I have had my fair share of business ideas, successes and failures, and known many friends who have been through the same thing. Some failed and never attempted to start up again; many did reattempt only to fail a second time; some were successful after one or two attempts and some were successful immediately.
One thing that I found interesting was the common errors I saw within each of our business strategies which I would like to share with you. Some of these may seem like common sense; others may be just the advice you needed to hear when making plans to start up a business. Here are a few common things you should not do when launching your new venture.
Rushing is one of the worst things you can do. There is always a rush to get on the market as soon as possible because you feel that if you don’t do it now, someone else will get there before you and make all the money you wanted to make. I think we’ve all thought this, but taking your time ensures that you have thought of everything before spending your money, and possibly losing it because you did not go through the simplest of things, such as a cash flow forecast.
Now I know that there have been success stories of people just quitting their jobs, starting a business and doing very well, but this is not the case each time. You have to think clearly before you do anything. You need time to figure out how much money you will need to start up and how much you will need on a month to month basis. You need to find out who your competitors are and what you can do that’s different. You also need to do your market research. Who is going to be your target market? Why? How will you reach them? What is the problem you are trying to solve? This is just the tip of the iceberg. There is so much more to starting a business than just investing in a website and some stock. Don’t rush, do the math, do the research and make sure you get off to the right start.
DON’T UNDERESTIMATE FINANCES
So many people have done this mistake. They have underestimated how much money they will need to start up the business. Once you have invested money into the business, you still need to meet monthly costs, and you cannot rely on your sales for that month to meet those monthly costs. I am not negative here because we are all hoping for high sales; but you need to think smarter, so if anything were to happen and you could not meet your monthly costs via sales, you still have available funds to cover them.
Another thing that people forget to add to their plans are items such as merchant costs. For every transaction that you do, there will be a cost from your merchant bank. This is an expense. If you are in the business of selling products, don’t forget the cost of packaging and postal fees; these are all expenses that eat into your profit, and if you do not include these into your costs, then you are not giving an accurate reflection of your cash flow. Don’t forget costs such as insurance; if you are not maintaining your website yourself, you will need to include maintenance costs; costs of product packaging, production, staff, employee payroll costs. It all adds up!
DO NOT BORROW MONEY IF YOU ARE UNSURE OF THE TERMS
It’s good if you have people who are willing to help you through your business venture, but if you’re going to borrow money make sure you’re clear what the terms are, and have a backup plan should things go belly-up, and you’re unable to pay what and when you said you would. Speak up if you feel that you’re going to be unable to meet the terms. Suffering in silence is not good for your mental health, which is crucial for your well-being; stress can do so much more damage than you believe.
Don’t borrow more money than you feel you will need. Have a breakdown of how you wish to spend the money and illustrate how you will pay it back. Plans do not always work out, but it gives you a rough guideline of what you are working with. When borrowing money from friends and family, things tend to get tense; to avoid such tension, make sure you are all clear on the terms.
DO NOT WORK EVERY HOUR GOD SENDS AND IGNORE SLEEP
This is such a huge point. When starting one of my businesses, I had a three-year-old. An extremely active three-year-old, and I was getting possibly four hours’ sleep a night. This didn’t help me at all; in fact, I passed out at one point. I was run down, and I ignored all the signs. It made things worse, because not only was I unable to do anything for my business but, most importantly, I was not there for my little man, a.k.a Trouble. It was a very difficult time for us both because he didn’t understand what was going on with Mummy and, to be honest, I felt very selfish. It made me feel that I didn’t take his needs into consideration at all.
DO NOT ‘GUESS’ WHAT YOUR COMPETITORS ARE DOING
I can tell you one thing for free: commenting on what a business is not doing or should be doing is easy, but doing it is another thing completely. Everything looks easy on the outside, but you don’t know the struggle involved on the inside. For this, I say do your research.
