5 things every first-time entrepreneur should know
From hiring and firing to managing your time effectively – entrepreneurs reveal how to navigate the challenges and pitfalls of setting up a business
The burst of excitement experienced when you come up with a business idea can quickly diminish as you become overwhelmed by the task of simply knowing where and how to start.
Enthusiasm and passion alone won’t be enough to see you through the stormy waters of your business’ early days.
We asked some entrepreneurs for the dos and don’ts of setting up and managing a successful business.
Read on for advice on how to manage your time, cashflow and recruiting talent…
Set regular targets
Setting regular and constantly refined targets will help you stay focused and manage your business growth effectively. This is especially important in the early days of setting up a business when there are so many disparate elements that need attending to. A checklist with major items marked both urgent and important is essential.
According to James Hind, founder of online car dealership marketplace carwow “regular analysis of how your business is performing and setting regular targets and milestones to hit” will help you stay focused. He also warns that by “not tracking your company’s growth, you’re failing to acknowledge when successes, however small, are happening; and this can result in a lack of focus and motivation”.
“Work out what your goals are”, warns managing director of marketing consultancy Glass Halo Trevor Lambert. “Most people don’t. Remember your focus should be on doing the stuff that brings in money rather than just doing stuff to be busy.”
Don’t waste time and money on things you don’t need
You may be tempted to part with cash for things you think will make you look or feel like a legitimate business, but a fancy office and the best equipment does not necessarily make the best business – you need to concentrate on doing the most important things to the best of your abilities.
Paul Jozefak, managing director of innovation laboratory Liquid Labs, says that you should not “focus on having the best office or the coolest furniture”, and adds: “Don’t become conference-obsessed and spend all your time networking”.
“As soon as you set up you’ll be a sitting target for a bunch of people trying to sell you ