do in our lives. On the other hand, figures suggest that one in every three new businesses will fail within the first three years.
The good news behind that is that two thirds survive and if you want to be one of these, you need to go into the whole thing with your eyes wide open, aware of the many problems and pitfalls likely to come your way. So, here’s our guide to ten things to think about, remember and do before setting out on the rocky road to entrepreneurial success.
1 Do your research
Before doing anything else, you need to determine if anyone else is likely to think your idea is as good as you do. In other words, find out if there is actually a market for what you want to offer. You might have come up with what you think is the best thing since sliced bread, but if your target market thinks it’s the worst thing since Harley Davidson perfume or bottled water for dogs, you’ll be back looking for a normal job before you can say ‘Sony Betamax’.
There are innumerable examples of business ideas which, with the benefit of hindsight, you can’t help scratching your head and wondering what on earth they were thinking when they decided to push ahead. Things like a Kardashian sisters credit card, a rock ‘n’ roll theme park (complete with Led Zeppelin rollercoaster and a ‘trippy’ Moody Blues 3D experience), or The Fashion Café, an eatery fronted by a group of near-anorexic supermodels.
2 Learn some basic accounting
Now, I’m not suggesting you spend a few years training yourself up to Finance Director levels, but let’s face it, it will be your money on the line, so understanding a little of how to manage your finances may not be a bad idea. The taxman is, after all, notoriously unforgiving of even basic financial errors and missed deadlines.
Qualified accountants and tax experts aren’t cheap to hire, so if you can get your head around the necessary crunching of numbers you could save yourself a considerable expense, at least in the early days – if your business starts to take off, however, then a finance professional should probably be one of the first people you take on.
If, on the other hand, your maths skills have not improved since you were made to learn the 12 times table off by heart, you may want to save yourself a lot of time, trouble and expensive mistakes by getting someone more suited to looking after that side of the business right from the start.
Incidentally, the other thing you need to remember right from the start regarding money is to make sure you keep your personal finances separate from those of your business, because otherwise things can get very messy…
3 It’s a dog eat dog world
Unless you’ve come up with a brand new idea that no one else is offering, the only way you’re going to get some customers is by convincing people to stop spending their money with someone else and start giving it to you instead. There are many ways you can do that – try reading this blog on how to make your business stand out from the crowd for a little inspiration.
And, of course, once you do have some customers, there will inevitably be others trying to nick them off you. Sounds unfair, but that’s capitalism for you!
The simple lesson is to make sure you stay on top of what your competitors are doing in terms of pricing, speed of delivery, add-ons and so on. They will be constantly looking for ways to fine tune their business so that they can tempt your customers away, and you need to be ready to adapt to match them where possible.
Don’t be silly about it, though – so, if you’re setting up a small corner shop, I really wouldn’t recommend getting into a price war with Tesco! (You’ll be far better playing the ‘personal touch’ card in that battle!)
4 Love what you do
There are many reasons for small businesses to fail, but surely the worst must be because you don’t actually care enough about what you’re doing to make the required effort. Passion and enthusiasm for the business and/or product are therefore essential.
Solving problems, having creative ideas for developing the business, selling your product or service to potential customers and finding the strength to deal with difficult times will all be much easier if you have a positive approach to what you’re doing. And that kind of positive energy has a way of enthusing others as well!
5 There may be trouble ahead
Alongside passion, persistence is the main personal characteristic needed for running a business. You will almost certainly find it occasionally stressful and there will probably be times when you’re wondering why you bothered. It’s not going to be easy seeing it through, but you don’t want to be falling at the first hurdle.
Having the strength of character to keep going when everything seems stacked against you (and I’m sure even the most successful entrepreneurs will have had that feeling at some stage) is doubly crucial when you have employees to think of – after all, how do you think it looks if the boss starts giving off negative vibes about the state of the business?
It would feed down to your staff – at the very least, you’ll start losing valued people who want to find themselves something with a more secure future. At worst, that negative attitude could get transmitted to your customers, and these things have a knack of spiralling out of control.
Finding a way of dealing with the stress that is almost inevitable when running your own business should therefore be a top priority.
6 Follow advice
One of the great things about the internet is that people use it to share their knowledge and experience. There are all kinds of blogs (many almost as good as this one!) giving hints and tips on matters such as marketing, running a small business and eCommerce. Any problem you come across will almost certainly have been faced by other business owners at some point and hopefully you can quickly find the advice you need.
If you can’t immediately find the answer to your problem, many of these blogs also have very active communities of users who will usually be more than happy to help you in the best way they can.
Networking has always been good practice for small business owners. In the pre-digital age, that would exclusively consist of locally run groups with guest speakers giving inspirational talks and answering questions. These still exist – and are still worth getting involved with – but today there are experts, inspirers and influencers all over the world whose knowledge, wisdom and experience you can tap into. Make use of them!
7 Keep the cash flowing
Cash flow – or, more precisely, the lack of it – is probably the single biggest reason for new businesses failing. In fact, it can even see off successful and established companies at times. Music store Fopp went bust in 2007 after acquiring the Music Zone chain, despite apparently running at a profit. Taking on Music Zone’s 87 stores, trebling the size of the business in the process, just put too much strain on the company’s cash flow and it was quickly forced to cease trading.
Making sure you have the cash available for regular expenditure as well as unexpected demands on the company purse isn’t as easy as it may seem. There are things you can do to keep some measure of control – invoicing your customers quickly with clear payment terms, for example, perhaps with some kind of incentive for them to pay up promptly.
The lesson from the Fopp experience is that you should take care not to overstretch yourself. Put simply – if you’re worrying about cash flow, you probably have something to worry about.
8 Customer service doesn’t end with the sale
Making a sale is always great, but if you really want to impress your customer and give him or her a reason to buy from you again, you need to make sure the after sales service is as good as you can make it.
One way you can do that, if you’re selling goods online, is by shipping your goods quickly and in strong postal or cardboard boxes (if you click here, you’ll find hundreds to choose from!) with a courier service you can rely on. It’s the sort of service people remember!
If we’ve had a memorable experience dealing with a company, we’re more likely to tell our friends and family about it – and good word-of-mouth is still one of the best ways for a company to establish a good reputation and earn new customers as a result. When you’re happy that your business is getting it right the majority of the time, you might want to think about registering on a review site like Trustpilot. That could mean your business’ good reputation spreads across a far wider area than used to be possible.
9 You can forget about security, paid holidays, sick pay…
Get a good job working for someone else and you’ll usually get a few weeks paid holiday to recharge your batteries, sick pay which means you don’t suffer the double whammy of being ill and losing out on much needed income and, should the worst happen and you get laid off, redundancy pay to tide you over till you find another job.
Unless your business really takes off and you can hire others capable of taking care of it in your absence, you can forget about all that! When it’s just you, if you’re not working, then you’re not earning.
10 Plan on some time off
Having said all that, you do need to allow some time for you and your family. Running your own business can be extremely time consuming and it’s too easy for it to become all-consuming.
What are the most important lessons you’ve learned from starting your own business? Let us know by leaving a comment below!