Most business ideas are borne out of a desire to change something; to do it better, faster, cheaper (or more profitably).
The energy around a start-up is always tangible and there’s no lack of enthusiasm when it comes to getting things ready for launch. But, it’s important to take the time to check your idea is sound and to take careful steps to ensure you build your dream and not a nightmare experience.
Building a business is one thing. Creating something that is likely to be successful and sustainable is quite another. We’ve seen, during crisis-hit 2020, that you never know what’s around the corner and your business needs to be carefully thought through and constructed to weather the storm.
Read on for my Ultimate To-Do List For Successful Business Startups.
Build Solid Foundations
This is a little bit about planning and a little bit about investing. For many entrepreneurs, the idea itself is the key to success and, in their mind, hard work will get them there. However, as with anything new, first impressions count. That’s why branding and messaging is so important.
Don’t skimp at this stage. The temptation to rush something to market may be strong but getting the wrong brand – or a weak look and feel – could well be the difference between success and failure. Jumping into the business world is a big decision. You need to be completely convinced you have a great idea.
Additionally, sound foundations and a deep understanding of why you’re doing what you are will stand you in better stead for meeting future challenges.
During the COVID crisis, businesses that were able to pivot quickly – to revive and thrive – were those who knew their brand and purpose inside out and could therefore visualise where they sat in the ‘new normal’.
Invest in a proper study, work out your avatars, understand your market and consider what your brand needs to be synonymous with. Ask yourself what problems your brand is solving; have you got a unique proposition?
Know Your Network
Often in business, it’s not what you know, it’s who you know. Who has the expertise that you need to tap into? When it comes to startups, the journey from concept to funding, finding expertise and needing to expand can happen rapidly. If you truly believe your idea has legs, you owe it to yourself to spend some time researching how you will achieve each of these stages in the journey. Ask yourself:
- What sort of funding do you need and where can you get it?
- What does your initial team look like? Are they in your network or do you need to find them?
- Have you got the business-wide experience or acumen to drive launch and expansion quickly or do you need to buy this in?
Experience of significant interruption to normal processes has highlighted the importance of business ecosystems and being well networked to survive. No business is an island and your support network comes into its own when the going gets tough.
Focus on Value
I’ve blogged before about how to create a unique value proposition and this concept is so critical to any business startup, even before the proposition takes shape.
With any new idea, you must be able to determine and communicate what value it is adding to the existing offerings in the market. If you can’t identify this, you will struggle to convince potential customers as to why they should do business with you. It is key for gaining the attention and buy-in of investors but also so important in ensuring growth. To grow and scale in as short a timeframe as possible, you need a frictionless business. One of the trickiest things to overcome (and therefore the biggest generator of friction) is competition and a lack of USP so make this one of the first things you think about alongside your new idea.
It’s often tempting for inspired and enthusiastic entrepreneurs to come up with lots of ideas and continually increase their scope. However, the business world these days is much more of an ecosystem. For true success, it’s better to be specific and excel in one area rather than trying to be the expert across a spectrum of areas. Creating a niche and then building a strong presence within it is critical to success.
There are several areas where it pays to be specific. One is in creating and understanding your ideal client avatar. By being clear about who you want to do business you will be far more likely to attract those people. Saying you want to focus on female entrepreneurs is woolly. Saying you’re keen to work with female entrepreneurs in the finance sector who are aiming to exit their business successfully within 5 years is really going to speak to the right people.
Get comfortable outside your comfort zone
Building a successful business was never meant to be easy and it seems the world in which we operate is becoming more complex. Risks are harder to see and assess, yet still need to be calculated and assessed. As an entrepreneur you are highly likely to need to make judgement calls here and there without necessarily having the clarity that you’d like as to what the future holds.
Back in 2017, I wrote a similar blog, Seven Simple Questions To Ask Before Starting Your Own Business. Not much has changed in terms of my advice but the reality in which you read it has been turned on its head. As I concluded then, factors such as your network and the way you build the foundations of your business remain of paramount importance. In addition, we now need to add flexibility and on-the-spot innovative thinking to our ever growing list of skills.
Starting a business is a learning process, no matter how many times you might have done it before. Although it’s sometimes good to learn from your mistakes, you don’t want to fall into common traps if a little research and guidance can help you to avoid this. So, with that in mind, here’s our list of the top 5 mistakes made by startup entrepreneurs, and a little guidance on how to avoid them.
1. Not putting in the right amount of planning
There are entrepreneurs who totally underestimate the amount of planning it takes to get a business idea off the ground but there are also those who never quite make it to market and miss the window of opportunity to successfully launch their new idea. Neither are ideal.
