When you start a business, you need to be a raging optimist. That’s because, frankly, it’s hard and many people don’t succeed. So to stand a chance, you really need to have a sunny view of the future.
However, you also need to be a realist. A friend of mine was working in a new start up. He asked me if I was interested in investing, so I took home a sample of his product. In the meantime, he had managed to place it with a couple of major high street chains. I tried it with my wife and daughter who were in the target market. Neither of them liked it, so I declined to invest.
The business in the meantime continued. A while later they were back to the drawing board, because the product hadn’t sold through the retail channel at all and had been dropped by the retailers. Fortunately they have now completely changed the offering and are doing okay, albeit on a much smaller scale. My friend is no longer involved.
Another business planned to sell a website monitoring service to small companies. After a few months of selling, it was clear there wasn’t much of a market. The management team changed direction and started selling to big corporate sites instead. This was a raging success and several years later they still have a razor focus on the same market. I was happy and this time invested in the company when they changed direction.
What are the lessons from these stories? It’s about realism and facing the facts. The lesson isn’t to chop and change, as the second company had to stay their new course for several years. However, the quicker you face difficult facts the better, particularly when it comes to customers.
The most important thing any start-up can do is to get some happy, paying customers. If the prospects won’t buy or don’t like the product after they do, don’t try to tell them how they’re wrong. Instead, change direction and provide something that they want. Then press on. A dose of realism is worth a ton of investment. In fact, having the money to continue backing a losing strategy can be the biggest disaster.
Are you prepared to work hard? And not just hard, harder than you have ever worked before in your life?
Are you prepared to experience and savour the intense highs of business success?
If yes, then read on...
Your first 18 months of business life will be a roller coaster ride. Being your own boss brings you true freedom to do what YOU want with YOUR business and take it to where YOU want to take it. Being your own boss is addictive and compelling, and after six months you will know for certain whether you ever want to go back to corporate life.
As your own boss you are not just plotting a course and steering the ship, but deciding what ship to steer and the reason why you need to steer it in this destination. Sometimes luck plays a part in business success, but more often than not any luck is underpinned by a lot of hard work and dedication. Your role as boss is to provide the drive, vision and motivation to take your business through the storm into the next port.
However, when it is just you in your business, with potentially a mortgage to pay, you need to be very focused and disciplined. This means motivating yourself to get up each morning and get to work – even if this is your kitchen table or study. It also means being able to finish what you have started, and focus on the strategy and plans which will build your business. Only your energy will take your business forward, no-one else will.
Discipline is more than focusing on a strategy or plan until you get the required results, it’s also about making sure the tasks that you don’t enjoy get done, and they get done on time. To survive the first two years in business, which 70% of businesses don’t, you need to keep an iron fist on your finances, and regularly monitor your incomings, outgoings and your cash flow.
Your time does now really equate to money. If you are focusing on something that is not directly linked to running or building the business, this is costing you money. Discipline is needed from you to work to your business plan, and make sure that you give yourself re-charge, reflection and planning time. This time is just as important as time working ‘in the business’.
Does the thought of building something from scratch for yourself appeal? Or are you scared at the thought of having to put in your own processes, systems, plans in place and constantly use your own initiative? If you are not ‘turned on’ by the thought of building it all from scratch you may benefit from buying a franchise – i.e. getting a ready-made business in a box.
Rejection is part and parcel of life as a business owner. To succeed as a business owner you have to connect with your inner tigger. I can guarantee that as your own boss, you will ‘suffer the slings and arrows of outrageous fortune’. Your inner tigger will help you bounce back and re-motivate the troops when your business has hit a setback. Because, if you don’t inspire people to get back up and going again, no-one else will.
So to summarise, you will need drive, passion, enthusiasm, vision and bucket loads of discipline and focus.
Are you up for the challenge?
Heather Townsend, The Efficiency Coach
I was delighted to be invited to speak at the forthcoming Sage World event on 8-9 September.
For my part, I will be chatting about a question that has fascinated me ever since my first ‘proper job’ as an investment controller at the venture capital company 3i: What simple principles and tactics make business success easier? Or, put another way, what things allow you to survive the tricky first stage of business growth, so you can then have the time to build a truly successful business?
I’ve been discussing this topic with audiences for over ten years. It is a subject that never loses its excitement, because starting a business is never anything less than exciting for the people doing it. I come out of these sessions buzzing with enthusiasm and wanting to spend a couple of hours with each of the people who come and talk to me about their businesses straight after the session. I think it helps enormously that I started my own business as a one-man-band and I’ve continued to grow the company with no outside investment — in other words I am like 99% of the people in the audience.
Sage is one of a handful of mega-success stories in British business over the last 25 years and I’m pleased to see that Sage World is trying to do something different from the usual business event, by using their ‘interactive delegate technology’.
