Do you dream of being your own boss, free to choose how you work and to be master of your own destiny?
If so, you wouldn’t be alone, and as a result of Covid, an extra 84,758 businesses set up in 2020 compared with 2019, a 12% increase.
But before you resign or spend your redundancy money on setting up a new business, it’s not for the faint-hearted – it’s a long and wild ride!
Pitfalls to avoid
Doing what you love
You may think that you want to start a business doing something you love e.g. turning your love of gardening into a business. It doesn’t matter if you want to be a florist, coach, PT, electrician or candlestick maker, doing what you love is only half the battle. You will only spend half of your time doing what you love, the rest of the time is taken up with sales (a lot of this), marketing, finance and working out how you’re going to deliver to your customers. It can be quite a shock. I have known plenty of people who have fallen out of love with their business very quickly once they realised there was all this other stuff to deal with.
Setting up without planning and research
Another massive mistake people make is that they think they can throw up a website (that they build themselves (another no-no, unless you’re a web designer)), get a stash of business cards printed but then wonder why the business isn’t flooding in.
You may well have a brilliant business idea. Or you have an idea that may have missed its moment – fax machines, CDs and tight perms spring to mind (always tight perms actually – may they never, ever come back). Without research and testing, you won’t get a proper understanding of what your customers want and what they will pay for. And you run the real risk of your business not succeeding. The harsh reality is that a third of companies will fail within the first five years.
Expecting overnight success
The other mistake people make is thinking that this time next year, they will be millionaires (Del Boy Trotter anyone?).
The reality is more like this:
Be realistic about your likely earnings in the first couple of years.
I spoke to an entrepreneur last week who shared his business plan with me. His targeted revenue for the first 12 months is £8million. Once I stopped laughing (internally obviously – I didn’t want to hurt his feelings too much or dampen his enthusiasm), I suggested he may want to take a slightly more realistic view of what the business might earn. I’m all for stretch targets, but there’s stretch and then there’s twang! the elastic broke. It’s too disheartening, and you don’t need to do that to yourself.
You really have to play the long game. It can take a couple of years to get traction, so you need to have enough money to see you through – not only for your business but your personal life too. Please make sure you’ve done the numbers.
Finally, after all the stark warnings – here’s an uplifting quote:
‘When you buy from a small business an actual person does a little happy dance’
We really do. It’s one of the joys of being a business owner – you get all the pleasure when it works.
In future articles, I will go into more detail on areas such as planning, pricing and understanding your customers, but if there is anything, in particular, you’d like to learn about, please leave a comment below.
Thanks for this Karen. As a one reluctant entrepreneur I now can’t imagine doing anything else.
Wise words about the time spent working on ‘non-core’ bits of the business. We find that even after eight years we spent close to 50% of our time on marketing (and in a COVID-19 world) billings, managing cash flow and making sure our industry knowledge is top top. Just doing what you love and ignoring the rest will end in tears.
For those thinking about running your own business then go in with a realistic attitude and look to have enough cash to manage for times when income from clients dries up.
Then go for it😀
Thank you Michael. It’s good to hear from a business owner. And great advice about savings. I shall be writing an article on this in the future.
This is so true Karen! Great article! I started my own business 12 years ago so much of what you say resonates with me.
Thank you Jayne. And when the business is ready to start taking on staff, you’re the perfect company to help them 😊
Excellent article and so true about all the other stuff you gave to do as a business owner. You either need to learn to love that too or be very strategic about what you outsource. Look forward to subsequent articles.
Thanks Jo – I always recommend outsourcing as soon as is possible! Let others who are more skilled at some of the activities do them for you, so you can concentrate on what you’re good at.
Great article Karen.
Good, honest guidance for budding business owners.
Thanks Alan
Great article. As someone whose profession involves dealing with “business failure” I fully endorse your comments about how not to fail!
Thanks Bob. Your role is so important – if they can get to you before it’s too late, you can help turn them round.
Excellent article well written and thought provoking , as someone who left the corporate world and went into consultancy I have half tipped my toe onto being a business owner . Another shock to the system is the credit control side , chasing up money owed etc. Also you get to know your Accountant far too well !!
Thanks Vince. And ah yes, the joys of chasing late invoices. I will be covering how to minimise these late payees in another article.
And are you the Vince I used to work with at Standard Life? If so, hi! And how great to hear from you 😁