All entrepreneurs are self-reliant. I know – I’m a serial offender! But almost everyone who starts a company cannot make much of it without support from a whole range of people – both in the company itself and outside.
These people are always chosen to be the best, most reliable, the most trustworthy. So how does it come about that dynamic self-starters with handpicked teams frequently not only make mistakes, but costly wrong decisions too?
Part of the explanation comes from our personality profiles. The kind of people we are not only affects how successful we are with the outside world (customers, suppliers, the authorities and so on). It also impacts on relationships and effectiveness within the company itself. In my book, Decide – Better ways of making better decisions, I have included advice from acknowledged experts and a guide to the main personality types, and how you can cope with difference and similarity – and importantly pick successful teams.
But decision-making is not a straightforward process, and so-called Decision Traps lie in wait for the unwary. Below I list some of the most lethal. You may well be able to identify examples from your own experience.
The decision-maker is so excited about a potentially exciting outcome (the upside) that he/she seriously underestimates how bad the downside could be if everything goes wrong. Most of us are optimists and it’s natural to be enthusiastic. But wise decision-makers always weigh up reward and risk, and it’s often sensible to turn down an option (however glittering) if the downside could be disastrous enough to break you.
A group of really bright people cannot believe they can ALL be wrong! But it can happen – particularly if the balance of personalities in the room is skewed on the positive side. Ten people are as capable of being wrong as one. There is a related trap called ‘Confirming Evidence’ – when we are prejudiced in favour of people who think like we do. The trick is to make sure it is always someone’s job to be the devil’s advocate, and ensure frequent reality checks.
Sometimes it is tempting to go ahead and make a decision even before we have all the data we need. And it can be fatal to press the button before you have all the necessary information and research. But this is where judgement comes in. It can be almost equally wasteful to insist on having more and more information to the point that the opportunity has been lost. That is ‘information overload’.
This is a polite term for a hasty decision that can come back to bite you. Governments and ministers do it all the time. We are all inclined to kid ourselves we have thought things through when we haven’t.
Really bad this one – making the same mistake again and again.
David Wethey is author of Decide – Better ways of making better decisions, published by Kogan Page.
A business plan is the equivalent of a roadmap for businesses. It is a document that provides vision, goals and benchmarking. It creates momentum and also provides an opportunity for a reality check – what worked last year, where the gaps are and what next year is going to look like.
Many start-ups fail because they lack a map to guide them through their new business venture. A research study conducted by simplybusiness.co.uk with 400 British entrepreneurs shows that 54% have no written business plan and more than two-thirds make decisions based on gut instinct alone. According to the Federation of Small Businesses: “Britain’s best performing small companies are being hampered by a failure of the planning system to allow them to expand”.
Writing and maintaining a regularly updated plan can have a profound impact on business success, helping to demonstrate the viability and value of a business to potential investors and illustrating how investment will be used to grow sales and profit. It also provides a useful reference point and motivational tool for the business owner.
In terms of content, a plan should document objectives and strategy across three key business areas; marketing, operations and finance. These aims should be quantifiable and split between short term (next 12 months) and longer term (next three years). Other sections can include:
In summary, a business plan helps to focus clear roles and goals and motivates business success. As Matthew Brearley, former board director of Vodafone, said: “With a great plan you can engage others with a sense of direction and purpose, align all activities and review progress."
John Davis is managing director of Business Centric Services Group.
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.
Would you ever consider setting off on a long, unfamiliar journey without your SatNav or road map and only a dribble of fuel in your tank?
You might make good progress for a while, but before too long the roads will narrow, your fuel gauge will hit zero and your mobile will show no signal. HELP! Oh, if only you’d bothered to plan ahead!
Funnily enough, business planning is just like going on a journey. You know your destination, that fine place called Success. But knowing where you want to end up isn’t enough because you need to plan your route, too. And you must be vigilant, watch out for obstacles and steer clear of roadworks – not to mention bad weather and mile-long traffic jams.
If you’re serious about starting a business, you need to be serious about planning. You must focus on your ultimate goal – fabulous success – and determine your route towards it. This ranges from the grand plan right down to what might seem like insignificant details. If you plan for all eventualities – however small – you’ll know exactly how to deal with them when they, inevitably, crop up.
I took this approach in starting and running Diva Cosmetics and it quickly brought me success and wealth. Now, having moved on, I feel that passing on my knowledge called Seven Business Disciplines to budding entrepreneurs like you will bring you success. If strategic planning (my first discipline) is about visualising your destination, then business planning (discipline two) is how to plan your route to get there.