Planning may get in the way of an exciting idea but it’s essential if you’re going to get it right. Every area of the business has to be researched, from understanding the size and opportunity in the sector to knowing as much as you can about your target audience. This needs to be balanced with accepting that sometimes you have to go to market without everything being perfect.
That’s why, at Streamlion, we offer a free initial consultation to all our prospective clients. It helps us – and you – fully understand the scope of the project and, as we support businesses at all stages of their startup journey and through their growth, we can make sure you’ve not forgotten anything.
2. Not prioritising money matters
Again, there are two ways business startup owners can make mistakes when it comes to money. Firstly, many simply aren’t aware of the raft of different funding arrangements that are available to them. Not having the right information at the start of their journey will instantly put an entrepreneur on the back foot. It’s impossible to plan a successful business if you don’t even know the scope of what might be possible.
Secondly, and perhaps for the same reason, entrepreneurs will often either spend too much, too soon or assume they need a huge amount of cash upfront in order to be successful.
Starting out on a business journey is stressful enough so we’d recommend working with an experienced organisation like Streamlion when it comes to accessing funding. Our previous experience speeds up the process and increases your chances of a successful application.
3. Neglecting the nuts and bolts of policy and process
Maybe because this is another ‘dry’ topic, but it’s surprising how many entrepreneurs take risks when it comes to things like legal protection, contracts and the implementation of proper processes. These things are like foundations for your business. Growing with them in place is a lot easier than retrospectively adding them.
Start by filing for the proper legal structure and business registration and follow this on by enforcing contracts, processes and protection from the outset. At Streamlion, we have helped many new businesses by optimising their processes and ensuring their business is efficient as soon as it is launched.
4. Failing to embrace change
For some business owners, their idea is their baby and woe betide anyone who questions it. Being too ‘in love’ with your idea can be a recipe for disaster as it’s likely this will lead to the wrong ways of working. It might mean you try to do everything yourself, so as to get things exactly as you dreamt them; you might become resistant to change and therefore unable to evolve when you need to or you could become over-confident and expand too quickly.
Whichever way you look at it, it’s always good to seek and consider the opinions of experts, whether they are a part of your team or someone you pay for advice and guidance. In our experience of change management, we have found that it is one of the most important things for a business to get right. The trick is – and this is where our experience comes in – to effect change with the minimum of disruption to the business.
5. Starting without considering the end of the journey
Every good business plan should have an exit strategy. If you feel certain of success, why would you not decide how you will maximise the benefit of that success? As part of the initial planning phase, it’s really important to scope out what you think success looks like and, therefore, at what point you might want to cash in and move on to your next project.
Of course, exit strategies don’t necessarily mean leaving the business. Many entrepreneurs like to keep a guiding stake, perhaps as Chair of the Board or as a non-executive director. Exit plans are particularly important if you’ve started the business with the help of an investor, of course, and your strategy for this will need to be a part of the initial plan requesting investment.
At Streamlion, we’ve worked with new and established businesses to understand the best time to sell and move on. We like to think of it as a succession plan for your business journey.
Ultimately, launching a new business involves some risk and every entrepreneur will view this differently. If you’re armed with research, plans and have consulted those whose opinions you value, you can at least make your risk assessment in a calculated way.
You can have the very best business idea ever but, without a compelling value proposition, it might never get off the ground. Why? Because your value proposition is what lets your audience know why they should buy from you and you alone. It’s your power play, your ace card, or, to use marketing lingo, your USP.
A value proposition is officially described as “a positioning statement that explains what benefit you provide to whom and how you do it uniquely well.”
A winning value proposition will capture the essence of your business in one short paragraph. Think Uber: Tap the app, get a ride. Uber is the smartest way to get around. One tap and a car comes directly to you. Your driver knows exactly where to go. And the payment is completely cashless.
Not only is this value proposition simple and easy to understand, it actually names all the things that people don’t like about the competition – never being able to find a cab, drivers getting lost, not having cash on you when you need it most – and turns them into Uber’s USP. These are the pain points that Uber has set out to resolve. In this case, they are also the benefits customers can expect and the reason we should all flock to Uber and ignore any other taxi companies that might want our business.
How will your value proposition generate revenue?
At Streamlion Consulting, we work almost exclusively with start-up or scale-up businesses. We, therefore, spend a lot of time discussing the merits of, and the added value brought by a new or growing business idea. It’s this time and energy which many entrepreneurs cut out of the process. In their enthusiasm to start trading, they fail to get a clear enough understanding of the problem they are trying to solve or how their business is different from the next.
