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Top 10 starting your own business…

Thu, Nov 1, 2012

Top 10 tips, Uncategorised

Each of the following relate to some hard choices you are likely to have to make if you want to run your own business successfully.  Some involve making a decision, one way or the other; some involve finding the balance between competing drivers….

1:work-life balance: once you set up your own business, there is a danger that it will become all consuming - a 24/7/365 responsibility, from which you never clock off.  If you have a family, then this isn’t fair on them, or on you.  Make sure you find some way of protecting then investing in family time (or your business may become your new family, at the expense of your existing one….)

2: buy in or DIY: when you set up your own business, you will be tempted to do it all yourself - partly to save money, and partly because, “if you want a job doing….”.  You KNOW your business, and it will often seem easier for you to do it than explain to someone else (who may not have your drive or passion).  But in the longer term, this may be counter productive.  You need to work out how you best add value to your business, and protect that: if you do everything, and the business grows, it will not ony exhaust you, but it may prevent you doing anything really well - so it may be best to buy in the help you need, and budget for that from the start….

3: manage or produce: this will become an issue as the business grows; will you continue to be ‘the main person’ doing the key tasks, or will you start to take on more of a managerial role, and bring in others who deliver what you used to deliver?  Or do you need to bring in a manager, to leave you free to get on with the core delivery of the business, which is where your real expertise lies?  Again, this depends on where you see your main contribution lying, and what you most want to do.  The key point is, as your business grows, you can’t continue to do it all…

4:hobby or business: many people want to convert their hobby, their passion, into a business.  Without doubt, this is the best kind of business - where you earn a living doing what you love doing.  But be careful.  Not all hobbies convert into successful businesses, and the danger is that, because of your passion for the topic, you may continue to throw money into the business when clearly there is no business there.  People who want to turn their hobby into a business often over-commit, and stick with it long after it is clear it isn’t going to make money…..

5:head down or head up: this relates to number 3 above.  At the beginning, you can become so involved in the ‘busy-ness’ of getting it going, that you are over-focused on the operational nuts and bolts, and lose sight of the bigger picture, and the strategic issues.

6: product or customer led: do you primarily have an idea, a product or service, to sell?  Are you committed to that idea?  If so, you are product-led, and your priority will be to encourage the market to want that product or service.  So your emphasis will be on marketing and selling - persuading customers to want and then buy your product or service.  However, there is another approach: being customer led.  You have identified a customer group that has a range of needs, and your business is focused on delivering to that customer group.  So your products or services will be determined by the needs and wants of that group.  So your business priorities will be to stay closely in touch with that customer group (market research), and quickly adapt and develop products and services to meet its needs.  As such, you have no particular loyalty to any product or service - your loyalty is to the customer.  Your business may be a bit of both - find the balance, then equip your business accordingly with the appropriate skills…

7: price: it is tempting for any start-up business to enter the market competitively, to attract sales.  This often can lead to under-pricing yourself relative to the competition.  Be careful.  Ultimately your business model relies on you generating more income than costs.  So your pricing should be determined by the outcome (crudely) of costs + profit.  Not by what the competition is doing.  If your focus is ‘beating the competition through price alone’, you may not make enough to cover your costs…..

8 budget: where are you going to get your funds to start your business?  Have you got your own ‘warchest’ that will see you through the early days?  If so, how long do you expect it to last, and how much of it do you want to commit?  If you are going for a loan, how much do you want, and how will you secure the loan?  50% of start up businesses FAIL.  What is your ‘walk away’ investment?  In other words, how much are you prepared to lose (risk) to test if your business idea will work or not?  It’s a bit like going to the casino.  Are you going with a fixed budget, so that when you have spent/lost it, you will leave?  Or will you get hooked, and spend more and more to try and win it back….?

9: timescale: how long will you give yourself in order to gain a return on your investment (both money and time - see point 1)?

10: measures of success: how will you decide, determine and measure success?  Not everyone who starts their own business wants to make a fortune.  This is where point 4 above is relevant: if you mainly want to be happy (happier) doing something you love doing, then you may be prepared to lower your earnings potential, in exchange for raising your contentment potential.  More and more people are leaving a boring, unfulfilling and pressurised job (and the associated salary) in order to downsize into a lower-earning but more satisfying job, where, in compensation for lower pay, they gain greater autonomy and job satisfaction…  If it’s your business, then it’s absolutely for you to determine what constitutes ’success’….

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