So there will be lots of demonstrations of the software tools you can use to get your business idea off the ground. If you’ve already established your business, then you’ll find plenty of ideas to help you build on that foundation and meet the technical challenges that small firms face in the modern business climate: finance, HR, sales, marketing, and so on.
Sage World also offers a tremendous opportunity for you to build useful contacts. Networking is about meeting the right people, making the right connections and tracking them during and after an event. So I’m dying to try out Sage’s Spotme electronic networking device - I’m sure this will really help me find and talk to the people that matter to me.
I’m sure it’ll help you, too. So please do track me on Spotme, come and say hello and make the time to hear the presentation.
Sage World is a free two-day event in September for anyone starting or growing a business.
Rory MccGwire, BHP Information Solutions
This week we're celebrating the Start Up Donut’s first birthday - and what a year it has been! With a new roster of great sponsors, popular content, a much-improved blog and some 30 enterprise agency partners now on board as syndicators, the site continues to go from strength to strength.
My personal highlights are:
Our followers on Twitter continue to grow but, more importantly, we’re having more and more conversations with start-ups and more established small businesses. By being able to speak to you directly, we can find out what information is most useful to you and tailor the site accordingly.
We’ve recently improved our Facebook page, too, so there’s more interaction with and between our users. Recently we asked what your favourite things about being a small business are and we got some excellent responses ― come and join the conversation.
A few months ago we integrated our blog into the main site (it used to be hosted on Wordpress), which has fuelled growth in visitor numbers and boosted content on the Start Up Donut. We now have a larger number of blog contributors including many of our experts. We add a new post every day or so, keep checking back regularly to see what’s been added. If you’ve got something you’d like to share or get off your chest then send us your blogs.
What better way to learn about starting and running a business than from people who have been there and done it? We’ve added a large number of case studies covering topics from “How I set up a business in my 50s” to “How I attract customers”.
In May we took a stand at the Business StartUp Show in Excel, London. It was great to be able to meet our website users and Twitter followers face-to-face, as well as get the opportunity to tell even more people about the Donut project.
In the week leading up to Mothers’ Day we celebrated mums in business. We discussed the term “mumpreneur”, looked at the issues surrounding running a business when you have children and posted a range of interesting guest blog posts. The week was really interesting and we learnt a lot about the different challenges young women face when starting up. My summary blog post captured the highlights.
The main thing I’ve learnt is that a project manager’s work is never done! There are always ways to improve the site, different types of article to add, forum posts to reply to, blogs to write and people to speak to on Twitter.
I’ve also learnt that there is such a vast range of start-ups and small businesses out there that are looking for need-to-know information and advice that can help them to start and run their own business more successfully. Please let us know if there’s anything we should be doing to make www.startupdonut.co.uk even better. Here’s to the next 12 months.
Starting a business for the first time is undoubtedly one of the most exciting things you can do (if you enjoy business!). However there comes a point where customer demands can weigh on your ability to progress. Here are five tips on how to keep your customers happy during the start up stages.
1. Be honest
Some business owners feel that they have to present their company as bigger than it is, which can lead to customers placing greater expectations in terms of support and business development. It would be better to be honest with your customers and for you to tell them exactly how big your business is, if not understate your size. This is not suggesting that you slack on customer service. As a customer, if you know the size of the business you would rather be told that your problem will be dealt with tomorrow and then have the issue dealt with well, rather than the issue being sorted today and receiving a half hearted response. Having a set policy (see point number two) to customer support will make customers used to what to expect, it could be argued reliability is more important than punctuality and if done right it can buy you time.
2. Have customer service processes in place
Having a process (between yourself and however many employees) in place allows you to know what to do when an issue is raised. An example could be a customer calls and has a problem, the query is logged and then the customer is told how long it will be before they receive an answer based on number of problems in front. If the issue is an emergency/urgent (this can be difficult to distinguish as some customers may claim it is urgent, but in the grand scheme of things their query can wait) being able to fast track it will be important. It can be hard when customers get angry at you, however as long as you communicate why their query is taking a while to resolve then at least they will not feel left out in the cold.
3. Get your hands dirty
Despite point number one, it is important that you get involved in sorting out customer queries, even if you happen to have raised enough money to employ someone to handle customer support. Following this rule will also allow you to have a feel for your customers' needs plus it will allow you to identify your earliest customers. That sort of recognition towards a customer from a CEO or MD is greatly appreciated. How can you make sure that you keep your original customers close? Consider having a separate email address for them (even if it is not you responding to their queries). A phone line could be going a step too far as you don't want to be held back from the day to day running of the business.
4. Have a time to shut off
Have a time to shut off from customer problems so you can focus on another area of the business each day. It all comes back to the principle of focus, if you can break your day up into focused segments you will get each segment done better than if you try to multi task by doing a little bit of everything. Read this post on how to become a better mono tasker.