And, to answer the question about revenue, the very first thing a compelling value proposition will do is get you access to funding and investment.
Essentially, a strong value proposition will contain a little marketing messaging, some operational information and an idea of strategy. By bringing so many messages to the market, it will be highly effective at convincing buyers and decision-makers that they should be doing business with you. And, once this process is underway, revenue is an inevitability.
To work really well, your value proposition also needs to be succinct, specific and service-focused. In some ways, it represents the very start of your customer experience.
How does a value proposition work?
In a nutshell, a good value proposition will provide the differentiator between your business and your competition.
Renowned businessman and investor, Warren Buffett, refers to them as an ‘economic moat’. This is a great visualisation: the presence of a powerful value proposition will help fend off competition and protect your market dominance.
What are Streamlion’s top tips on creating a convincing value proposition?
Defining your business in a clear and succinct way is a skill. As business owners or entrepreneurs with a great idea, it can be easy to get bogged down in detail, to focus too much on the infinite moving parts that make our business so amazing. But we don’t need this level of detail in order to engage our audience. Quite the opposite, in fact.
Our first Top Tip is to start with a group brainstorming session. You need to get as much information as you can out of people’s heads and into a mind map or something visual. This needs to include what problem you are solving and why you believe you are different. You can either do this with a team from within the organisation or together with an impartial third party.
The key to driving value from these discussions is to continually revisit the purpose of your business and question what problem it solves. You can also go on to discuss whether that problem needs solving and why.
Once you’ve brainstormed everything, and discounted anything that is irrelevant, not convincing or too complex, you should be left with the building blocks of your value proposition.
Our second Top Tip is to keep it simple. Don’t try to complicate or obfuscate. There are no points for big words here. Simply try to write down your purpose. Forbes.com have a great breakdown of a typical value proposition template:
For (target customers)
- Who are dissatisfied with (the current alternative)
- Our product is (new product)
- That provides (key problem-solving capability)
- Unlike (the product alternative)
As with any marketing material, authenticity and building trust with our audience is key to success. This leads nicely to our third and final Top Tip, which is to always have proof. You should be able to back up your claims with customer reviews or testimonials, or independent research and polls. You may well believe that you are ‘the best’ or ‘market-leading’ but if you can’t back that up, you will pay the ultimate price for breaking the trust of your audience.
There are lots of tips around on how to survive today’s somewhat dystopian circumstances. For businesses of any size, the focus must be on managing cash carefully, looking after people and understanding how the restrictions affect trading.
But, where there’s crisis, there’s opportunity (to quote Einstein) and for many businesses, this peculiar event could be their making. Here are my top tips to find the opportunities that exist for you.
1. Authenticity and vulnerability are not just buzz words
Honesty is the best policy, so the saying goes. These days though, it’s about so much more than telling the truth. Trust of official bodies, including brands, is at an all time low and many more of our interactions happen on digital pathways than face to face.
Social media gets a lot of criticism for presenting a falsely positive reality but there have been some very honest and extremely vulnerable posts recently which have attracted massive engagement. Showing vulnerability is key to gaining the trust of others and doing so can be very powerful for you as well as your audience. Don’t be afraid to say the bottom has fallen out of your pipeline. Perhaps you’re using all your new-found free time to help others. Why not share this and keep those genuine conversations going. Lots of your contacts will be in the same position and will appreciate your candour.
2. Build goodwill among existing clients
Here’s a novel idea: why not pick up the phone to your clients for a chat? Everyone will be feeling cut off and many are likely to have a little more time to talk than usual. Showing concern by having a chat could be a valuable way of nurturing the relationship and they might be thinking you’re either flat out or closed. You can let them know what you’re able to do or how you can help.
The way in which you show up now, as a supplier or service provider will set a standard by which people will judge your business in the future. It’s an excellent opportunity to really delight your existing customers. Think about all the touchpoints you have with them (which will have changed given current restrictions). Make sure any that have disappeared are replaced with an alternative and look at what you can offer to your clients which may help or support with the challenges they may be facing.
3. Pivot your business if you can
There’s lots of new coverage of our larger manufacturers tweaking their production lines to help with the shortages of ventilators and hand sanitiser. It’s also possible for smaller businesses to react to the crisis with new ways of working. Many of those who provide a service have been easily able to take this online with the help of Zoom or Skype and other businesses are keeping their audiences engaged with newsletters which help them to adapt to a limited way of life.
For those who’ve been left with nothing to fill their days, look for a contact who might have been left in the opposite situation. Some industries are busier than before – could they use your help and support? You could also turn to community. I know of an investor who is helping a café deliver veg boxes using wholesalers thus helping them stay afloat which is generating much needed cash for their cafés that are not allowed to open at the moment.
If there’s really nothing you can do differently, do make sure you communicate what you have done to your audience. This page on the PWC website shows they are responding to the crisis and puts them in a positive light as an organisation that cares about its people and is intent on doing the right thing.
4. Look after number one!
Paying attention to self-care is critical at times like this. No matter how resilient you are as a person, this type of experience will increase your stress levels. Make sure you set aside time to recharge and allow your mind to process everything that is happening. Your business is nothing if you are too stressed to run it and your people will thank you for being able to stay calm in the face of crisis and make the right decisions.
5. Develop your skills
If you’ve always shied away from giving webinars or showing up on social media through video, why not take this opportunity to improve your skills? Investigate what running a webinar involves. Can you pull your network together to share advice and ideas? As well as bringing the possibility to make a real difference to people, you will be generating useful content for your social media channels, letting people know you’re still there and willing to help.
6. Be ready for what comes next!
We’re not talking about further measures to stem the spread of COVID-19, but rather the point at which life can return to normal. We will get there eventually and, when we do, the businesses that have made good decisions and used their down time wisely will be the first out of the starting blocks. Being ready for this means maintaining your profile online with social media posts and having an up-to-date website, looking after your people so they want to continue working with you after the crisis and gearing yourself up for a potentially quick ramp-up in activity. Let’s face it the filing will probably still be the last thing on your list but it’s the perfect time to get this done too, physically and virtually. Get that CRM updated and be ready for the future when it gets here!
There’s no doubt about it, these are unusual times. But I want to leave you with a quote by John F Kennedy which provides food for thought in how we might get through to the other side:
“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.”
Here are some useful links with information about the virus and how it impacts small businesses and start-ups.
To find out more about our services click here.
“Ask for what you want and be prepared to get it!”
I feature this powerful quote from Maya Angelou on the home page of my new website because it encapsulates the approach I take when I’m speaking to business owners or entrepreneurs wanting their latest idea to come to fruition.
I also like it because it’s true – if we are willing to work hard enough, and build relationships with a great network of people, we can make pretty much any dream a reality.
So, what is the secret to achieving your goals when it comes to business? I help all sorts of people from successful small business owners who want to scale their operations, to entrepreneurs needing angel investments for their embryonic business idea. There are a few things which hold true whatever the situation and whatever the customer.
I call them my “4 tips to make your business ROAR”
Tip #1 – R is for Resources
When you embark on a business startup, success becomes all about what you have at your fingertips. Money is likely to be tight, even if you have funding, and time is of the essence so having resources to hand is essential to getting yourself up and running as quickly and efficiently as possible.
Resources could be anything from people you know to lessons you have previously learned from. They could be educational, training programmes you need to fill any gaps in your knowledge, or physical such as buildings, materials and tools to start work with.
Resources aren’t just relevant at the start of your business journey, of course. They’re something that needs planning right the way through the lifecycle of your work. From knowing the right time to upskill or recruit additional people, to having the capacity in terms of space and/or materials to deal with the success of your marketing.
Tip #2 – O is for Optimisation
I’m talking about efficiency and accuracy. The quicker you can nail your business processes, ideally automating as many of them as possible, the quicker you will be in a position to make money. That’s because the admin doesn’t just drag us down, if it’s not addressed, it can actually drag us under. Paperwork: insurance, accounts, invoicing, contracts – if we don’t get these things right we are welcoming risk into our business.
Many start-up businesses fail to survive beyond their first 5 years and this is likely because while lots of energy went into the idea, the brand design, the launch and the business development, nobody really thought about the steady-state. What needed to happen once the orders were rolling in on a regular basis? Did the systems exist to keep on track? What aftercare or customer experience work has been done? How do we keep people loyal to our brand?
Tip #3 – A is for Access
Often, ideas – even brilliant ones – never get off the ground because those that come up with them simply haven’t got access to the right people. This is when your network comes into its own. I’ve spent years building a network of people with the right skills to help businesses get off the ground. In part, this consists of subject matter experts, marketers, branding experts, financial planners and more. It also consists of a strong network of investors.
Finding someone willing to put their money where your mouth is can be tricky if you don’t have the right contacts. Often, these angel investors will only consider business owners who come with a personal recommendation. It makes absolute sense to tap into the right network even if it’s not your own – doing so is a surefire way to ensure a sound investment, with a strong business footing and boundaries which help everyone measure progress.
