New Year! New Business?
As the new year swings round, many will consider it a great opportunity to make a resolution to loose weight, join a gym, stop smoking, start eating healthy, go back to school etc. A growing choice particularly with the climate of how the job market is changing is to start a business. Over the years and with the help of technology, starting a business has become incredibly easy for almost anyone to do. It is this low barrier to entry that often causes people to believe that turning a hobby into a business seems easier than it is. Why not combine your passions and natural interests into a profitable venture people will pay you for? Something you would happily do for free but can get paid for a living to do! Sound too good to be true? Then yes it is not as easy as you may think. Here are a few lessons I have learnt and some of my successful mentors have shared with me over the years that I found invaluable advise.
1. A talented cake maker does not a cake entrepreneur make!
Just because you are naturally gifted at something does not mean you need to commercialise that gift. The skills required to function in that gifting are not the same skills required to run a business. This often happens with creative business owners that focus on how “great the idea” is and not enough on the foundation and “behind the scenes” of how the lights stay on in a functioning business. The boring stuff finance, marketing, dealing with difficult or demanding clientele cannot be underestimated. The best way to explain this is simply the McDonald example. Could you make a better burger than them (most resoundingly – yes you could!) but are you as profitable as they are? What these organisations do is find ways to ensure their systems can run well and the focus is on building and maintaing those systems not actually on making the best burgers ever. Ask yourself if you have all the skills required to start a business in the field you are considering. Could you go develop some of those skills or possibly consider outsourcing them to more capable experts?
2. Who is your market?
This is probably one of the telling signs that shows whether you have done any research into your chosen venture. If you cannot describe your target market in one short sentence, a few bullet points or find yourself thinking “everyone” is a very valid and positive response therefore guaranteeing your success to as wide a market as possible, then you need to consider possibly doing some more research. The benefit of knowing your market is focus. If you are not focussed you will more easily waste your time, energy and money. E.g. spending your advertising on a target market uninterested in your product or service.
3. Start at the end
You should map out where you see your business taking you over a period of time knowing that the journey to whatever you will define as success is not overnight. Spotify (a digital music service) is a growing (as of May 2014 has 40 million users) and successful company but guess what? they are still waiting to make a profit and have been in business for over 6 years! and their investors are somewhat ok with that journey as they still maintain their investment support with the expectation of future growth and profit in mind. A practical example of how you can apply this is as follows. If you know you earn a salary of £20k a year and are thinking of going into business full time, this means if the service you provide produces a profitable income of £500pcm per client, you will need an average of 4 clients a month to maintain a similar lifestyle. Now how quickly/easily can you get and retain 4 clients monthly in your chosen field? This is why it may be wise to consider starting your business as a side project first as your clientele builds up. The best route to starting usually depends on your personal situation. If you have dependents you may find you need to be more conservative in your risk taking than if you were younger and/or single with no dependents.
4. There is power in unity
These days, it is rare to get funding for a startup from an angel or venture capitalist without having a co-founder involved. To the investor it reduces their risk and studies have shown your rate of success actually goes up when you partner. It is rare for one person to possess all the skills required to run a business/idea well and you can leverage from experience, skills and even sharing the cost of items. Don’t get caught in the “I brought the idea to the table so I should get more debate” Ideas account for in my opinion 30% of what makes a venture successful, it is the people that execute and bring the vision to life that actually do most of the work. Without getting caught up in the details of this story, the Winklevoss twins brought the idea of a social network to Zuckerburg, but it was Zuckerburg that benefited the most because he did the actual work to bring the social network – Facebook to life. So be wise but be fair if you want to get the best out of a partnership.
5. Count the cost
I once read a book called “The Dip” by Seth Godin and it quickly sums up to this, count the cost before you start the journey. Starting is easy thats why so many people do it. However if you do not plan to or have it in you to go all the way then don’t waste your energy and time because every journey to success will have its “dips”. Similarly know when to quit, know when its not working out and don’t be afraid to change course quickly. You may even discover a better investment of your time is not to start a business but actually increase your value in the work/career space.
6. Failure is part of the process
Not speaking negatively but failure can be one of the most effective modes for human learning. You can’t read everything in a book! If you start a business today and it becomes a success tomorrow one day something will go wrong and the likelihood is because you did not encounter challenges along the way and learn how to adjust and overcome them, you would probably fail, lose and have to start again because there is no substance to your success. You just “got lucky” and don’t actually know or understand what caused your initial success. This is why a low risk approach to starting can be beneficial to the learning process eg. multi marketing programs, partnerships etc. The process of building a business educates you but also develops you as a person if you are willing to respond to the lessons it can teach. A good example to anchor this concept is Thomas Edison. His story is a great one for why not to give up but it also demonstrates the process of failing continually yet learning till you get it right. He invented the light bulb on his 1001st trial. His response to failure “..I didn’t fail 1000 times, the light bulb was an invention with 1000 steps”
7. Get a mentor
If something is important to you, getting a coach in that area is a great resource to help. I used to think a mentor had to be in the same field to be beneficial but found that to be untrue. If someone has been in business for a period of time successfully, there are usually lots of transferrable concepts that apply to any business they can advise you on. It took me a year to apply an idea a mentor gave me as I thought they couldn’t possibly really understand my business well enough to tell me what areas to focus on. When I did, I saw the results wishing I had listened much earlier on. Of course it helps to have an industry mentor if you can but remember a mentor does not necessarily have to be someone you see physically, they can also be obtained through books you read and online channels of learning.
So in conclusion…
If you decide starting a business is the right fit for you, remember you will be a new entrant into that market and your competitors will not handover their market share or customers willingly. You will either have to find new ones or fight for your market share and work hard. Most definitely harder than you would even at the most demanding of jobs. So maintain your passion and do your homework….and just start already!
All the best on your new venture.
Further reading and resources
- The Lean Startup by Eric Ries
- Who Moved My Cheese by Dr Spencer Johnson
- The E-Myth Revisited: Why Most Small Businesses Do Not Work And What To Do About It by Michael E Gerber
- Purple Cow by Seth Godin
All available on Kindle, Audible.com as well as Paperback form.
May has been running one of the leading event companies in London for over 5 years. They specialise in the planning and production of events in the UK and internationally.
Draft article proposal for V2V Insider Magazine 2015