In short, he says, if it was easy, everyone would do it. It’s not. But the difference is about not hearing the word “no” and finding ways to be relevant, positively disruptive and understanding the true meaning of innovation.
“Concentrate on being better than your competitors, rather than over-engineering complex business models and value propositions. And, above all else, care about what you do – passionately. Because if it looks like you don’t really care, then nobody else will,” he advised.
(1) What are the most important first steps?
Well, I would ask myself: ‘What does my support network look like, and how much do I really believe in what I am about to do.’ It’s not enough to have a good idea. People believe a good idea is the ultimate conclusion. That is just the beginning. What turns a good idea into a real business, a business that has growth potential and makes a return, is you and the people you surround yourself with.
Are you going to make a sacrifice to make this happen? Are you going to make a contract with yourself and commit to your goals? What will be the cost of that – not just money, but the time you will be away from the people you love? Has everyone around you, the people you care about, understood your decision, and are they behind you? Ask these questions now, do the groundwork. There will be challenging and stressful moments along the way, and you will need people around you to get you through. In terms of your business, you will need to have an honest and realistic plan. I don’t mean a business plan you create for the sake of it, but a really well researched and thought-through road map to your first milestone, and then those that follow.
Keep asking yourself the difficult questions. How long can I commit to the business before I need money? What are my personal strengths and weaknesses, and where will I need help? Who needs what I am offering – and who is already doing it and how? How am I better than the rest? Who do I know who can help me through these first steps? It doesn’t hurt to reach out to people and ask them to help you question your business and your approach. Sometimes finding a business mentor can be a great way to help you through this part of your business journey, and this is much more commonplace than when I started out in business. Choose wisely, someone you respect, admire and who inspires you, and definitely somebody with some experience or understanding of your market sector. We all have egos, and a well-written invitation to become a mentor is hard to ignore. Just be clear at the outset what you are both looking to achieve, how you plan to interact or meet and the scope of the mentoring requirement.
(2) What are the keys to survival in year one?
If you have prepared carefully, year one will be hard but much harder if you haven’t considered the money you need to keep going. If you think you can start receiving income in three months, make it six months in your plan. It’s not often things happen when you want them to. If you have planned your cash requirement carefully and truly have the desire and energy to start-up, then you will get through year one with your focus and belief. Remember CASH IS KING, so don’t make the mistake of not having a big enough “war chest” of savings that you have set aside so you can keep going when things don’t happen as quickly as you want.
In the early days, enthusiasm and passion count for a lot, and can be the difference or the edge when it comes to convincing people to meet, buy from or invest in your business. This is something I have seen a lot on Dragons’ Den, and possibly the best example is Levi Roots with his Reggae Reggae Sauce. The numbers didn’t add up – but there was something that made me really want to find out more about the man and the business.
One of Levi’s challenges, and something that is common to every business, is achieving scale. In his case, this was about ramping up production from a home-based business to a production capacity that could support bigger orders from major retailers, and then the challenge of managing cash flow in the context of payment terms. Years two and three can be more challenging as you grow, but the foundations you lay in year one will be fundamental to how you manage success going forward – and definitely plan for success – and any other challenges that crop up as you grow.
(3) How do you suggest setting up a network of support?
I’ve already explained how important it is to have your family and friends on side and supportive with any bold business decisions you intend to make, and so let’s think about your network of business contacts for a moment. You will need to network in a productive way. Be disciplined with this and really prioritise who you really need to know, or get to know, and why. Time is of the essence, and focus is really important in terms of good time management in the early stages of any business.
Social media can be a great asset in identifying people, organisations and potential customers – but it can also become a great way waste of time, so include it in the mix but don’t wholly rely on it. Making direct contact personally is best. Using email, or a LinkedIn request/message, can be helpful, but picking up the phone, or getting the attention of key people at, say, a trade event in person is how I would set about building a network of value around you and your business.
Whatever business sector you are in, there will be established networks that exist to support them, such as trade bodies, business organisations and relevant trade publications. You need to become part of the ecosystem, and make sure you have relevant contributions to make, so that when you engage with people, you have something memorable to say that makes people want to connect with you.
You have no time to be shy, you need to put yourself out there with a purpose that directly adds value to your business and what you are trying to achieve. Some useful ways to get networked with relevant people can come from using shared co-working offices spaces, incubators for early-stage companies, and events that bring like-minded businesses and people together. But, as I have said before, keep focused and don’t get distracted by the lure of networking events that may not deliver what you need right now for your business
(4) What unknown “loopholes” did you leverage early on – kind of cheats?
Being smart is a necessity in any early-stage company. Chances are, you will be doing all you can to write business and deliver sales for your business, so that you can stay on plan and hit vital targets. As an early-stage company, it is likely that you will be reliant on customers who are bigger businesses than you probably are, and so often the dice are unlikely to roll in your favour. A good example will be in the terms of business, and particularly payment terms, that you may feel forced to agree to win the deal. I’m not a fan at all of so-called “cheats” or “hacks” and exploiting loopholes that
can end up in leading you into a legal minefield.
The best things to focus on are ways to balance the scales of risk as much as you can back in your favor. There aren’t any shortcuts to success so don’t be tempted to make them. Read everything in detail and don’t just accept terms of business as they come – challenge and question everything if you can, but do it nicely. If you have a good trade body in your area of business, engage with them and see what support they offer companies like yours. Chances are there will be tools and templates and guidance that exists in some kind of industry standard way.
If you have something that a customer really wants, there is always an opportunity to negotiate. Keep an eye on how much credit you extend to customers – I learnt about that the hard way. Credit insurance for your customers can be expensive, but it can also be a lifesaver for your company when things go bad.
Probably the most useful thing I have always done is to go onto the Companies House website and check the last accounts of whoever I am going to meet. If it’s a limited company in the UK, you can search the business by name and buy the last filed accounts for just £1. It’s a great way to learn a lot about their business, and can also help you swing the bargaining pendulum back in your favour.
(5) What are your tips for managing cash flow?
We’ve all heard the phrase ‘cash flow is King’. But purchase ledger control is Queen – and she wears the trousers! Managing cash flow varies greatly and is dependent upon the nature of your business. But the golden rule is don’t buy what you don’t need and don’t let expenditure become a leaky bucket in your business.
(6) How do you stand out from the crowd early on?
I would strike a balance early on between putting yourself “out there” and managing the business. Think about the mission and vision of your brand or business, and turn that into a “story” – it could be about you, or it could about the USP of what you are offering. Get active in your sector and develop a voice and a platform for what you have to say that gets you noticed. Find opportunities in trade press and at trade events to get this message out to the crowd, and stand for something relevant.
Don’t just get on a soapbox for the sake of it – make sure every opportunity you get to promote you or your business has a point and a purpose, but find an issue or a cause that fits your business philosophy and objectives and learn to own that space, so you become the default commentator.
Social media can play a part, and so can some DIY PR tactics, but don’t let these activities take you away from delivering your business results otherwise you may find yourself standing out from the crowd for all the wrong reasons.
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