Tip #4 – R is for Review (and refocus)
As a business evolves, it’s easy (especially for those of us who are over-excited entrepreneurs) to get distracted and start tweaking the business to cater for every enquiry. This can lead to a business that isn’t scalable, has no consistency in its offering and ultimately confuses its prospective client base.
It’s important to pay attention to that business plan you spent so long compiling. Stick to your aims, follow your goals and, if you do veer off centre, don’t be afraid to refocus.
An important element of any business is the ability to scale what you offer. Having bespoke processes and offerings for every client isn’t going to give you that option and you’ll then be very unlikely to meet your growth targets, not to mention killing any chance of ever getting your money back out of the business. Of course, there will be times when you need to change tack but this should happen as part of a conscious change program, carefully managed and implemented to ensure the necessary improvements are realised.
As a business consultancy that offers business advice, strategy, funding and planning services to start-ups and scale-ups, Streamlion Consulting has helped hundreds of entrepreneurs get their business journey right and realise their dreams.
A one-stop-shop for helping businesses to roar, Streamlion can help with everything from accessing funding and angel investments through to building, and exiting, a successful and sustainable business.
Find out more at www.streamlionconsulting.com
So, you’ve successfully entered the world of start-ups and found the adrenaline buzz of owning your own business to be addictive. Most entrepreneurs love the thrill of seeing an idea launch, which often leads to them moving on to new ideas in a fairly short timeframe.
However, to successfully remove yourself from a business and continue with the heady path to portfolio status, you need to know how to scale your existing business so it can continue to fund your future adventures in business.
Scaling a business is about more than just growing your sales and employing more people. To successfully scale, your business needs to be based on the right foundations which ensure it is equipped to deal with a continued higher volume of transactions. It will undoubtedly involve further investment and a good amount of time invested in strategizing for future success.
At Streamlion, we work with clients at all stages of building and scaling businesses so we thought it would be useful to capture our top 5 tips on how to scale your business successfully.
Top Tip #1: Start at the beginning
It’s all too easy for excitable entrepreneurs to leap over the initial stages of scaling a business and move straight to the increase in marketing or selling. Before that, it’s essential to ensure your business is equipped to handle this extra throughput. Not doing so could result in disappointed customers which, in turn, could seriously damage your reputation and put paid to any future plans for growth. Premature scaling is cited as one of the leading causes of startup failure.
The beginning is planning. Scaling a business is not the same as growing it. Scaling involves innovating your business model as well as your product or service. You need to invest time in working out potential new markets, back-office automation and funding.
Top Tip #2: The price of growth
Scaling a business effectively is never cheap. In fact, one of the most common reasons that startups fail to scale is down to funding. And funding a scale-up is an entirely different prospect to funding a startup so it’s essential to work with experts who can help with creating a sustained growth plan as well as helping you understand the transformations that need to happen to set the business up for a successful future.
Like scaling, finding funding is down to putting in the right preparation and demonstrating that your business is ready for change and growth.
Top Tip #3: Optimisation is key to transformation
To quote Einstein “If I had one hour to save the world, I would spend 55 minutes defining the problem and only five minutes finding the solution.” Scaling a business needs the same approach; success is all about understanding how things work and how they need improving to cope with a larger volume.
Achieving automation and integration, which are the likely outcomes of optimisation, will likely involve technology. The happy fact is, there’s no shortage of packages, apps and products that can help make things easier. However, finding the right one for your business is critical.
CRMs, automated marketing, accounting and your overall IT network all need to come under the microscope at this stage.
Top Tip #4: A change of pace
Your business goals might be clearer but it’s a well-documented fact that change management needs careful handling.
As well as any team members involved, it’s well worth getting under the skin of your customer experience journey. Plotting out every touchpoint between you and your clients will help to identify any areas that might need attention prior to scaling. We use Customer Journey Maps to help our clients to see any areas of friction which might cause problems when scaled. Additionally, you can identify areas for investment, which could be wrapped up with the other areas that need funding in order to create the very best version of your business.
Top Tip #5: It’s not all about you
Creating a business is a little like having a baby, you bring it into being, nurture and help it to grow and, inevitably, you eventually leave it to stand on its own two feet. This time is now.
For a business to scale, it needs to be able to operate consistently based on the policies and processes you’ve spent so long on assessing and improving. You have options as to whether you outsource some of the regular activities, or whether you hire a team to run things for you. Either way, taking a step back for the first time can be daunting.
The key thing to remember is that you’ve invested time in getting things right, so your business is ready for this, even if you aren’t. It’s also really important to hire the right people – people you know share your values and will continue to inject enthusiasm and innovation into the business.
