I have a new business idea everyday, in fact I have so many my husband has asked me to write them down so we can review them at the end of each month. As long as I can remember I have had business ideas, so I guess it was inevitable that I would end up starting and running my own company.
Before I managed LemSec and launched The Investment Stylist, I had been lucky to advise various start ups, whether it be around legal structures, cash flow management, strategy and business plans, capital raising or assisting with operational management. With all of this experience, I thought I would be ready to run my own business and run it smoothly. Little did I realise the difference between advising and making the decisions necessary to run a company and survive in the current economic climate.
The Investment Stylist theme this week is self employed women and I thought it would be an opportunity for me to outline some to the lessons I have learnt and the tools I have used.
Here are my 10 tips for starting out with start up
1. Have a Strategic Vision and a Business Plan
To me there is a huge difference between a strategic vision and a business plan.
The vision sets the scene. It outlines what you want your business to be, what your business stands for and where you want to be in the future. It defines the bigger picture and boundaries for your business. The strategy does not have strict targets or timelines and does not get caught up in the detail of running the business. A business strategy includes your mission statement (business purpose), company values (the guidelines of who you run and do business) and your future goals (where you want to be in one year, three years and five years).
It also includes a strong understanding the environment you will operate in, your market and the resources your need to start and continue to run your business. Even if you want to work for yourself from home, thinking about these things helps to stay focused on the bigger picture. This is important, especially when the day to day management tasks can get you down. It sounds very high-brow, but a great place to start reading about business strategy is Harvard Business School “10 Must Reads on Strategy”, it costs USD $24.00 and is worth the money.
The business plan to me is more like a project plan; it outlines the steps to implement your vision. It goes into the detail around set up costs, product/service development and roll out, if you need book keeper support, what IT support you need, when and how you wish to launch. The government has so many websites with business plan templates and checklists it only takes a Google search to find them. The following are a few I like: Starting your business checklist, Starting a Company, Small Business Tool Kit
For me the main difference between your vision and your business plan, is that your vision doesn’t really change. Your business plan will evolve and adapt to your experiences, achievements and the environment you operate in.
2. Doing something is better than making it perfect
Setting a vision and doing a business plan is essential to establishing the foundation and boundaries for your business, but don’t spend your life making it perfect. Starting to do business is far more important. By doing business I mean calling people, producing your product, making sales, setting up your office and engaging service providers. In my mind you are doing business when you are invoicing and paying bills.
The tip around doing something is better than waiting for it to be is relevant for everything you do within your business. Taking too much time to make things perfect eludes you into a false sense of security. By taking longer to do something you are not receiving the feedback you need to make your business even better. Sometimes we can rely on the search for perfection as a way to protect ourselves from failure.
I am in fact a budding perfectionist/control freak, so it has taken me a long time to apply this tip. These days I now do things to 80%, I then go gathering for feedback from anyone that will listen. I then apply the feedback I have received and evolve my idea to fit the market. From my experience this has meant that my ideas evolve and my business can be solutions driven organisation that meets the demands of your customers and the environment.
3. Cash Flow Management Essential
As I an avid investor, I have always been focused on profit and loss. It is the basis of company valuations and a tool for understanding whether a business is a sound investment or not.
Now that I am managing a business my focus has take a full 180. I am now solely, focused on cash flow and my balance sheet. Every second week I religiously track what money is coming and what is going out. This helps me keep a strong handle of what outstanding debtors and creditors I have plus ensure that my cash flow forecast is relevant. By being focused on cash flow I am also acutely aware of what products are successful and what value my service providers are providing.
Without a strong cash flow your company will never be able to make a profit. I like the three tips Dunn and Bradstreet have given for good cash flow management:
- Know your balance sheet
- Invoice regularly
- Develop a cash flow forecast.
The New South Wales Government has a great small business kit that you can log into. Within the kit there are some very handy finance tools.
4. Understand your product and market
Understanding your market and your product is essential to selling your ideas and increasing your customer base. Having a strong marketing strategy helps you to enter the market with a strong product and approach. With sound research and analysis you can enter the market with unique product and idea. Your marketing strategy usually forms part of your visions and business plan documents. It can include:
- Your Marketing Goals
- Market Research
- Customer Profiles
- Competitor Profiles
- Analysis of the 5 P’s
- Projects to meet your marketing goals
- Test you ideas
- Lesson you learnt
Once again there is a tonne of government support out there for developing your marketing strategy, I would once again start with New South Wales Government small business kit as a guide.
5. Adapt and Evolve – Be innovative
The environment we work in is changing all the time, whether it be as a result of economic forces, legal changes, new technologies and customer drivers. Being able to adapt your product or service to these changes is the key to survival and growth. To me that is what innovation is in business. Innovation does not just mean developing the next big technological change. To me it means being able to think of new ways of evolving your business and understanding that you need to innovate to survive.
The concepts of adapting and evolving are similar to theory of discovery driven growth, there is great interview of Rita Gunther McGrath an academic specialising in this field.
6. You do not need to be superwomen
This is a simple and brief tip, once you have enough money coming in the door, outsource time consuming task that are either not your technical speciality or are holding you back from doing more work. A great example is hire a book keeper as soon as you can (unless that is your skill).
7. Learn from others
A lot of people in business focus on the need for a mentor. I in fact think you need several mentors. People you can talk to about different
scenarios, business structures, debt recovery and even how to manage work and life. Finding mentors is easier than you think, especially if you do some networking. With a strong network of people you can usually find a mentor when you need them. A great place to start networking is a some of the women’s business groups out there some that I like are Women on Boards, Behind Closed Doors, Business Chicks and Network Central
8. Balance your time
This has been hard for me. When you work for yourself you are able to work as much and as little as you like. So it is important to balance your time between work, family and friends and your hobbies. This is especially hard if you are working from home.
9. Take time out
In the first couple of years this is also very hard, but taking time away from work is really important. It gives you a chance to recuperate and rest.
It may also give you the chance to play more golf (like I do) or spend more time with your family friends. It is stressful running your own business and you need give yourself enough rest to be able to cope with everything you do.
10. Believe you can do it
Finally, believe that you can do it and make it work. Also find an undying supporter who will back you all the way and maybe even a little blindly. I know it sounds cliché but is really important to have that confidence that you are able to achieve what you have set out to do because not every day is easy but the rewards are great.
Good luck with starting your business or continuing working for yourself. It is a unique experience and journey where you learn a lot more about yourself than you ever thought. We would love to hear your experiences and tips around starting and running your own business, please comment below of email us at firstname.lastname@example.org.