Thankfully, things are going very well for my new business, but I’ve experienced failure in two previous business ventures, as well as huge losses and a risk of bankruptcy. Based on all of my experiences so far, here are my six start-up tips.
1 Go it alone
If you start a business with a friend, you’ll fall out eventually. Sole ownership and responsibility gets past a tremendous amount of pitfalls and issues that you just won’t anticipate.
2 Minimise your personal risk
Never take a charge on your house and try to avoid providing more information than a lender requires. The bank manager only looks at the information you present him with, so just give him what he wants and leave it at that. When my first business failed, my partner could not find a job and the bank chased me for the total amount of our personal guarantees – which equalled £40,000 and took 10 years to clear.
3 Stay on top of your accounts
Do your accounts, get invoices out promptly and don’t accept being messed around over payment. I remember sitting in our largest customer’s reception waiting for a cheque to be written and the receptionists sneering at me. They could afford to sneer, they’d been paid – my staff and I hadn’t. And ask your accountant to visit you every quarter to make sure you are on top of everything. If you wait until the year-end, you can be looking at information up to 18-months-old.
4 Keep track of key performance figures
It’s much easier for a small business to lose a thousand pounds a month than to make a thousand pounds profit. Make sure you are on the positive side of that line. If you are working hard, the least you can do is make a profit.
5 Pay your bills on time
Think of how much you appreciate being paid on time and the goodwill that makes you feel towards that customer. Now flip that on its head. I prefer to be known as a good payer than a bad one, and in these tough times your bill-paying performance will feed directly into the amount of credit you will receive from your key suppliers.
6 Always employ the best you can afford
It’s impossible to place a value on a hard-working employee who cares about your business and where it’s heading. Spending extra on wages for certain skill sets or talents that are suited to your business can be the difference between 5% growth and 20% growth in a start-up’s early years.