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.
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.
Our last blog discussed the differences between – and challenges associated with – growing and scaling a business. This time, we want to share some tips to help you successfully scale your 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 the 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 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 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 Consulting, we are experts in knowing and advising on the difference between growing and scaling your business.
Our scale-up workshops are designed to help entrepreneurs face exactly this type of challenge. We spend time looking at your business, acting as your trusted advisor to help you to make the decision that’s right for you and your business goals and aspirations. And we can then help find funding for this type of expansion.
If you’re interested in finding out more, contact Helen on firstname.lastname@example.org or call 07790 493033.
You may be forgiven for thinking not much has been happening in the world of business startups for the past year or so. You’d be wrong. We’ve seen our busiest year ever here at Streamlion, and it seems there’s been no change to the old adage that alongside crisis comes opportunity.
Startups.co.uk have published their list of The Startups100 for 2020, using criteria such as finances, turnover, strength of business idea and the opinions of existing successful entrepreneurs, to rank businesses across the categories of tech, family, social, B2C, B2B, and regional.
The full list of the class of 2020 is here, and we’re excited to see everything from healthy baby food, to outsourced delivery services for small grocery stores and a platform for families to use to monitor elderly relatives in care.
There’s a heavy emphasis on automation – or making everyday life more simple – with a hefty number of data and analytics platforms included. Wellbeing and sustainability are also big players. Overall though, it’s great to see the appetite for entrepreneurialism hasn’t diminished.
One of the first things I do with clients who are seeking funding is chat through their business idea and ensure it is viable, sustainable and scalable. If a business has too many barriers to entry, is not going to appeal to a wide enough audience or doesn’t have any chance of growth, the chances are that investors will be wary.
With that in mind, and to help you conduct something similar on any business ideas you might be considering, I thought I’d share an example using a popular business I think most of you will be aware of.
Christmas Services Ltd t/a Father Christmas, Santa Claus, Saint Nick
Clear and simple with an attractive colour palette. Although the name varies slightly when used globally, it does seem to translate to roughly the same value set:
- Family friendly
- Celebrates good
The authenticity of the brand needs some consideration. Because of the strong links with the biggest dishonest collusion any adult will ever enter into, this may be called into question.
Action: Gather and submit evidence which proves this is, in fact, a white lie (which we all know are ok).
- Presents for good children
- Lumps of coal for naughty children
- Goodwill to all men
Consider the definition of ‘good’ and ‘naughty’ including examples of what bad behaviour results in the delivery of coal. Customer satisfaction reports seem to imply that most clients recover their behaviour sufficiently to receive presents.
Action: Is the production and provision of coal still a valid part of the enterprise? If so, should the presentation be tailored for a modern generation?
Action: Update service descriptions to reflect modern society – “goodwill to all” is more diverse and inclusive.
The main consideration is the extremely seasonal nature of the business.
Operating ‘but once a year’ may be considered high risk by investors. However, due to manufacturing and workforce constraints it is not clear whether the operation could be scaled while maintaining standards.
Potentially, this is only an extreme example of the bias that many retail businesses have towards seasonal trading.
Action: consider whether service could be scaled to any other occasion annually. (NB: set up negotiations with key competitors; Easter Bunny, all witches, skeletons and ghouls, tooth fairy)
The workforce is seen as extremely loyal and effective at producing the required type of artisan goods that link with the brand. However, diversity is virtually non-existent, with almost the entire workforce being of a single nationality/culture. However, the mass employment of the vertically challenged has been seen to be of advantage to the local population as a whole and certainly assists in bringing in goodwill.
Action: consider recruitment campaign to attract a more diverse workforce. (NB: assess impact of this on elf and safety given size constraints of machinery and factory)
The requirement for 9 months of the year being used to prepare for 3 months’ worth of manufacturing and delivery is unusual. Consideration must be given to whether the workforce remains efficient.
Action: assess workforce capabilities with time and motion study. (NB: Particular reference to CEO who appears to be on holiday for those 9 months).
Finally, consider the overall wellbeing of the workforce, who reportedly work long hours at times. Night shifts should be properly staffed to ensure regular breaks are being taken and adequate facilities are provided for inclement working conditions. Anyone showing signs of illness (red nose, overly hot, red cheeks, or overweight bellies that shake like jelly) should be given a company medical.
The Supply Chain
The original brand USP was for artisanal products. However, in recent years, there has been increasing outsourcing leading to a dilution of the brand values and a prevalence of non-environmentally friendly materials being used.
Attention should be paid to the importance of the brand values and goodwill (of all men) towards the original business plan. Should the outsourced manufacturing be brought back in house?
