So you’re thinking of starting a new business?

First appeared in ‘Home Business’ (Australia)

Introduction

So, you’re thinking of starting a new business?

First the doom and gloom;

the statistics – Some figures suggest that 93% of craft businesses fail in their first year, and of the 7% that survive only half of those will make it past 5 years;

the money – There is every likelihood of you not having a regular salary for a few tears;

the time – There will be occasions, especially early on, when you will be exhausted having worked a 100 hour week.

On the positive side however you are your own boss. Really, you are your own boss. There’s no-one telling you what to do, when to work, when to take holidays, when to go home.

Seems a good deal to me.

So what do you need to do that could help you survive? There are a number of steps you need to go through before you start selling and recouping some of your outlay. These steps are the planning stage and are vital. A great many businesses that fail ignore these steps and jump straight into the action – the ‘doing’ stage and regret it. It’s understandable but it is a mistake – be patient. So, do the planning and thinking first, before things go wrong. There is a good deal of financial and legal help out there available to you. There are articles on business plans, cost benefit analyses, market strategies, cash flow matrices, etc. all freely available. These articles are written by far more qualified people than me. My advice would be to read them if that’s your style and try to relate them to your business on the most practical level you can. If there is something you really can’t do – the financial or legal implications of starting a business springs to mind – get the best advice you can afford.

What I’ll be looking at are the personal implications for you. Psychologically you need to be strong and determined. You need to be confident and determined. This will not always be as straightforward as it seems. There will be times when you’re tired, broke, fed up. These are the times when you really need to be sure of a few things;

Idea

Number one – You need an idea. It’s not enough to want to do ‘something’. You need an idea and you really need to believe in it yourself. This will be a large part of your life for a long time so if you have any serious doubts about it early on – have a rethink. Do a little research on your idea. Find out about competitors, opportunities. Get some information on a range of aspects. Talk to people. Carry out some basic research. However, it’s important not to get too bogged down in the detail. One of the traits of successful entrepreneurs is their ability not to over-analyse. They are frequently confident enough to go for something before all the results are in. What helps a great deal though is their ability to adapt their ideas, stay flexible and keep constantly alert.

Values

This is the key to setting up your business. You need a strong set of values and beliefs. To help this you should sit down and ask yourself a few very difficult questions;

Vision – What would success look like? Where would you like to be in 3 years time? What are the values you have? What won’t you compromise on?

Why do you want to run your own business?

What are you go at?

What aren’t you good at?

What are you like when things aren’t going well?

Have you people who can help you?

Techniques

You need to be clear about exactly what business you are in and everything about your business. I was amazed recently to hear a leading figure for McDonald’s stating that McDonald were in the retail business. On further thought I realised that if people stopped buying McDonald’s meals tomorrow they would still survive. Their restaurants are all placed in extremely marketable locations.

Parker Pens had a meeting a number of years ago when they were trying to compete with cheap pens and realised they weren’t in the ‘pen business’ at all. They understood that their main competition wasn’t Bic but bracelets. Think about it. When did you last buy, or receive a Parker pen. I would guess it was some kind of gift, or present. Realising this totally transformed parker Pen’s mindset. Instead of trying to cut costs to compete withy cheap pens they spent more and added nice boxes, ribbons and marketing to help their products compete in the gift business. What business are you in?

If you know what business you’re in you should know who your customers will be shouldn’t you? Use this fun exercise with any trusted colleagues to gain some interesting insights;

Write the name of any customers, or potential customers on post-it notes. These customers can be grouped however you want to; “Mr. Smith”, “students”, “men with spare money who like football”, “ex-criminals who eat chicken” , etc.. List them in whatever way makes this real to you.

The next stage is to draw a simple 2 by 2 matrix with INTEREST (HIGH to LOW) on the Y axis and DISPOSABLE INCOME (LOW to HIGH) on the X axis.

You’ll then have 4 areas:

HIGH INTEREST / LOW DISPOSABLE INTEREST,

HIGH INTEREST / HIGH DISPOSABLE INTEREST,

LOW INTEREST / LOW DISPOSABLE INTEREST,

LOW INTEREST / HIGH DISPOSABLE INTEREST.

Now place the postits in the relevant sections. This part of the exercise, in itself often reveals some interesting insights as you discuss where certain groups of customers, or potential customers, sit.

Having completed this focus on the right hand side of the grid. These are the people with the money. The people who are highly interested and have a high disposable income should be customers already – if they’re not then make sure they are tomorrow.

Then focus on the group with high disposable income who are not interested. What would it take to interest these people? Do they know about you? Where do they go? What do you need to do to get them to hear about your product?

On the other side of the grid take notice of these people and keep them informed – especially the group with a low disposable income – who knows they may get money soon, but don’t spend too much time and resource on them. You simply can’t afford to.

This simple, fun process should help you target your marketing. One other point – you need to repeat this process regularly – people move and new customers emerge – it’s very useful.

Conclusion

So, on the one hand it’s hard work, incredibly risky, guaranteed sleepless nights for little money – certainly in the beginning. On the other hand you haven’t got a boss. Still seems a great idea to me.

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