Are you thinking of starting a new small business?
But there’s plenty to do – you may even be starting to get overwhelmed about all the things you have to do, or even more overwhelming, unsure about what you have to do!
So, like many others, you probably turn to friends or family, those who have their own business and whom you trust.
Only, be warned, your friends and family may love you so much that they won’t tell you everything!
Because that’s what we do isn’t it? We want to protect the people we love so we sugar coat things, and make things seem simple so that they don’t get hurt.
Or, they are afraid for you and tell you all the risks and start to put you off?
And yet, now is the time you need their honest truth!
Well, here it is – my honesty in all its glory!
Let me tell you about the 5 most difficult things you should think about when you are starting your own business.
The first is that you may not be ready!
You need to understand that starting and being in business is very different from working for an employer, even the worst, most dictatorial employer!
The reality is that you’ll need different skills from what you are expert at.
You may be a subject-matter expert, you may be the best at what you do, but you will need other skills as well.
Take the example of a good mechanic.
You may be the best mechanic and you can fix every car under the sun with your skill and experience – but how good are you at hiring people and making sure they do what they are supposed to do? How good are you at talking to customers and marketing the business? What about keeping the books? Finding the best supplies at the right price?
A small business owner does not – at first – immediately find independence and the time to spend a balanced lifestyle with family and friends. They work hard! There are sacrifices to be made in time, effort and finances.
Is your “why”, your purpose for starting the business, your drive, sufficient to keep you going? Is it enough to drive you when you have to learn new skills, be a jack of all trades until you can afford to hire help, pull you through the working weekends?
You need to understand yourself and be ready for sacrifices.
The next “truth” you will be confronted with is, will your idea actually fly? Is it really feasible under market and other conditions?
It’s great having a business idea, but unless you really have cornered the market on some product or idea, understand that you will have competition.
Is your idea actually feasible taking into account where you want to set up, what you want to sell, and who you want to sell it to?
You need to do some minimum market research to see if your business has enough demand for your product. You need to consider the strength of the competition, generally and in your area.
Practically, what amount of capital do you need, and do you have that? Is it enough to fund the startup when sales may be slow?
What is your point of difference that will make you attractive to customers faced with your competition?
You also need to see if there are any barriers to entry – these are the tangible and intangible barriers some businesses face at startup. For example, does your industry need a lot of capital to start, in the purchase of equipment and so on? Will your business need to face license and regulatory barriers? Is the product you intend to sell covered by trademarks and patents?
You need to have conducted – to whatever degree – a simple feasibility study.
The third difficult question is what business model will you establish to make your business efficient and productive?
Now here’s the thing.
Most people who are not fully prepared, start their business and then figure out how to do things.
Who should I really prioritise to sell to – who are my low hanging fruit in terms of customers?
Where should I source my product from? How do I compare different prices against different quality or against different performance and delivery standards?
What exactly am I saying about my product and the way I deliver it? What is my reliable value proposition so people know what to always expect?
What key activities must I always make sure get done? Is it more important, when I’m really busy, to restock the shelves or to pay the bills? What will get me into trouble if I don’t do it or do it late?
These are only a number of things that most startup owners don’t think about until they have to. Maybe it won’t get them into any trouble other than that there’s a brief panic while they figure it out, but it could be worse. It may cause a breakdown in the business, or you may decide on an alternative supplier in a panic and find out they can’t deliver on time or they are 20% more expensive than someone else.
The point is that before you start your business, or very soon after, you need to have thought through some very basic components of how your business will work – your business model:
- Who are your ideal customers?
- Why will they buy from you? What is your compelling message?
- How will you touch these customers, to give them your message, to sell and deliver?
- How will you interact with your customers throughout their relationship with you?
- How do you actually create your revenue from your value propositions?
- What key activities are needed to function seamlessly?
- What key resources must you have access to?
- What are key partnerships to help the business function?
- What are your cost structures and drivers?
Then the fourth difficulty at startup is defining where you want to end up.
In the excitement of starting a business, remember, you only succeed in your journey if you know why you are taking the journey and where you are taking the journey to!
Have you felt excited about taking a holiday at some stage?
I’m sure you have, but in the midst of that excitement, I’m sure you knew where you were going, what you wanted to do, thought about what to pack, and researched best prices for flights and where to stay, right?
Imagine starting one of your largest investments without knowing what you want to do and where you want to go in your business?
And how to get there?
Yet many people do it. Many people start businesses without having a business plan.
You need to think about your goals and strategies. You need to think about financial forecasts and budgets. You need to plan for capital purchases (equipment) and employing people (who, what type, when?).
A business that fails to plan, plans to fail!
The fifth difficult thing your loved ones won’t tell you about is all the little details that you need to tick off – and there are many of them!
You need to make sure before you open your doors that you have done all the necessary registrations, at the Tax Office and other regulatory bodies, even with local shires or business associations.
You need to have set up insurance policies, websites, accounting systems.
These are all the little (and dare I say it, boring) things a business must have lined up or be subject to legal issues and problems.
It might be tempting to hire an accountant and leave it all to them but let me tell you a home truth that you will find out in your hopefully successful and long-lived business life:
You can delegate tasks, but you cannot abrogate responsibility.
You need to understand what is required, and then make sure that things get done. It’s fine to avid micro-managing by defining responsibility to people, but you cannot abrogate your own responsibility as the business-owner that things actually get done.
Many businesses have come unstuck because at the beginning, they asked someone to look after something they found boring or that they didn’t understand – and then found it wasn’t done or done properly!
So, where can you go to get some fearless advice (and warnings!) about what you will face when you start your own business?
Go find a good accountant. Go find a good lawyer.
By all means ask family and friends, especially those who own their own business – but be forewarned that they will probably colour their advice with attempts to protect you or temper their advice in case it causes relationship problems!
Read business magazines, google “Business Startups” – do your research.
You can also read my free report on startups here.
In my free report, I will take you through the 4 Myths of starting a business, 5 steps to take to startup, and I’ll give you a startup checklist.
I hope you find it useful!
You can also go to my website at teikoh.com where you’ll find plenty of articles about starting, building, and growing your successful business.
See you there!