Are you thinking of starting your own business?
A 2014 survey showed that it is the dream of almost 60% of people in employment. I don’t know how many people not in employment wish to start a business, but either people in jobs really hate their jobs or it is built in to our genes that we want to be masters of our own destiny.
So if you want to start a business, what do you need to know?
In my opinion, having helped many successful start-ups over the last 30 years (and nursed a few failures!) I believe what you need to know is the answer to two basic questions.
Firstly, how will my business grow and prosper over many years? And secondly, what are the basic supports I need when I start?
Let’s deal with the first question first – how will your business grow and prosper over many years?
To answer this question you need information about the following:-
- What kind of person am I?
- What exactly is my business?
- What skills do I need?
- What money will I need?
- What is my plan to grow and prosper?
To start with, I always ask people wanting to start a business what kind of people are they? Business owners need to be highly motivated and disciplined. There will be a lot of ups and downs in your business life – don’t go into business if you are likely to get bored, give up at the next problem, or fear change. You need to be disciplined enough to work at things rather than dabble at them. That’s not to say that you need to be numerate or process-driven, many creatives and non-numerate people thrive in business. They do however subscribe to a discipline of sticking to it, finding the best advice, and working at a problem.
Another aspect of knowing what kind of a person you are involves what your family will do. Running a business, certainly at the start, is time-consuming. Will your family support you?
You also need to know what exactly is your business. What a silly comment, you might say, of course I know what is my business, I sell grommets, or I operate a law firm, or I repair cars.
That’s what you do which is not the same as what your business is.
I’ll give you an example. So you want to run your own law firm. What are you selling – your skill or your experience? Who are you selling it to – businesses or private individuals? How will you sell it, will you be by yourself or have lots of employee lawyers, will you specialise in anything, will you operate from an office in the city or the suburbs? Get the picture?
Unless you have a highly detailed picture of your potential business how will you grow and prosper in the way you want? That’s like opening your doors and saying come one, come all, I have no idea what I offer you but I’ll see what happens and maybe go the way it transpires. A recipe for disaster, or at least disappointment and eventually you’ll hate your business because it doesn’t make you feel good.
The next thing you need to know (and I’d argue you can only do this if you know what exactly is your business) is what skills you need. Here are some basics:-
- Understanding finance
- Understanding marketing
- Understanding how to manage staff
- Understanding client or customer service
- Understanding contract law
- Understanding taxes
- Knowing your product or service.
Note that I say “understanding” most things but “knowing” your product or service. Once you know what skills you need, you can run your business while you understand most of those skills because you can hire experts to take care of those skills. You cannot abrogate your responsibilities because it is your business after all. So you need to understand those skills even if someone else looks after them for you so that you can understand and react to what they are telling you.
However you need to know your product or service because no one else can develop the product, find opportunities for that product, watch for threats or changes that will affect that product, and generally use it to grow and prosper better than you. Or at least no one else should be able to know your product better than you.
You need to know how much money you actually need to start your business. Make sure you get help with this if you are uncertain. Have someone look over your shoulder – have you thought of everything?
It’s not just the amount you need to pay for stock and renovate your new premises, or the amount to pay for rental deposits or printing of brochures. You need to work out your working capital requirements, which is, basically, the cash you need to tide you over between making your first sale and collecting the money – in between which you will need to pay staff and suppliers.
Finally you need to have a plan. Yup, I know it’s a cheesy saying but it is true – businesses don’t plan to fail, they fail to plan. And when nearly 80% of businesses fold in the first year or two, there’s a lot of businesses who fail to plan.
You need a long term plan (I call it a strategic plan) which tells you, broadly, where you want to take your business – the strategic direction. You then need a shorter term business plan, which needs to be renewed at the end of each term. The business plan is the detailed steps within a timeframe that you can more easily predict.
I use a planning method that starts with the vision of where you want to go (remember what exactly is your business?). Once you are clear about that, you can then formulate goals and objectives that are created to get you to the ultimate place. From those goals that point you to the vision, you can then develop action plans of step by step detail in every department. In this way every small step is in only one direction – towards a bigger goal, and ultimately towards your vision.
The second basic question, of what basic supports you need at the start, is more easily answered once you have collected the information above. Your plan, the answers about capital, the skills you need – all these start to generate the support you need:-
- What staff do I need and can afford?
- What advisors do I need and how will I work with them?
- What do I need to follow my plan?
- How do I get trained up in some of the skills and to what level?
- How do I get my bank to support me?
- What legal structure do I use?
- What tax or other registrations do I need?
- How do I protect any intellectual property?
- How will I market to my target customers?
In summary then, if you are thinking of starting a business, make sure you know yourself, make sure you know your business inside out – don’t just start with an idea or a day-dream. Be prepared, make a plan. Be aware and look for the basic supports.
Running your own business can be tiring, depressing, lonely.
But it can also be fun, exhilarating, motivating, cause you to learn and grow as a person, create enjoyable networks and relationships, be highly rewarding financially and intellectually, and become the purpose of your life!
Start right, and enjoy the ride.
Finally, if you are starting a business or already running one, get yourself over to https://teikoh.com to get more tips, tricks, tools, resources and templates that will help you to create strategy, show leadership and grow your business. While you’re there, enter your name and email and I’ll make sure that you get new tools and resources delivered to your inbox as soon as they are developed – for free!