From the top 29 January 2016

The eight lessons learned from running my own business

Ed Molyneux knows all about building a successful business
Ed Molyneux knows all about building a successful business

Knowing what to focus on in the early years of building your company is interesting in hindsight, but even more useful if you can gain that insight at the beginning.

I’m the CEO and co-founder of FreeAgent, a company which provides a cloud accounting software for freelancers, contractors, micro-business owners and their accountants.

Since setting up FreeAgent in 2007, I have sought and secured more than £7m in external investment, from backers in both the UK and US – including a first round of equity crowdfunding, which successfully raised over £1m.

My two co-founders and I “bootstrapped” FreeAgent for the first two years before looking for financial funding, and experienced the considerable challenges involved with getting a business off the ground and growing it during challenging times. Here. I’d like to share some of the biggest business lessons learned throughout the FreeAgent journey.

Just begin

The world is full of great potential business ideas, dreamt up over lunch with friends or a few pints down the pub. However, there are far fewer actual businesses, because for one reason or another those potential entrepreneurs never summoned up the courage to take the first actual step.

Some entrepreneurs liken that step to jumping off a cliff with a kit of aeroplane parts and assembling it before you hit the sea. Luckily it’s normally less dramatic than that, and the consequences for failure less terminal, but nevertheless you do have to commit fully from day one. Be brave and start your journey – you never know where you’ll end up.

Be a painkiller, not a vitamin

Your product or service is very unlikely to succeed if it’s just something that’s nice-to-have, or that’s perceived as an optional extra. Unless you’re really removing a painful problem in someone’s life, they’re unlikely to reach for their credit card or hand over hard-earned cash.

Also, make sure you take a good look at what you’re actually offering to potential customers and be prepared to use their feedback to tweak your product or service to better suit them. You may think you’re solving a problem for them, but the reality may actually be quite different.

Be focussed

Your market is probably not “all the consumers in the world”, or even if it is you don’t have the resources to pursue it properly. It’s better to find a smaller market that you can serve exceptionally well, and start from there rather than spreading yourself too thin. Remember you can always try to branch out and expand once your business is established.

Don’t run out of cash!

This may sound obvious, but it actually happens surprisingly often. Many new businesses fail because they haven’t budgeted enough money to achieve their vision, or because they’ve let costs spiral out of control.

Considering it’s the only thing that’s truly going to kill your business, it’s vital you are disciplined enough to know where all the money is going and what your realistic plan is for becoming profitable. It’s a lesson learned often too late.

Hire people smarter than you are

Even the most successful entrepreneur can’t do everything themselves. There will always be some things you’re great at doing and others that you’re less proficient at – and while you can gloss over these shortcomings when your business is in its infancy, it’s less easy to do so when it starts to grow.

Find the areas where you know there are shortcomings and fill in those gaps with people you know will do the job better than you. It takes confidence and self-awareness to do this, but it’s essential for your business’s long term success.

Own and communicate the vision

As a founder and business leader you “own” the vision for the business and should be continually testing it against what’s going on in the outside world. Even if you think you’re sounding repetitive, it’s almost impossible to over-communicate your vision to the team. They will never buy into your business unless you’re clear and transparent about what you’re trying to achieve.

There can’t be too much clarity

All those smart people you hired don’t want or need to be micromanaged. Instead your job is to create alignment around your vision and very clear objectives, and let them figure out the details.

Embrace the journey

Entrepreneurship is more like a roller-coaster than a rocket. You’ll need to learn to persevere through the lows – which can be very low – in order to get to the highs. But it’s the highs that make it all worthwhile.

With Ed Molyneux knowing where he’s gone wrong before, creating his list of lessons learned, we previously found out what the likes of Karren Brady and Richard Branson wished they’d done differently.

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