5. Listen, don't ignore
Always listen and never ignore the customer. Even if you do not feel that the customer is right or cannot act on what they have said this instant, by listening to them you will be aware of the issues that your customers are raising. If you simply shut out your customers in pursuit of growth you could end up with a backlash that brings about your downfall. Little and often should prevent customer enquires becoming overwhelming in the start up stages, it's a better approach than letting them mothball and ultimately build into an uglier beast. If you have been abiding by point three you will be able to prioritise your customers and keep the major ones happy.
Nick Braithwaite, Clear Books Small Business Accounting Software
Earlier this year, entrepreneur and founder of The School for Startups, Doug Richard, published his Entrepreneurs’ Manifesto – a “declaration of rights” for small businesses.
The manifesto sets out eight demands to a new government, each of which addresses a different key concern for businesses. In the build-up to the 6 May general election, Donut MD Rory MccGwire is offering his thoughts on the issues raised by Doug Richard.
Scrap Business Link?
In Part 1 of this blog I summarised the recent history of business support in the UK. I concluded that, after 20 years of heavy expenditure, one precious asset that we have is a brand that most business people recognise. Business Link is “the place to go to access whatever help is available”.
I take this view notwithstanding the fact that I’m still hearing the same things now as I’ve heard every single year during that period.
“Business support is too fragmented.” “I don’t know where to go for help.” “It needs to be more practical.” “The advisers need to be people who have run SMEs.” “It must be local.” And meanwhile the civil servants seem as keen as ever to have a service that is “innovative”, a word that is prominent in every tender that comes across my desk at BHP, the company behind the Donut websites.
In his intentionally controversial Entrepreneurs’ Manifesto, Doug Richard proposes scrapping Business Link and moving business support online.
Traditionally, business support has been delivered one-to-one through business advisers and telephone helplines, together with an extensive calendar of training courses and networking events.
But hold on a minute, let’s start by asking what we are trying to achieve. What are the objectives of government business support?
Well, it’s support for businesses of course. There are about four million of them.
Some of them are like Doug Richard and me: successful (OK, he’s a lot more successful than me, I’m the first to admit it), confident, experienced, and so on. Do these individuals seek Business Link’s help on how to start a business, or how to comply with all the regulations surrounding employing someone? Probably not, but we do take advantage of tailored support for ‘high growth’ companies. The UK invests a lot of money helping its most capable businessmen, not least because the next Google, Dyson or Nokia may be among the businesses that they start. I have mixed views on this.
I generally prefer ‘pull’ to ‘push’. So who are the people who actually come looking for help?
In a word, novices. It is people who feel they would like to be self-employed, but want to bounce their idea off someone with some experience who can also tell them how to go about getting started.
One obvious group that springs to mind is women who are returning to work once their children are in full-time education. They have a high propensity to seek help.
Another group who ask for help is people who have never run a business, but suddenly find themselves out of work. (By the way, Tony Robinson, the well-informed boss of SFEDI, the standards-setting body, was quoting a UK statistic that if you’re made redundant at age 45 you only have a 10% chance of getting a new job.)
There are lots of subgroups like this. Some of them get lumped together in reports under the unflattering name of ‘disadvantaged groups’, or ‘the hard to reach’.
Do these guys all use the web for business support? Er, no. The latest research from the Small Business Research Trust reveals the true extent of this non-use.
In 2007, ‘information on websites’ was the most popular form of business advice, having just pushed ‘face-to-face contact with an adviser’ into second place. But the latest data, published in December 2009, puts the business advisers back at the top of the charts. I guess there is simply too much information out there on the web for people to cope with.
BHP’s own user-testing bears this out. Users with a specific business question are unlikely to be able to find the answer online. Their first port of call is businesslink.gov, which is also their best chance of finding the answer. So it should be after the vast sums of money that have been invested in it. Happily, they also find the Donut websites useful for the topics that we cover. And likewise a specialist website such as j4bgrants is a treasure trove for that specific search. But while other small business websites are brilliant in other ways, they don’t always give you direct answers to direct questions.
As the data shows, businesses are once again finding it easier to simply ask someone: a friend, an accountant, an adviser, or whoever.
Business Link, and the plethora of business support organisations that it acts as the signposting for, delivers this face-to-face support. So it’s no good simply scrapping it. The question is, how can we improve it and which organisations should be delivering this one-to-one business support?
I’ve got lots more to say on this fascinating topic. On call centres; on how to objectively establish the success and value of a service; on the psychology of start-ups and micro businesses; on how to make the front line and the back-office of Business Link (etc) hugely more cost-effective; on how to involve the banks (an old idea, but a good one); on how to get the support/messages of 1,001 different public sector organisations out to small and medium-sized enterprises; on how to do public sector procurement without financially damaging so many of the bidders; and, sticking with procurement, on how to tap into the specialisation, experience, passion and sheer hard work of the smaller suppliers more than we do now; and that is just the first list of things that springs to mind…
But let’s see what others have to say first. Comments please!