Finally, as with most things in business, successful scaling is also a mindset. By working with a strong team of advisers and having faith in your own ideas, scalability becomes infinitely easier.
At Streamlion, we’re well known for getting business owners started and business ideas up and running.
But, did you know, it’s just as important to give some thought to how you leave your business when the time is right?
An exit strategy is a plan for how you will end your involvement in your business. The business will continue, perhaps with new ownership. You may go on to start something new or you may be retiring. Whatever your reason for wanting to exit, it’s important you get a good return on your investment of time and hard work over the years.
Exiting your business – where (and when) to start
The first and most important consideration is to leave your business in the very best shape. That means good turnover and profits, yes, but it also means your admin needs to be up to scrutiny. Processes need to be documented, your books must be up to date and accurate, and so on. As you can imagine, some of these things take time to put in place so it’s never too early to start planning.
Apart from increasing the likelihood of your business lasting long enough for you to need an exit plan, putting in this planning and preparation will almost certainly get you a better price when you come to sell it.
The Main Ways to Exit a Business
For an entrepreneur or small business owner, there are several ways you could consider as your exit plan:
- Merger & Acquisition – you might join forces with a similar business to create a larger or more wide-ranging business and then make yourself redundant as a result, or, you might look to be acquired by a larger organisation who operates in the same space as you.
- Initial Public Offering (IPO) – this method looks to bring in shareholders who buy up your shares and effectively repay you and any other investors. However, this get-rich-quick scheme of old is less lucrative these days and no longer the preferred approach.
- Sell to an individual – this is different from a merger or acquisition because there’s no other entity in the deal, you’re simply handing over the reins for an agreed sum of money. Your ideal buyer would be someone who can take the business to the next level.
The method you choose will depend upon the type of business you have and the outcome you want from exiting. There are, of course, a myriad of other options, such as selling to your management team, passing the business on to family or simply shutting up shop and liquidating. It’s important to get good advice and consider every option carefully before committing to a plan.
Exit Strategies – Keeping It Real
We’d all love to be the next ‘Innocent Drinks-becomes-Coca-Cola’ type of success story but, in the real world, exit deals are often more modest. The most important thing, as a business owner, is to decide what you want from your exit and then engineer the best opportunity to achieve it.
Making sure your business is as automated as it can be is important, not just because it can drive a higher sale price. According to growthbusiness.co.uk, a massive 83% of entrepreneurs end up staying involved with the business they chose to exit. Now, in some cases, this will be part of the plan, as entrepreneurs reportedly continue in advisory or shareholder roles.
However, it’s clear that entrepreneurs still love the ‘art of the start’ as an incredible £108bn was made in sales during the 5 years to 2019 and, according to FreshBooks, 61% of baby-boomers say they would work through retirement by choice.
If you’re keen to explore exit strategies further, why not pick up the phone to Streamlion Consulting?
The UK is known for being highly entrepreneurial, with over 99% of all domestic businesses being classified as SMEs.
However, research carried out in 2019 showed that 64% of the British workforce has entrepreneurial dreams but an incredible 41% of those are put off setting up their own business by money fears.
In 2016, Hiscox and Bloomberg carried out research showing that 8 out of 10 entrepreneurs who start a business fail within the first 18 months. Cash flow is listed as the number one reason for failure.
Cash Is King
No surprise then, that my latest blog is all about cash. That four-letter-word which proves so critical to everything we do in business. At Streamlion, we help businesses to find funding for their entrepreneurial dreams but to do that effectively, we need to really focus in on cash.
Love or loathe the saying, but cash really is king.
Creating a cashflow forecast
When entrepreneurs work with Streamlion to arrange a business loan, we take a detailed look at cashflow forecasts, plotting out how and when they expect to make their sales.
Often, simply by undertaking this task, business owners give real thought to the incomings and outgoings of their business for the first time. It’s easy to think in ‘big handfuls’ when planning a business concept or launch but getting down to the finer detail will quickly expose unsafe assumptions or gaps in your business plan.
Doing a cashflow forecast at an early stage in the life of the business is also a great way to get into the habit of continually updating it. Cashflow isn’t something we glance at now and again. As a successful business owner, you need to have a clear view of your cash situation at pretty much every given moment.
That’s because, even if you have the funding you require to start the business, your cash can also be affected by late payment of invoices. This is an ongoing problem for the majority of Britain’s SMEs. In fact, during 2018, accounting software business FreeAgent found that just 58% of invoices were paid on time or within a 3-day window of their due date.
