This the first of a series of posts about the life-cycle of a business.
First, we will start with the things you need to know and consider when you are starting your small business.
But don’t stop reading if you have already started your business, or if you believe you are operating a “mature” business! You may still learn a thing or two about setting up successful businesses, and you can still use some of these strategies to improve your growth or spurt the next cycle of expansion.
In this post, I will start with making sure you understand why you are starting your small business. In the next few weeks, I will talk about all the things you need to consider, and then later the “how” or steps to take, how to check your business idea through a feasibility check, planning, hiring your first employee, and setting up standard operating procedures.
So, let’s talk about why you are starting your small business.
You may be fresh from college or leaving a job to start your business, or you may be starting a side-hustle or a stay-at-home business. Whatever the case, you need to know why you are starting this business. Knowing why is important because it will continue to drive you through the emotional ups and downs of running your own business.
Without focusing on your “why” you are likely to falter at any hurdle. Sometimes, it can look all too hard to cope with, but if you realise why you are doing it, you can always remind yourself of the big picture.
For example, if you want to start the business because you feel that you can do it better than in your current place of employment, then when the going gets hard, you can remember the big picture. Not only that, when choices have to be made – say reducing quality to reduce cost – you can remind yourself that you wanted to do it better, so will the proposed reduction in quality affect “doing it better”?
Another example, say you start your business as a side hustle during the evenings and weekend in order to provide extra income for the family. When times are hard, you can ask yourself if the problems are worth it by reminding yourself of what your family will get from your effort. If you forget that the purpose of the business was to bring the family a better life, you might just give up at the first hurdle.
So, the first thing you should do when you think that you want to start your own business is to ask yourself “why”? Dig deep into your real reason or purpose.
If your answer is “to make money”, don’t stop there – money is only a vehicle – ask yourself why you want that money, what do you think it will buy you? Find that purpose that will drive you as the ultimate motivation.
By the way, if you can’t find a compelling purpose to start your business – if it’s just “a good idea” – then I would seriously question if your should start your own business. It might be better for you, if you are not driven by a purpose, to just stay in your job and be good at it.
Next, while you are still making decisions, make sure you understand the pros and cons of starting your own business.
Starting, and operating your own business, can be immensely fulfilling.
You are your own boss, and there is no more thrilling feeling than when you open the doors and realise – it’s all yours, your pride, your fears, your abilities, your mistakes. Yes, making mistakes that are nobody else’s fault can also be satisfying because you learn and grow from them.
For perhaps the first time in your life, you can make totally independent decisions about everything to do with this pone thing, your business. Especially if you are clear on your “why” you can finally live your passion. If this doesn’t fill you with energy, I don’t know what will!
Making your own decisions and choices, making your own plans on how to fulfil your purpose means that you can direct this portion of your life. You are in total control.
Of course, the financial benefits are also yours, and more often than not, they are proportional to the thought and effort that you put into it. When you are earning a salary, you can make a gigantic effort on a project, but you get paid your salary. If you complete a successful project in your business, it usually brings larger financial rewards. This means that you can make decisions about the flexibility of your work-life balance; not something you can do if you’re on the 9 to 5.
As you are motivated and driven by your ideas and your own business, you will learn and grow and so too will the business. This means that you can build your business year after year and it can develop into a significant and ongoing income-earning asset for yourself and your family.
On the other hand, running your own business also has cons.
It is lonely. It is all yours and you are on your own as you make decisions and see the sometimes adverse effects of those decisions.
You can mitigate this with good advisors, business groups and eventually partners, but be aware that at least in the early days, it’s hard to find someone to bounce ideas off.
Sometimes, the constant effort and thinking that you have to employ can wear you down. Being clear on your Purpose to motivate you, and making sure you take care of yourself with disciplined “off” times and holidays will help, but be aware that you need a lot of ongoing motivation.
Financially, the outcomes may not always be consistent. The other side to a salaried experience is that you can rely on that paycheque hitting the bank every week. In your own business, cash flow may mean that from time to time you take out less. It’s also true that you take on all the risk. If the business does not succeed, you lose your investment or at least part of it.
This is where you need to consider what type of a person you are.
If you find it hard to motivate yourself, if you are easily stressed and worry about everything, if you need constant feedback, then really consider if the worries of being totally responsible for everything will sit well with you.
On the other hand, if you are reasonably motivated and can work independently, if you can be clear that the end result will be worth fighting for if you’re a problem-solver and proud of it, if you are pretty resilient if you had to take a financial hit every now and then, if you think the rewards are worth the risk, then go for it!
Finally, look for advice where you can trust it.
As I said earlier, it can be lonely running your own business, so from the start, look for advice where you can trust where it is coming from.
One note of warning – be careful of advice from family and close friends.
They may not be of the entrepreneur mindset, and they will give you advice from the perspective of love for you and care about you. This may mean that their advice is over-cautious and too risk-averse. It is up to you to judge this, but be aware they may try to warn you off, not because of the risks you face, but because of the risks they perceive for you from their point of view.
On the other hand, a business-minded or experienced family member or friend can be an asset. These are the people capable of giving you experienced and solid advice. As a family member or friend, hopefully, you trust them and can talk things over with them.
Failing that, look for good advisors.
A good accountant that you know or that has good references from people you know, or a good lawyer, are assets to your business life. Get to know them personally as well as professionally so that you feel comfortable talking to them and feel you can discuss alternative decisions or even challenge some of their advice to get the best from them. Here is a free checklist on what to look for in a good professional advisor.
Be prudent, but be brave.
As you need to be in running a business, so you should start.
Don’t just jump into it because it “sounds good”. Be prudent. Get to understand what is involved and – again – why you want to do this.
But be brave.
Good things come to those who look at the risks, weigh them up against the advantages, understand the dangers and then makes sure they are mitigated or managed. Don’t let fear stop you from starting your own business – at least, not fear of the unknown. Get to know what is in the unknown.
Next week, I’ll be writing about the components of a business that you need to think about when you start your own business.
You won’t want to miss it – not even if you already own and operate a small business – because it will open your eyes to what makes up a successful small business.
In the meantime, if you are thinking of starting your own business, you may want to invest in a short online program about how to start your own business, without pain. For under $100 you get an online (available to you for life) program that takes you through checking your personal readiness to start a business, analysing the industry and checking the feasibility of your business idea, designing a business model that works, planning and structuring, and the details of implementing your business startup. You can read more details about this program here.
Look out for next week’s post – if you like, make sure you don’t miss it and subsequent posts in this series by adding your name to our mailing list here – and don’t forget, you can unsubscribe at any time. See you there!