(By the way, thank you to everyone who commented last week on my business regulations blog, I’ve enjoyed reading them all.)
Rory’s other Have your say! blogs
Earlier this year, entrepreneur and founder of The School for Startups, Doug Richard, published his Entrepreneurs’ Manifesto – a “declaration of rights” for small businesses.
The manifesto sets out eight demands to a new government, each of which addresses a different key concern for businesses. In the build-up to the 6 May general election, Donut MD Rory MccGwire is offering his thoughts on the issues raised by Doug Richard.
In his manifesto, Doug Richard argues that business regulation should be streamlined so that people can start businesses more quickly and run them more easily.
I agree. But in order to achieve this, I think the law must make an important distinction between small and large businesses. They have different regulatory requirements. What is fair and suitable for one is often neither fair nor suitable for the other.
It’s also important to recognise the natural bias in our regulations, a bias that stems from the fact that regulations are always going to favour the people who make them. So our regulatory system is heavily skewed towards the preferences of the government, the public sector, big business and the trade unions.
The seemingly simple task of taking a chunk of time off for a family holiday is a struggle for many people running a small business, so it’s hardly surprising that they do not have time to assist in the law-making process.
Nor do the various small business membership organisations have the power to make much of a difference. Think back to when the government raised CGT by 80 per cent without realising until afterwards that for many small businesses the only “pension” available at retirement is the proceeds of the sale of the business. A £1m threshold was hastily added, but not before it became obvious that the small business lobby groups had not even been consulted on this legislation, let alone listened to.
Yet it’s small businesses that end up paying the price for so much of the legislation. Take a law requiring organisations to offer wheelchair access to their premises. I’m sure everyone agrees that society wants to help make life less difficult for disabled people. But few people stop to consider who will be forced to pay for the door widening. We all pay for the doors to be widened in the public sector buildings and the corporate buildings, through our taxes, pensions and savings (some of which are invested in listed shares), which seems completely fair.
But when it comes to all the properties owned by small businesses, it’s the business owner who pays. So if I earn a £20k salary working for the local council or for a big company, I am not affected at all, but if I would have earned £20k from owning a shop, I might be left with just £17k after the adjustments to my shop front. How can that be fair? It’s not. It is merely convenient, both for the lawmakers and for the Treasury.
It’s the same with employee rights. Nobody questions the need for new parents to spend more time with their children. But who pays? There’s no compensation to any of the small business owners who pick up these costs. In a small business, every member of staff is a key person and losing them, even temporarily, is a considerable blow. Larger businesses have the resources to cushion the blow; small businesses don’t.
Given that small businesses employ a very considerable proportion of the workforce, I suggest that society ought to compensate small businesses if we all want to have those benefits. If not, you end up with a situation where business owners are terrified of employing women of a certain age. It’s discriminatory, but it happens; the law has massive unintended consequences.
Sensible regulation is essential to protect customers, employers and employees. But it must recognise the reality of running a small business.
So much of our business regulation is designed for Hewlett Packard and Rolls Royce, not for “mom and pop” businesses. But, in my view, firms with fewer than five employees should have a completely different set of regulations. If you choose to work for them, perhaps you shouldn’t have quite the same rights as employees in larger companies, simply because these rights amount to robbing Peter (the employer, who is a person) to pay Paul (the employee). But then you would be discriminating against employees of small businesses, which is clearly wrong.
So the only fair solution is for society (aka the taxpayer) to face up to, and pay for, the cost of implementing all these rights, instead of turning a blind eye while the costs fall onto the shoulders of small business owners.
Doug Richard is right and all the political parties seem to agree. We need to do something to enable the moms and pops to run their businesses in a more flexible and efficient way. Now let’s see if anyone actually does anything.
What do you think?
Rory's other Have your say! blogs
What do you think about the regulations affecting small businesses? Please leave your comment below.
First impressions are everything. Get it right, and everything becomes easy. Get it wrong and you are pushing water uphill with a sieve.
Many people will warble on about you have to be your authentic self when meeting people. Get that right and you will make the right impression. They are sort of right but what happens if your authentic self doesn’t make a great first impression.
So, what do I mean by a great first impression? People respond well to warm, positive and confident folk. Very simply, that means offer your handshake first, give them a warm smile and be positive and enthusiastic.
As a slight aside, when I talk about handshakes, there is nothing worse than a wet fish handshake OR a bone-crushing handshake which leaves you gasping for breath. If you don’t know how your handshake is perceived, test it out on friends and get their feedback.
