Running your own business means you take on many roles. Cash may be tight, and you will need to fill the gap in certain roles until you have sufficient funding to build out your team. Focus on getting cash in from customers early and constantly review the performance of the business.
1. Have you got what it takes?
Be sure you have what it takes to be self-employed. Can you cope with the thrill, excitement and stress of running your own business? Are you willing to commit all the hours of every day to ensuring your new business succeeds? Are you also prepared to put all of your savings and time into your new venture? If the answer is yes to all of these questions, then you probably have the right DNA to go it alone.
Always work to your strengths: often, the best start-ups come from tweaks or changes that improve the way we do things or how a service is delivered. Have you found something that we don’t yet realise we will need, or have there been advancements in technology that mean you have found a better way to offer an existing product or service?
Improvements to existing offerings can often be easier to get off the ground and funded initially, but the gold nuggets can be found where the market doesn’t realise we need the product yet! The success of Apple is a prime example where we didn’t realise we needed iPods, iPads or iPhones, yet many of us have one of all of these products, or use an alternative similar product. Passion about your idea isn’t enough; you must be offering something people are willing to pay for.
3. Back yourself
I say this with caution, as not all ideas are worth investing your life savings in! Many new business founders try to protect their idea to the very end; this can also be the end of the road for that business idea. Talk to your friends and family about your concept, and get some honest feedback; listen to their thoughts and comments and take it all into consideration.
If your idea is in a specific sector, talk to experts in that area. Get their feedback and be open to constructive criticism. The fast “no” is a lot less painful and less costly than a slow no so take everything on board before you give up full time paid employment.
If the feedback from the experts is positive then it could be time to take on the challenge of being self-employed.
I cannot stress this point enough. Research starts with your idea, exploring the concept, identifying competitors in the same or a similar space and the assess appetite of the market for your new idea. Is there room in the market or do you need to create a new market for your product?
Do customers need or want to buy your product, or do you need to educate the market? These are questions you will be asked as you speak with funders, investors, banks or other lenders, so being prepared for every eventuality is very important. Making an educated decision to back yourself and your new idea will bear much more fruit than proceeding blind without having completed the research.
5. Business plan
I think this is many founders’ most feared part of going it alone. Putting your plan on paper can often be a daunting task.
Good market research will form the frame around which your business plan can be written. Only when you are confident there is a market for your offering would you commit the time to write the business plan. The plan can be as short as five to ten pages at the outset, and develop over time into a detailed and strategic execution plan.
For me, there are four key points to address in any business plan:
- the concept/idea – clearly and succinctly explain what you want to do and how you are going to do it.
- marketing – having completed your research, you will have a clear view of the market size; the particular sector of that market you are focusing on; the price point you can sell at in that market; and a basis to make assumptions about how much product/service you could potentially sell to that market. This section of your plan will set out your unique selling point and competitive advantage in the market.
- team – we all like to think we can do most of it ourselves but having the right people to help you along the way will make the journey a lot easier. Identify the key roles for a successful business and prioritise filling these roles as funding allows.
- Financials – put the numbers on a page and see what it looks like. Make reasonable assumptions for turnover, and be realistic about how long it will take before you will make your first sale. Don’t be afraid to ask for help to prepare your financials, as this will be relied on when you are seeking funding.
Be ready for the level of commitment once you decide to invest yourself fully into making the business work. Make sure you have the support of your family and friends. Running your own business means you take on many roles. Cash may be tight, and you will need to fill the gap in certain roles until you have sufficient funding to build out your team. Focus on getting cash in from customers early and constantly review the performance of the business to your business plan.
Regardless of your offering, unless your product or service works seamlessly or is a pleasant experience, people won’t continuously pay for it. You must over-deliver on service, quality and reliability, especially in the early stages. Your reputation is all that you have when you are starting out, so you need to protect it. People like to talk and love to complain. Be sure you don’t give customers anything to complain about!
Get the structure right from the start. Speak to those that have started businesses before and to someone that has experience in setting up new businesses.
There are many support services for people looking to start out and many accountants, lawyers and investors offer free initial meetings where you can get some solid guidance when starting your business. From experience, advisers much prefer to see a business start with the right structure than try to unwind a maze of mistakes when it can be too late to do so without incurring costs. Your options for a suitable platform to start your business are (i) sole trader; (ii) partnership; or, (iii) limited company.
9. The right funding and support
There are many options available when you are starting your own business; the secret is knowing where to look for help. As you are investing all you can personally, you can explore other funding options such as friends and family, private investors, venture capital funds in conjunction with any government support available.
In the early stages of your business, you will constantly be fundraising or at least mindful of how long your cash will keep the business going.
It takes time to secure investment, often ranging from three to twelve months from when you first start fundraising discussions. Be prepared for delays along the way. Fundraising can be seen as a game that needs to be played, so play it wisely.
They call it a “pivot” in technology companies, a “change of direction” in others. Put in plain English, the first iteration of your idea just wasn’t viable. Every business idea evolves and develops as you gain an understanding for your product/service, your market and your customers.
As you take on board feedback from your advisers and customers, you will evolve and improve your offering to better suit the market. Be ready for advancements in technology, and adopt technology early where possible to improve or streamline your offering. With the Internet of Things becoming more prominent, it creates new opportunities for people to start their own business and provide new solutions to everyday problems.