Think slowly before starting

The credit crunch has quickly brought attention to the need to rely more on our own efforts and less on the whims and promises of others to earn our daily bread. With unemployment figures rising and new job creation figures plummeting, the days of assured employment even for graduates, is renowned to be a challenge at worst. With government cut backs, the prospect of assistance or benefits look bleak for many who are willing and able to work hard, contribute to the economy and pay their own way. So what should we do?

Its widely known that starting and growing a decent business is not for the feint hearted and often many of us just aren’t suited to ‘going it alone.’ Running your own business means becoming skilled at doing many tasks and acquiring many skills that are not particularly enjoyable. Take the routine ones for example, like tax returns, bookkeeping, admin and relentless marketing. If we have decided to start a business making and selling something we are passionate about or believe in – the prospect of doing a multitude of ‘other tasks’ can be tiring and in many instances boring. Mostly, willing or not, there is not always the time to learn how to do the ‘important extras’ let alone do them regularly and up to standard.

If we feel that we have no option in these economic times to take the initiative. In order to earn a decent living and build a nest egg to sell later, then starting and growing a business may in fact be the only answer. Starting out sensibly is essential – so, if one in twelve new businesses fail, please consider the five pieces of advice below before you get started.

1. Don’t compromise on what you offer

Its all too common to find new businesses starting out with make-shift marketing, accounting, marketing or planning tools. Many before us have managed to start a business with nothing and slowly put in place important systems and processes when they are affordable. Well yes, but times change relentlessly and in these modern days many a brand, logo or website poorly conceived and presented almost kills off any customer interest in the product or service from the start. We need to find a way of avoiding this compromise.

Each new or growing business has its own set of key success factors. Its the business owners responsibility to find out what they are and make sure that the business puts these key factors in place simpler, better and faster than others in competing their market. If this is easier said than done in your business, get help. Compromising standards makes staying in business very difficult.

2. Be careful who you associate with

What you want often determines who we get into bed with. Well, if we want a job or some income to ease the pain of retrenchment or early retirement we might be less choosy about who we elect to partner. An example being, if you want to create a business that you want to form part of your pension in twenty years and your partners rather want to sell in three years – unless you can afford to buy them out and replace their skills sooner than you would like, your goals will be challenged.

Its recommended if you are a natural leader, a maverick or someone who dislikes decision-making by committee not to start a business venture where you don’t have the option of becoming the majority shareholder. All too often, good intentioned efforts are thwarted later through earlier bad choices where associates ethics, goals or contribution are way less than others.

3. Keep the crown jewels

If you are one of those that provide either the main idea or expertise, the resources [especially the cash] or land up doing doing most of the hard work – make sure you don’t find yourself having to ‘carry’ anyone else when times are tough and there is little cash to share or worse, when times are good and you land up getting less reward for your risk and effort. At the start of any business its easy to be generous with partners future rewards as there is as yet nothing to share. This scenario is notorious for creating problems that may split a partnership at the worst of times.

4. Make sure your model is achievable

Spreadsheets while useful, are also easily used to create a business model that looks simple enough on paper and more complex, if not impossible to achieve in practice. Obviously, simpler models with few steps are more suitable for new and small businesses. Complex paperwork, poor systems and ambiguous marketing messages make it all the more difficult for products and services to be trusted, purchased and delivered successfully. If the market leader has a simple model, you at least need a model as good or better to compete.

Still today, many businesses increase their sales dramatically, without any significant increase in profit making or taking. Plan for profit and make sure your business model is realistic and fairly simple to achieve.

5. Plan to become the best of a bunch

We sell our products and services to buyers who collectively make up a market. Some markets grow buyers rapidly, others stagnate while others decline over time. This means we are competing with others for buyers bucks. We need to find out what it takes to be the ‘best of a bunch’ of sellers in a buyers market. If there are only a few sellers to many buyers – fantastic! Life will be easier for a while. If like most of us, there are many sellers to a not so rapidly growing group of buyers, we need to develop a better, different or cheaper product or service. Make sure you ALWAYS have the people around who understand this and are quick to join you to see that you take up the challenge. We all need a team that are willing and able to create a sense of urgency to compete, to know what to do at the right time. Failing which….our business life gets so much harder from the back of a bunch.

What do you think? Your comments posted below are encouraged and appreciated.