How do I put this delicately? Appearances do count and stereotypes do exist. If you think of a lawyer, you expect to see a well-tailored suit and a neat appearance. Lawyers take note; however much you want to break out of the mould, a well-fitting suit is probably necessary for your credibility. As many image consultants will tell you, details are important. Chipped nail polish or dirty nails is a no-no, as is missing buttons from a coat, or messy hair. If you have young children, do carefully check your appearance in the mirror before you go out, baby sick down the back is a ‘no-no’!
If you look good, and have a confident handshake, then the battle for the right first impression is nearly won. The last piece of the jigsaw is how you introduce yourself. For many professionals, a big trap is waiting for them, when asked (the almost standard question at a networking event), ‘so what do you do?’ Do you confess and say, I’m an accountant... lawyer... coach... and fall into the trap. Or do you describe what you do by the value you bring to your clients?
The right answer is to have the one sentence sound bite prepared, which succinctly (yes, succinctly) talks about the value you bring to your clients. It wouldn’t surprise you to know that my sound bite is “I help professional advisors gain better business results for less effort”. Many people worry that if they use this type of opening, people wouldn’t know what they do. I can see that this is a genuine concern, however, in my experience, whenever this type of opening is used, the next question is ‘oh, that sounds interesting, how do you do that?’. And then you are off, the conversation is started, and you have moved straight into a business conversation.
There are two ways of starting up a company. The first is to take an existing business idea, and do it better. Preferably you will concentrate on an area where the competition is limited or you have some existing connections.
The second is where you come up with an idea that’s completely new. People think that it’s the only way to make a real fortune, but that’s not true. It may come as a shock, but Bill Gates became the world’s richest man largely by improving on the work of others. He wasn’t the leader in new technologies, but he was close behind. And he did things very effectively.
Microsoft didn’t invent the Windows and mouse interface. It was invented by Xerox at its research labs. Microsoft didn’t even produce the first commercial Windows-based computer. That was Apple with the Lisa. But it did get its timing right, do a plausibly good job and market the product very well. The rest is history.
The problem with developing a totally new concept is that it’s totally new. You are not only selling the product, you have to sell the idea too and educate the market. Even if it would sell, it’s more than twice as much work. If you have all the capabilities you need, with limited resources it is hard to succeed. And it’s even harder to recover from a failure.
The world economy is driven in the long run by breakthrough products. But for your own success, it’s worth remembering that the odds are greatly improved by exploiting an area where a market already exists.
Chris Barling, SellerDeck
In last Monday's blog post we introduced you to www.inafishbowl.com which follows the trials and tribulations of three startups. We're featuring the story of Marcela of Rico Mexican Kitchen, who produces home-cooked Mexican food products. Follow her story each week as she deals with buyers and distributors at department stores and discusses the reality of running a home-based business.
Crystal ball, where are you?
We normally start doing something new because we think we have a chance to succeed. Well, at least, that’s what I keep on saying to myself: “Look, you’ve put in your all, people like Mexican food, and your Mexican food has soul, YOUR soul in it.” Well, yes, and? Surely, giving your all and having a good product should be enough to make your business work, shouldn’t it?
I gave up my job to dedicate my full energy to getting Rico Mexican Kitchen off to a good start. My idea was simple: to make fantastic authentic Mexican food so everyone in the UK could try something healthier, tastier and ethically sourced. But this game is sooooo difficult! Will I make it work? How? Any advice welcome!
Everyone told me that it was a brave thing to give up my job to start a business. But deep down I was thinking, “I really want to try my best to make it work- it’ll be simple- I’ll make these amazing, delicious and authentic and people will buy them.” At the moment, however, some shops think that it’s not the right time for Mexican food... what are they thinking? What do they think Mexican people do when it’s winter... not eat? What do you think?
Anyway, luckily Selfridges doesn’t think this and I am off to do a tasting session. I don’t know if I’m more excited or more nervous - I’m a bit of both, I suppose!
The week ahead of me looks like an incredible juggling act of cooking, training course, kids off school, delivering, entertaining 10 girls for my daughter’s birthday party. The added complexity is that we are having new labels designed especially for the Selfridges launch and the printers don’t want to say that the labels will definitely be ready- just keeping me on my toes! I am really really nervous about this- will the labels arrive on time?
You can find out more about Marcela on the new interactive business website www.inafishbowl.com
We’ve recently launched new interactive business website www.inafishbowl.com to help start-ups learn from the experiences of others. Arguably, there’s no better way to learn.
Through an energy-packed mixture of video, Twitter feeds and blogs that feature on the new Big Brother-style business website, we chart the trials and tribulations of three start-up businesses, as their owners share their experiences – the good, the bad and the ugly – in real time.
The three businesses featured are a record label, a bespoke tailoring company and a Mexican food range. Each are finding their way through the start-up maze and sharing their experiences along the way. From naming their business through to frustrating first meetings with banks, the businesses lay themselves open for others to watch and follow online.
