7 Business Tips From Someone Who Has Built One
Are you looking to start your own business?
Here are 7 honest things to consider from someone who has built one...
1. Absorb - One of the biggest mistakes you can make is not listening to the advice around you. If 5 experienced business owners or mentors tell you that an idea is bad, it probably is... Yet time and time again people new to business mistakingly adapt the 'It will be different for me' attitude. At the very least, take the advice given to you, do some research and make sure that your idea isn't going to cost you a lot of time, energy and money if it doesn't work out. That's the last thing you want and being patient here will be your advantage.
2. Loans - Historically business schools have told you to chase your dream, take out a loan and think about the rest later once you're profitable. I'm sure there was a time in which this advice was more logical but in today's market I would never advise you to do this. Of course there are always exceptions, but I feel strongly that a business can be profitable without loans and you will need to be 100% sure your business plan will work and that you can pay it back. In the UK 20% of new businesses fail in the first year. I'd bet most of them fail becuase they over-leveraged on a bank loan. Don't let that be you.
3. Passion - Making a business out of passion can be a really big risk. Many people start a business out of passion so they can 'do what they love' but it can massively backfire. What you once loved as a hobby you now despise as work. On top of that, the margins are extremely low and the energy input equals no financial reward. I've heard it too many times and I don't want this to be you. A great example of this in today's world is hospitality. Arguably one of the most energy consuming business models yet they rarely make significant profits due to large overheads and poor margins. If your passion falls under this 'high risk' category, don't worry. There are always solutions like online teaching, workshops and other methods of risk-free business where you can fuel that passion in a more clever and creative way.
4. Simplify - When starting your business your head will be spinning with "what if" and "what about". It can't be stressed enough that you will benefit from keeping things simple. Let's say you start a marketing agency that specialises in SEO. If that's what you're good at and that's what you can monetise, then you should test this out before adding new services. Make sure the business is profitable and flowing nicely before adding in extra things that could result in you being overstretched or potentially losing money. This step takes time and experience, however, by being patient you can limit any financial loss and stay focused on what's working. Remember, you can also outsource services to keep your focus.
5. Budget - If you have a good business idea with a concrete plan, that's only half the battle. You'll benefit greatly from doing two things. Firstly, build up your emergency fund of 6-9 months of living expenses. This is your buffer during months when there is no or little money coming in. Hopefully that doesn’t happen but it’s best to prepare for the worst. Secondly, you’ll want to make sure the business is going to be profitable after all the overheads and taxes are accounted for. Generally speaking, online service-based businesses have some of the best margins since there are limited staff, premises etc. to swallow up profits from the cash flow. Keep that in mind when finalising your business idea/plan.
6. Employment - A lot of us want to start our own business for one thing - freedom. If you’re not careful this can lead to rash decisions being made like quitting your day job too early. Just remember that businesses can be built or grown in your spare time, evenings or weekends, especially in the early stages. By doing this you’ll be able to have less financial worry, keep a roof over your head and focus more on the business than the fears around money. You’ll also be able to keep most of your business profits since your day job will cover your monthly expenses. In this time you can build confidence until naturally you hit a point of being overstretched with your time and the business brings enough money in each month to cover what you need (ideally more). You’ll know when the time is right to take the leap and go all in.
7. Confidence - One of the biggest things (likely) holding you back is yourself. Whilst this sounds cliché, it is absolutely true. If you have a particualr skill and you can monetise it - you can be a business owner. You’re allowed to say “I run my own business” or I “ I have a ____ business”. For many young entrepreneurs this is the hardest part of it all. This is known as imposter syndrome and most people have it. This is simply part of the lifestyle of being self-employed. As you become more experienced and time passes you will feel this less and less but I urge you to get comfortable with this as soon as possible. Be confident in your abilities and show that you’re serious about your business. Every single business owner has these thoughts and the ones who win get comfortable with it really quickly. Get comfortable with the uncomfortable and embrace it for what is. You can run a business.