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Ten things I learnt this year…

Ten lessons in business start up

Ten lessons in business start up

Hindsight has always been my best teacher and learning by doing is how I learn. It is a painful process but it is valuable. I have read many business books and watched many ‘business TV shows’ but nothing is as valuable as getting stuck in and doing it. The pain this year has not stopped any desire or drive to do business. It has inspired it.

Here is my 2008 list of lessons I learnt this year which I will keep at the front of my mind this year.

  1. Don’t  be cocky when starting a business about how well it will go.
    • Researching a market before you start a business must go further than just one prospect and a few positive conversations. It’s easy to get excited about an idea but you need to ask real prospects about your idea and their response to it in detail before you decide it is a realistic proposition.
  2. Being friends with people when you start up a business is not the same as knowing that the team will work.
    • People who are very skilled and experienced in their professions will not necessarily work together in a manner which will produce the results your business needs. This can be said for any team, whether in business or sport. Make sure the team works before you start and be prepared to walk away if you have any doubts.
  3. Make detailed plans before you start the business.
    • You need all the time you have when you start a business to sell your product or service. Any time spent on writing a business plan during selling time is going to negatively effect your sales pipeline. There is not the  slack in a small business which those in a large business take for granted. So, write a detailed business plan before you start the business and get selling.
  4. Give up your job only when you have sales and working capital in place.
    • Sales are your lifeblood. Working capital is your backbone. Nobody will believe your business idea enough to lend you real money until you have proof that customers are spending real money with you. Without these you will find yourself in a very difficult position where a great business idea shrivels and becomes just an idea that cost you a lot of money.
  5. Ensure you do all the boring paperwork before you do anything.
    • In a business start-up make sure you do all of the dull activities like setting up a directors agreement and official paperwork with the government before you lift a finger. It may seem unexciting to do the dull things like deciding if you and your business partners can afford to take any holiday in the first year of your business, or what you charge to the business or not for expenses. When you know what is expected of you and what you expect of your business partners then life is a lot easier and it will ease any animosity later on.
  6. Working virtually is fine in short bursts.
    • Working at home or in different offices when you start a business is a bad idea. You need to see your business partners to make sure that everyone knows what is going and to discuss the details and the ‘big rocks’. Working virtually is good when you are more established and need to be in different places. For me, my home is 150 miles from my business partners and this did not work. I had to spend scarce resources on travelling and being away from home a lot created tensions.
  7. New technology is great when it works.
    • Even though using technology provided by major suppliers to run our business sounded as though it was reliable and was supposed to be, it was still relatively new. Newness is cool but be prepared for when it breaks. Relying on new technology without having a backup can mean your business looks amateur through no fault of its own.
  8. Keep marketing aims realistic.
    • When you are small business you are unlikely to have much in the way of marketing budget. Don’t use big business methods in a small business. Your marketing plans must be in line with your business strategy. Speculating on marketing is hope and not strategy. Make sure that you research your market, as said earlier, and only spend on marketing your business when you are confident that it is an investment in your well researched strategy. I now ask myself “Would Warren Buffett spend the money on this marketing campaign?” If this answer is anywhere ‘no’ then it is risky speculation and not investment.
  9. Don’t be arrogant about your idea and be prepared to change direction quickly.
    • Although you have an idea which people say good things about, you are the one who needs to make it work. The beauty of being in a small business is the ability to change direction quickly. If your business idea is not working out quite how you expected and it is not selling easily in the way that you imagined it would with your strategy, then listen to what your customers are saying and change it. Better to change your strategy and swallow your pride than waste time and money trying to carry on.
  10. Small businesses have small business benefits.
    • It is exhilarating running your own business. You need energy, guts and guile to get it going. You must be prepared though to drop any corporate ideas you had from being an employee about your two weeks off in the summer, your skiing holiday in the New Year or the expense account until you have started to bring in sales and to make the business profitable. You may feel tired but, like having your first child, your business needs you to give it life and nurture it.

My lessons are likely to put a wry smile on the faces of other business people who recognise them. I have listened to many people and I have learnt a lot about people and business in the last year and I am the better for it. Listening and questioning are two activities I will carry out in earnest in 2009.

Look out for my list of challenges for 2009 coming soon.

Categories: Uncategorized
  1. A Maui Blog
    13/01/2009 at 12:03 am

    Excellent advice and tips! Thanks. Everyone starting a business should read this 🙂

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