Let’s look at planning basics. What is a business plan? In a printed form, it’s a surprisingly slim document. Only 25 or 30 pages with a front cover carrying the business name and logo. Inside, the business idea is thoroughly investigated and includes supporting facts, figures and research. The writing style is easily readable within bite-sized paragraphs and technical jargon and waffle are banned. Titles and headings are concise with the overall structure being simple, focussed and well-organised and there are, of course, no errors (whether spellings, grammar or figures).
If the thought of sorting out your business planning sounds daunting, long-drawn out and too demanding of your scarce time, you should take comfort in the fact that this initial burst of effort will pay real dividends. This one document – and all the research that you’ll need to carry out for it – will help you decide whether or not the idea will fly. It will signal your chances of success and how to go about achieving it.
What are the key elements you need to include?
Once you’ve dealt with these elements you’ll be in a position to write an executive summary, a two-page summing up of your start-up. It should be convincing enough to excite potential investors, as well as boost your own confidence. Although this is written last, your summary should be at the front of the plan, where it needs to pack a powerfully persuasive punch.
When you’ve finished that first draft, you need to step away from the process. Return to it a couple of weeks later and read it several times. Make notes, gather more data and rework parts that don’t read well. Double check your facts, especially your figures, because they need to stack up and be impressive. Make sure the tone of the document shouts the right message. Does it ignite your passion? If not, revisit the words you’ve used and choose more dynamic, proactive, positive language.
Ask a business colleague, mentor or supporter to review it. This must be someone you trust, who has good judgement, knows you professionally and has an insight into your industry. Ask them to be honest and use their comments to hone what you’ve already done. After all that hard work, don’t allow it to languish on your desk. Instead, actively use your plan for reference, it will help you make good business decisions, take fewer risks and keep customers in the front of your mind.
At Diva Cosmetics, right from start-up, I updated my business plan regularly and used it to keep ahead of the competition. By focussing on the business, I was able to make decisions about staff requirements, how to expand the team and in what areas. I was able to review costs, check suppliers and understand the implications on the business should anything go wrong. I would undertake a full competitive review each year and adapt the marketing strategy on the basis of it.
My advice to you is to make your business plan a “living” document that evolves and adapts as you progress on your journey. Remember that planning is a necessity and if you want success you can’t afford to ignore it. So, I hope your journey into business is a smooth one – no collapsed drains or muddy old tractors up ahead for you – and do make sure you check your fuel gauge!
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
Entrepreneurship is all about making things happen and turning ideas into a profitable business. However, it’s impossible to have all the skills and attributes in one single individual- no matter how motivated or how working one can be, to turn an idea into a long-term profitable proposition requires a team of people who complement each other.
I realised a while ago that I could do with bringing into the team someone who has the skill sets to help me really get the numbers behind the forecasts right, and to help me negotiate with banks, funders and other possible stake holders. Someone who can help me turn the forecasts into a reality; in other words, an experienced, trustworthy financial director.
It was time for me to call in the experts. I came across an organisation which offers the services of a “virtual” or part-time FD who will work with a company for a minimum of 1-2 days per month and helps with all the financial strategic stuff. I met with the regional director of that organisation and my FD-to-be if we will take things further. It was a pleasant, purposeful meeting, and I felt I could trust the guy. They call it the “barbecue test”, in other words, would you invite the person to a barbecue. We will go to the next step and meet for a full day to discuss the business past, present, future and financial strategy.
I think this model will be the affordable way to bring an experienced helping hand to complement my winning team and turn my proposition into a reality.
You can find out more about Marcela on the new interactive business website www.inafishbowl.com
I recently interviewed Dan Germain, the Head of Creative at Innocent Drinks.
A jovial, bright eyed, bearded chap who clearly loves working at (read: being one of the driving forces behind) Innocent 10 years on. We had a great chat, and he shared a lot about how the team at Innocent have managed to make it all work.
In fact, he's the guy responsbile for the packaging on all of Innocent's products. He now has a team of people working with/for him, but the very different packaging is his baby.
We had an interesting conversation about being different. And Dan's view is that you don't actually need to be different. You just need to be better than the other guy. So in the case of Innocent Drinks, they aspire to offer the best smoothies on the market, alongside a whole bunch of other "bests". Best distribution. Best packaging. Best communication etc etc.
Interesting theory which I could spend some time debating (largely with myself). My view is that whether you aim to be different or better could just boil down to semantics and how you view the world. But the key thing (which applies in equal measure to both "differentiation" and "being better than") is to ensure that you stand out from your competitors thereby getting the attention of the people you want to buy from you.
Watch this interview in our upcoming Business Startup series on yourBusinessChannel, which we'll publish soon.