The In a Fishbowl project was founded by entrepreneur Toby Reid and is being supported by Midlands-based entrepreneur Andrew Springhall, who says: “So many people go through the process of starting a business – it’s a truly daunting experience. There’s a wealth of information available, but nothing that really provides the chance to learn from the experiences of others in the way www.inafishbowl.com does.
“The aim was to show empathy with the challenges new entrepreneurs face, but also to inspire them and enable them to learn and benefit from an interactive source of support for any budding entrepreneur.”
Taking inspiration from her native land, Marcela Flores Newburn owns and manages Rico Mexican Kitchen. The new business produces a range of authentic, home-cooked Mexican food products that are sold through stores in the UK. Mother-of-two Marcela makes all of the products by hand.
“I’m really excited to be featured on inafishbowl,” she admits. “It’s a great idea and I really hope it will help other new entrepreneurs in the early stages of starting their business.” On the site, Marcela discusses everything from dealing with buyers and distributors at department stores to the reality of running a home-based business.
You can also follow www.inafishbowl.com on Twitter for latest snippets from all three of our entrepreneurs, while Marcela’s posts have been chosen to feature regularly on the Start Up Donut blog, too, so watch this space.
Last month we talked about starting a business on very limited resources. This time, I would like to think about the problem of having too much time or money.
Having too many resources can distract you. In contrast, when money is tight, you’re focused on just doing what is truly important. In any start up situation, you should only care about discovering two things:
Cracking the above two points and then becoming cashflow positive is the surest route to business success. Failing to focus on this is the surest route to failure, whatever the bank balance. I speak as someone who has not only started their own company, but who has invested in a variety of start ups, some with tremendous success, and one that has been an abject failure.
Two of my investments (actually the ones with the most potential and both of whom have raised millions), are also teetering on the brink of failure. The reason? Too much money, with one having raised more than £10m over several funding rounds. Having too much money encouraged both to try and tackle multiple markets before they had fully established themselves in one. It made them feel that becoming cash positive was an optional extra. After all, they could always raise more capital. And they seem to pay enormous salaries, far above what I pay for higher caliber staff in my own business.
In my opinion the lesson is simple. Focus your efforts on providing what is wanted. Then deliver it at a profit. Don’t do anything else. Becoming profitable as fast as possible makes long term success much more likely.
As a start–up business, one of the most crucial elements will be employing a strong and reliable team. But how do you judge if someone is likely to be a reliable employee? One of the issues that can affect your team in the long term is maternity leave.
I was shocked to read Alexandra Shulman's recent article for the Daily Mail, ('Year-long maternity leave, flexi hours, four day weeks... why would ANY boss hire a woman?'), in which she argued that current maternity law is making women 'unemployable'.
I found Shulman's article particularly galling given that she is a woman with children who is in a rare position of power as editor of Vogue UK. By her own admission, she was able to go back to work after only 18 weeks off because she had, and continues to have a 'live–in nanny'. This option is off the cards for the vast majority of women, yet her article implies that those who do not, or cannot hand their children over to others are likely to deliver a less than adequate performance in the workplace.
Shulman's is an extreme view, but there is no denying that for a small business, a vital employee taking maternity leave can make things difficult, particularly in the current economic climate. Although businesses that pay £45,000 or less in gross national insurance contributions in a tax year can reclaim 100% of Statutory Maternity Pay (SMP), there are other aspects to consider such as the potential costs of arranging for temporary cover. It can also have a negative effect on your team – promoting a junior employee to fill the position and then effectively demoting them once the employee on maternity leave has returned to full–time work can create resentment.
The Start Up Donut has plenty of information on the legal issues affecting maternity leave and SMP. However, I think there is more at stake here than just the law. The World Economic Forum (WEF) reported this year that the UK has slipped down the league tables for gender equality. The stats are alarming – the UK now stands at 15th out of 134 countries, a drop from ninth place in 2006. According to the Equality and Human Rights Commission (EHRC) women in the UK face an average pay gap of 17%, with the media blaming the gap on women taking leave or working fewer hours when they have children. Compare this to the Scandinavian countries occupying the top positions in the WEF survey, where maternal leave can be up to 12 months, but which have smaller pay gaps. Is there a cultural difference here? If the UK is to really act on the gender equality it promotes, I would argue that all businesses, whatever the size, have a responsibility to ensure that they take maternity leave seriously.
What do you think? Are you a woman who has worried about the results of taking maternity leave or experienced difficulty returning to work after taking it? Have you deliberately chosen a less competitive or pressured career so as not to face these worries in the future? Are you an employer who has hesitated to hire a woman, because, in the words of Lord Sugar, you considered it 'a bit risky'?