How has the sugar tax affected profit margins? Have suppliers passed this cost on or absorbed it?
Action: conduct supply chain audit to identify contractors whose brand values do not match that of the organisation; rerun competitions for all contracts.
Distribution & logistics
The use of a non-fossil fuel delivery system is well established and appears to be working well. It might be of use to carry out a survey or surveys to establish whether the production of greenhouse gases (e.g. methane and carbon dioxide) might be seen as a negative and to establish the viability of sustainable alternatives, especially for the lead tractor animal who has his own branding with a red nose.
Are the towing animals at risk of extinction? What facilities are there to ensure regular fleet replacements? Is the red nose a common characteristic or deemed to be some sort of rare throwback gene?
The recent global pandemic has caused some issues for the survival of the business. The brand story has been tested and messaging needs to be clear to all clients: if 2020 doesn’t stop us, then nothing will (particularly because ‘magic’ seems to be the main rebuttal to any question concerning disruption of supply).
However, modern technology is yet to catch up with the iconic delivery system utilised by the business and this is a positive aspect to be included in any sale calculations.
Currently, options for exit are:
- Franchise and assume managerial/brand guardian role (beware quality control of franchisees, many less-than-convincing substitutes have been seen – beards on elastic, cheap wellies, rubbish plastic presents)
- Sale as going concern (consider location of new owner and possible impact on workforce, brand story and general authenticity – Superman will get cold in just tights, Iceman thought to lack empathy)
- Merger/acquisition (difficult to identify sufficiently similar organisation, but possible contenders are:
- Multinational drinks company with really nice lorry but likely not to embody brand values or extremely competitive pricing strategy
- Other cloaked heroes all of whom do seem to have their own battles ongoing, therefore present risk of lack of focus or departure from core business
- Tooth fairy, although concerns on size match mean this business might not be viable option – currently SME with little ability to grow.
So, what do you think? Would you invest?
Wishing all my clients, colleagues, collaborators and followers a very happy Christmas.
It’s the topic on everyone’s lips at the moment but, as the saying goes, ‘this too shall pass’ and eventually we will need to start thinking about life after covid. This three-part blog series looks at moving on from crises and why businesses need to acknowledge what’s happened and learn the right lessons.
McKinsey & Co have been publishing a fascinating ongoing blog on the impact of Covid-19; one instalment of which explores the somewhat unexpected performance of the stock market in recent months. Despite crisis, uncertainty and deep recession, the markets are reaching new highs. Why? Firstly, because investors tend to take a long-term view of things and even the resilience of this pandemic is only a blot on the landscape of the average investment period; secondly because the markets are dominated by five major tech companies who, understandably, aren’t really affected by the change on working practices; and thirdly because for every plus there is a minus and impact across the various business sectors has varied wildly. For every disaster, say the events industry, there has been a success, say those manufacturing PPE. The market is a reflection of the whole and so its aggregate value remains resilient.
The report, however, made me think that there is an important lesson in positivity for us to take away. Despite pain and sadness, 2020 will leave another legacy. An understanding that there’s more than one way to do business. A feeling that we’re perhaps more resilient than we gave ourselves credit for.
So, what did we learn and what can we take away for the future?
- We can pivot. It’s become one of a few hideously overused words but that can’t detract from the fact that we experienced an incredible agility in our business world. Manufacturers suddenly started making ventilators or manufacturing PPE. We found out we could meet online instead of in person. Small, medium and large businesses found a way to adapt.
- You’ve (probably) got deeper business relationships. Being ‘in it together’ has a unifying impact and many businesses are likely to experience increased loyalty from clients and employees alike. I said in my last blog on this topic that the way we show up in a crisis underlines our future reputation and this is never more true than when it comes to our people.
- You’ve got a story to tell. Your brand identity will be enriched and authenticity enhanced by letting people know what you did to survive. Many businesses didn’t just survive, they contributed to their community, helped in the national effort to save lives and supported their peers without question. Marketing aside, this is a story of community and we need a little more of that in our business lives.
- Survive this, survive anything. Or so the saying goes: complacency has no place here but you have now stress tested your crisis plans, pushed your business to the extent of its comfort zone and survived. That’s something to celebrate and also to learn from. Disaster and business interruption planning is important but probably overlooked unless you’re a giant corporate. That’s likely to change and our agility can only improve as a result.
- The importance of connection. Whether it’s working in a remote team or keeping your customers up to date with what you can and can’t do, we’ve all learned the lesson that communication matters. Your messaging could easily have been the difference between adapt or die for your business and there’s no reason to change your approach now. Keeping people informed, continuing to be front-of-mind with your audience is great for business at any time and hopefully this will be a new habit we intend to continue with.