Years ago I had a friend who lived with his parents, held down a good job and saved prodigiously. The result was that he had tens of thousands of pounds to invest as he saw fit.
One day he announced to me that he was starting his own business and had been looking at some warehouses. He didn’t know what would go in the warehouses or who would buy the goods. But they were fine warehouses available at a good rate.
This is an extreme example of the wrong way of going about starting a business. When you begin in business, you mustn’t do anything that isn’t vital at that point in time.
Do you need...?
Do you need business cards? Not if you’re selling on the phone. Do you need premises? Again, maybe not if you’re selling over the phone. Do you need an expensive list of national contacts? Not if you’re selling from a local shop. Do you need an equal opportunities policy? Not if you’re not employing anyone.
Don’t skimp where you need to spend
As well as doing things they don’t need to, some start-up owners don’t do vital things well enough. Regularly I see new shops open up that have an appearance that is, quite frankly, tatty. They haven’t spent money in a vital area so these shops never last. They are taking their most potent marketing message – the look of their shop – and almost begging their potential customers not to enter. These shops don’t succeed either because the owner didn’t realise the importance of appearance or because they didn’t have enough capital to get it right.
Incidentally, I believe that anyone considering starting a retail business should consider a web-based one. The start-up costs are much lower and it’s a field where sales are still growing. This can’t be said for traditional high street retail.
There is an easy way to decide what must and must not be done when starting up. Simply answer the following questions:
- What will I sell and to whom?
- What price will they pay?
- How will I persuade them to buy?
- Can I source or produce the product and deliver it professionally while making a profit?
A small business is like a flame struggling to stay alight on a cold, wet night. Everything must be done to nurture that flame and there is no time or money to be wasted. That’s why we cannot afford to do things that aren’t related to the critical questions above.
Chris Barling is Chairman of SellerDeck