I’ve always felt that there were two types of startup – those with too much money and those with too little. I’ll leave the topic of too much money for another day, and instead think about the more common problem of having too little money.
When you’ve got too little money, the key is not to spend a penny you don’t need to, and to make sure that every penny you do spend is effective. That’s pretty much common sense, but I think that it’s worth drilling into much more deeply.
One of the pitfalls when starting a business is mixing up the keys to business success with the stuff that has to be done as you become successful. In start up mode, all your effort needs to go into the former and virtually nothing into the latter.
A business bank account, business cards, business premises and the services of an accountant can all be vital ingredients – but not if your business isn’t yet making any sales.
Your efforts and resources should go into working out your business proposition, finding customers and delivering that proposition to them. Make sure that you keep 100% accurate records, and probably set up a limited liability company to protect you from personal bankruptcy, but otherwise focus on starting to make sales and money.
When I set up SellerDeck (formerly Actinic), providing ecommerce services for SMEs, we had two vital objectives. We were trying to sell critical technology to small companies and ISPs, and we also needed to raise funds. I renamed my house “Actinic House” which was perfectly legal and cost nothing. I also joined the Institute of Directors and met all prospective investors in the IoD offices in Pall Mall.
These are the sorts of techniques that I would describe as “guerilla” – getting to your objectives by low cost and unconventional means. You can find all sorts of ideas both online and from other successful entrepreneurs. You won’t get them from the bank manager or the accountant, these techniques tend to be anathema to them. But it’s these that will help you to succeed, not having leather bound accounts.
Starting up a business is always going to be tough and like many things in life, there’s probably never going to be a perfect time to take the leap and launch your idea. For many entrepreneurs, one of the key concerns is acquiring funding to turn your dream into a reality. Doug Richard says that one of the best ways to fund your start up is to seek investment from one of the three Fs – Friends, Family and Fools.
Many people are reluctant to enter into business with friends. What has your experience been? Would you advocate mixing business and friendship?
This is our first blog post for Start Up Donut and for this post we wanted to explore something that was close to our hearts, and also something that every small business has to go through – coming up with a business name.
This article is a combination of thoughts and actions we took from our branding exercise, where we explored our rationale for using the name Resonata Consulting.
Everybody who has gone through a similar exercise will agree it is incredibly hard to be original. Not only do you want the name to reflect your business activity, but it should also have a familiar ring to it – making it easy for people to find our company and remember you. At first we explored the straight-forward options such as for example MI-Consulting or IM Consulting. But not only were the names already registered, we felt both options reflected poor creativity and didn’t explain our services or how we wish to be perceived.
To build a strong brand we would have to find a name that would:
How our name stands out:
Resonata stands out from the crowd because although it has a familiar feel to it (resonate or resonating) it also incorporates data and when you see that resonate is brought together with data it immediately gives you a connection of resonating with data, therefore it stands out, speaks softly yet firmly and is ultimately memorable to others
How our name explains our services:
We came to the name Resonata Consulting, which reflects the essence of what we do and how we do it.
Resonata is a unique word, though it has a familiar feel to it making it memorable to clients and partners alike. Depending on your interpretation of the word Resonata, it is made up from the words resonate, research and data.
Therefore, it gives you an immediate impression of how our company interprets best practice: we resonate client’s data needs and actively research on data – a process driven exercise with the client at heart.
Many branding experts, consultants and our advisers consistently told us that our brand/company name had to incorporate the term data or even data acquisition – because that is what our service is all about.
We struggled at first to incorporate it, but by merging the word data with resonate and research we did not only manage to satisfy the most critical of branding specialists but we also found a way to express exactly how we bounce ideas of clients, actively help them and research around their data needs – this is partly to do with our philosophy of not making our client’s briefs fit to the prospect data available but making the data fit to our client’s brief – hence the research that we do on data, trends and insights to gain best the best possible prospect data for our clients.
How and why Resonata could be recognised internationally:
Because both directors have travelled extensively (Asia, Europe, North America, Central America, and South America), speak a number of different languages (English, Dutch, Spanish, French and German) and have both lived and worked abroad in various parts of the world (Europe, North-America and Asia), we knew that our services would have an international appeal. Because the word ‘Resonata’ was created by us it would have no negative cultural barriers concerning its interpretation.
Why our business name had to have a consultancy feel to it:
Resonata Consulting had to have consulting or consultancy within the company name to emphasise that we want to engage with our clients in the process and we are essentially Research on Data Consultants.
Coming from an international sales and business development consultancy background ourselves, this is the kind of company philosophy we want to be part of and are confident our clients will buy into as well.
What does Resonata Consulting mean to us:
We listen to our clients' needs and act as an extension of their organisation; building on existing internal knowledge and processes, and resonating clients’ needs by understanding the clients' goals and helping them to achieve the highest quality data in the most timely and financially efficient manner.