Gary Turner, Co-Founder and Managing Director of Xero puts this problem into sharp focus:
“Late payments don’t just damage business finances and relationships, they compromise personal finances and relationships. Our research illustrates how getting paid on time can have a dramatic effect on a small business owner’s happiness. When small businesses struggle, the whole of the UK struggles.”
Clarity of cashflow is key to decision making
Having a medium-term view of your cashflow is critical when it comes to business operations. When you run a business, you continually need to make sound decisions, often quickly. Whether your biggest customer goes bankrupt and can’t pay their latest invoice, or emergency investment is needed, you need to know whether the business can cope with the situation financially.
A sudden interruption to cashflow can be catastrophic for SME businesses. According to the Federation of Small Businesses, combatting late payments could keep an additional 500,000 businesses open every year.
The statistics are compelling. Positive cashflow is key to survival unless you have the funding you need to ride out the tricky times. Funding is always at a preferable rate if applied for in advance, so having the information you need, at the click of a button, gives you and your business a distinct advantage.
As recently as 2018, the government committed to improving the late payment situation by affording protection to smaller businesses, who are the main sufferers when larger companies take too long to pay. So, the issue has been recognised, but we’re yet to see any firm legislation. Let’s hope our leaders can see the benefit of supporting entrepreneurship and work harder to ensure the UK retains its reputation as one of the best countries in the world in which to start a business.
I’ve been having a lot of fun recently working with some serial entrepreneurs – on their business strategies and helping them get start-up funding for their next new ventures. These founders have already started, managed, grown and sold successful small businesses in the past and have the appetite and know-how to do it all over again… And again. They are pretty awesome.
So, how do they do this? How do they land on a good idea and make it a reality? How do they spot when to get financial help, when to spend on expert advice and with whom, how much to spend on marketing, PR and Social Media, which manufacturers and suppliers to use and when to take on staff? I can tell you how – they set themselves realistic expectations and aren’t afraid to take out finance in the start-up phase to give them the boost they need to get going.
I’ve heard many a small business owner say – “Oh, I don’t want to borrow any money – I’ll keep on working full time and put what I can into my idea and take it from there”. The problem with this is that many great ideas “seize the moment” and are the answer to current business or social problems or indeed current phases/trends. If you wait too long, the moment will have passed and you will have missed it.
So, how do you set yourself realistic expectations? I believe in these 5 golden rules:
- Know your market; know your customer; know your business – this is the KEY. Successful entrepreneurs know exactly who they are selling to and what those customers want to buy. Get that right and you have your business.
- Have enough cash to set up – take out a Start-up loan or other means of finance so that you can do what you need to do in the start-up months. Start-up loans are unsecured and each Director can borrow up to £25K.
- Take time to do a proper Business Plan and Financial Forecast – pay an outside consultant to do this for you if necessary as they will accurately capture your projected order book and record all expenses. There may be hidden costs that you might have overlooked that would give an unrealistic margin expectation. To have an independent view adds great value.
- Monitor your expenses and spend when you can afford it – we all know that “Rome wasn’t built in a day”, so make sure that you have a sensible roll-out plan in accordance with your business plan. As revenue comes in and grows, then fixed expenses can be taken on.
- Be confident, resilient and enthusiastic – if you don’t love your business and have the staying power to make it succeed, then it is hard for others/employees to feel the enthusiasm.
So, back to my entrepreneurs. They have got it and it’s this realism that will make these small businesses grow, at pace, to become buoyant, lucrative and successful future companies.
Are you just crazy madly busy at the moment? Do you feel that you are juggling so many balls and just praying that they stay in the air and don’t all come crashing down? It’s a common theme I’m hearing amongst my SME colleagues and friends at this time of year and we all know why – our work/life balance is out of kilter!!
When you are a solo entrepreneur or “solopreneur” you manage everything yourself – selling new products and services to give you billable revenue for the future months, delivering the services that you have already sold plus all the associated admin work that comes with running a business – bookkeeping, invoicing, quoting, writing proposals, marketing, PR and Social Media. Each one of those tasks is a full-time job in itself and I haven’t even mentioned putting time aside to brainstorm and plan your company growth! Plus of course, my all-time favourite – customer service! You need to nurture and spend time with your existing customers too.
But how do you manage your time to make sure that you are still getting a good work/life balance and making sure that you give yourself some precious “down” time??
These last few weeks I’ve been burning the candle at both ends, selling and delivering work and also trying to carve out time to spend with my young son. I haven’t been succeeding on the latter! I mean, that’s the reason why I left the corporate world in the first place – to run my own show and be able to spend quality time with my lovely boy as he grows up.