I cannot stress this enough. Every decision you make, do your research. Find out the financial impact of a decision, the social implications, potential competitor responses and so on. You want to know what your competitors are doing, why and how; but you will not know this by guessing. You have to go out there to find the information you need. Research means investing a lot of time and not only browsing the web. Reading books, attending trade shows, visiting the library and reading market research reports are just some of the activities you can do to find out what your competitors are doing.
Do not get consumed with what they are doing, all you are simply doing is reviewing how they remain successful and how you can ensure you stand out by making yourself different. Remember, you and your competitors are at various stages of business so you can not expect to be able to do the same things they are doing now when you have not even launched!
DO NOT BE QUICK TO PURCHASE THINGS YOU DO NOT NEED
It’s very easy to make a list of things you think you need. Did you need that brand new computer, or that brand new iPhone 6S with a £40 a month contract, or that £1000 annual subscription? As a start-up business, try and minimise expenses where you can. Lower costs equal greater profit.
It is wise to work with equipment that you already own and then only purchase the things you need. Even when you do purchase equipment, try for second-hand wherever you can. You don’t want to start with a huge director’s loan and little or no cash flow because all your money is tied into assets – things that you did not necessarily need but bought anyway because you always wanted them.
The first few years are critical, and you should focus on keeping all costs as little as possible. As time goes on and you start generating more income, you can then think of purchasing items. Think about it: didn’t Apple start in a garage? Didn’t Virgin begin in a bedroom? Look at some of the big players and see how they all started. I think you will find that they all worked with what they had and only invested when there was a ‘need’.
DO NOT PURCHASE ANYTHING AT THE FIRST PRICE YOU SEE
This is something I’ve been guilty of. I’ve bought things because they looked like a bargain; only after buying them with a ‘no return’ policy have I discovered that I could have got the same item for a fraction of the price. This was all because I was in a rush to purchase the item, or I couldn’t be bothered to look around. That action reduced my cashflow, and I wasted money that could have potentially been used elsewhere. Certain things also show up on offer, but that still does not mean they are a good price. Shop around! Get your money’s worth.
DO NOT TELL EVERYONE EVERYTHING
Not everyone you think is your friend is your friend. I say this from experience. You can have an excellent thing, and you may share your plans, processes and experiences with someone else because you genuinely want to speak to a like-minded person. Only the thing is, this person knows everything they possibly need to know and can do what they want with it. They can take your ideas and use them as their own. It ‘s nice to have friends you can talk to, but not everybody is your friend. In fact, you should only tell people certain things on a need to know basis. You may argue that someone else can take your idea because they will not have your flare, yes this is true, but think about the emotional damage this experience has just done to you.
Do you want a safe place to talk to others? Read my post on creating a mastermind and surround yourself with like-minded people.
DO NOT BASE YOUR BUSINESS CHOICES ON WHAT YOU ‘FRIENDS’ SAY
This is something that you could take the wrong way, but just because a friend has said something is not a reason for doing it! This is your business. If things go wrong, are you going to hold your friend responsible for what has happened in your business? There is a difference between having a discussion with a friend who may make a suggestion that you think about and decide to implement, and having a friend telling you ‘this is what you have to do’.
Unless your friend is qualified to give you this advice, ensure that any final decisions are based on your understanding and judgement on the matter. You are the one that has to deal with any consequences that may occur from a decision. I hear people thinking in their head, ‘but what if said friend has an interest in the company?’ I guess this is where voting rules would apply.
DO NOT BE SCARED TO INVEST IN YOURSELF
This is the most important thing I could ever stress. Invest in yourself! Miss Jessie’s Book taught me so much about the benefits of investing in yourself. I cannot stress this enough.
Investing in yourself is one of the best business things you could do for your business. Whether it is training classes for a particular issue or doing something else that will save you some money and benefit the business in the long-term, I don’t think you should hesitate to do it. You are the most important aspect of your business. You make the decisions; you run the business, this is your baby. Investing in yourself can only strengthen your business. If you haven’t read Miss Jessie’s Book, read my review here; or better yet, read the book and see how investing can take you places.