What have clients' reactions been?
In the main clients feel positive towards our company name and are often curious as to where it came from and how we came up with it. Although sometimes if it is a bad phone line we have to spell it – something I did not expect!
All in all the naming of our consultancy was an interesting and involving exercise that in the main has had incredibly positive results!
You can see more about us on our website: http://www.resonata.co.uk where you are able to see more about our brand and how that has translated into a logo and overall feel of a Fresh Player to the Market.
Matthew Baker is the Co-founder and Director of Resonata Consulting.
You're probably reading this blog because you are in the process of starting up a new business or you've got a great business idea that you want to develop and launch.
First of all, congratulations! It's a great feeling when you make that decision to start a new business. And if you’ve never done this before, you're at the beginning of a very exciting journey.
Now for the bad news. If you've just come up with a great idea and are now rushing to get it to market, you've probably got a really serious problem. And that problem is that your idea is quite likely to be fundamentally flawed. Or to put it another way, it's likely to go really badly wrong and it's probably not going to work.
I know that doesn't sound very encouraging, but before you rush off into the distance and start investing a lot of time and money into implementing your idea, you need to do something very important indeed...
You need to challenge it.
You need to look at your idea from different perspectives. You need to put yourself in the shoes of potential customers. You need to put on Edward DeBono’s black hat and challenge your idea seriously. While all of this may sound terribly negative and destructive, it's really important that you take this advice on board. So many businesses are launched with insufficient planning, insufficient testing, not enough feedback from people and poor advice.
If you actively approach your idea from a balanced and objective point of view, where you've considered the huge upsides as well as any potential downside which exists, then you'll be in a much better position to get it right.
Like with anything, starting up a business takes patience and a whole lot of learning. Market conditions change so quickly that you need to always approach you business holistically, and be willing to take advice on board. With those things in mind, it seems like you’re half way there having found this Donut!
Not a particularly cheery headline for a business startup blog, but it's an interesting observation which we can all learn from.
Richard Reed is co-founder of Innocent Drinks, a very successful business which brings fresh, tasty smoothies (and food products as it turns out) to a health conscious market in the UK, and now further afield. I interviewed Richard yesterday for yourBusinessChannel's latest series on business startups.
It was a refreshingly straight-forward interview. No business jargon. No pretence. No corporate positioning. I asked pretty straight-forward questions, and Richard gave pretty straight-forward answers. You see, one of the things that has clearly driven the success of Innocent Drinks is that they are honest and uncomplicated in the way that they talk about their business. They call it "innocent" language. And the language reflects their way of doing business - which is also said to be "innocent" in all respects.
Anyway, we spoke at some length about starting up a business, having great business ideas and such like. And during this refreshingly honest conversation, Richard said that when you have refined your entrepreneurial idea - the idea which will be the driving force behind your new startup business - be prepared for hundreds of people to tell you your idea isn't going to work. That's right. They're going to try to dissuade you.
Richard's advice? Be ready for people to try to shoot your idea down, but if you truly believe in it, don't listen to them. Keep going, and make your idea come to life.
Oh, and for anyone who feels a bit squeemish about Coke buying into Innocent, I asked Richard about that and got a very interesting reply, which we'll publish soon.
In a world of increasing complexity and one with growing demands on our time, it can be challenging to create a business plan. In recent years, however, there has been a growing trend in the production of 'simple business plans'.
What is a simple business plan?
A simple business plan is a business plan typically produced by start-ups. You write your business plan as normal but you reduce the breadth of content in certain sections of your business plan.
Why would I write a simple business plan?
Simple business plans are appropriate when there are a lot of unknowns or when you are simply at the idea creation stage. At this point you do not want to invest significant time and resources in a full blown business plan, but are looking to produce a business plan that will enable you to forward it to interested parties for further consideration. Once you have received feedback you can then proceed with a full blown business plan.
What does a simple business plan contain?
The simple business plan contains much of the same content of a standard business plan but certain sections can be put on hold at this point e.g. cash flow statement, balance sheet etc. Sections can be skipped and a greater emphasis can be placed on the idea, the market opportunity, the likely demand, the routes to market etc
What is the point of a simple business plan?
One frequent problem entrepreneurs have is that they can keep ideas ‘in their head‘ rather than commit them to paper (or to a PC). However, ideas are practically worthless when they relate to a product or service in isolation (or without providing a market and commercial context). By producing a simple business plan, the entrepreneur is taking the next step towards their idea reaching fruition. A simple business plan will ensure that there is a holistic view of the business opportunity and an assessment of whether it is commercially viable or not.
How do I create a simple business plan?
Business Plan Pro has the option of a simple business plan built -in. By selecting the option within Business Plan Pro, the number of tasks you need to undertake is reduced from the number needed to produce a standard business plan.