So, time to get that balance back by designing my own life. But how do I set and enforce the boundaries that I want to live by but also get everything done that I need to do? By making small adjustments to my everyday – the small things matter. With the smallest investments in the right place, I can make a real difference.
So, here are my 5 “small things”:
(1) Make sure that I do something mentally relaxing every day – be that walking the dogs or having a quick coffee with a friend. It doesn’t have to be all morning or I will start to panic about time lost but just 20 mins/half an hour to give me time to pause for breath!
(2) Get more sleep. We all know that sleep deprivation impacts mental ability and falling asleep on the keyboard isn’t productive!
(3) No phones at bedtime – put the phone on sleep mode. Emails can wait until the morning.
(4) Keep my sense of humour – laughter is most definitely the best medicine.
(5) Hug my son every day.
I’ll let you know how I get on!
You’ve all heard the saying “don’t judge a book by it’s cover”. Well it’s the absolute opposite when it comes to personal branding! You are judged on first impressions and these are nearly impossible to reverse or undo.
Research shows that it takes just a quick glance, maybe three seconds, for someone to evaluate you when you meet for the first time. In this short time, the other person forms an opinion about you based on your appearance, your body language, your demeanour, your mannerisms and how you are dressed. With every new encounter, you are evaluated and yet another person’s impression of you is formed. These first encounters are extremely important, for they set the tone for all the relationships that follow.
As a small business owner, my personal brand is critical. I’ve just been through a process of making sure that what I wear (colours and styles) and how I present myself absolutely compliments and highlights who I am so that when I meet someone for the first time, they see the true me in my most confident and at ease state – there is nothing quite so powerful as going to a meeting knowing that you look good and are at ease to deliver the expert knowledge and advice you know you have in your brain!
So what are the top tips for getting your personal brand right?
Make sure that you wear colours that suit you – make your skin glow, look smooth, healthy and your eyes sparkle!
Don’t be a slave to fashion trends – wear styles that compliment your shape and enhance your best features.
You know your stuff so be confident – you are the expert in what you do and have built a business around this expertise. Show people how good you are!
A winning smile is the perfect ice breaker/conversation closer. If you are confident and smile, you are a winner!
(5) Open and Courteous
Talk a bit about yourself to make your interaction more personal. It is you they are buying a product or service from after all. And we all know the power of good manners – “please” and “thank you” are the magic words!
Be positive, even if you’ve had a bad journey to the meeting or your IT hasn’t worked, don’t moan or dwell on it. No one wants to listen to complaints but will be impressed with how you turn things around for the better.
One of the most important tips – be a good listener. If you can listen, grasp the issues and come up with a way to help on the fly, that is one impressive skill.
Yesterday I was chatting to someone at the pool and they asked me what I did for a living.
I said “I have my own business”, to which they replied “That’s great, I would love to be my own boss”.
But is that all it’s about?
Definitely not – jumping into the start-up world is a big decision and you need to be completely convinced that you have a great idea you are passionate about.
Even with this belief, you risk a great deal getting started and there’s no guarantee you’ll succeed.
There’s loads of advice online and in start-up workshops, but basically you need to ask yourself seven simple questions before you take the leap:
1. Why do I want to start my own business?
If you simply hate your job, or you’re following a trend, it probably won’t survive. You need to solve a problem in an industry you love and this passion will help you succeed.
2. What problem(s) am I solving?
You need to provide something unique that will solve a problem for someone else. If they can do it themselves then there is no need to buy from you!
3. What lifestyle sacrifices am I willing to make?
It’s a big decision to give up a high-paying job to follow your entrepreneurial idea. You need to be brutally honest with yourself and ask what kind of lifestyle you would be comfortable with.
4. Will my family and friends be supportive?
The small business rollercoaster takes you up and down, and as you veer from ‘busy excitement’ to ‘tumble weed depression’, you need to have supportive people around you.
5. How much money will I need?
It’s good to have some savings to use in the early days, but don’t stretch yourself too thin. Cash flow can be a killer so make sure that you have loans or access to more cash if necessary.
6. Should I grow quickly or take my time?
If you have a great business idea, you should seize the moment and grow as fast as you can. This is best with funding so that your investors can realise quick and profitable returns. However, if you’re going it alone with your own money, you can take a little more time.
7. Am I in the right place to launch my business?
You need to either know, or get to know, your industry and make contacts by going to lots of networking and start-up events. Hearing about the experiences of other people is the best way to learn. This can help you work out whether you’re in the right place geographically to launch your product.
Remember it’s great to be your own boss, but it’s your passion and belief in your business idea, plus a strong and stable support structure that will give you the best possible chance of succeeding.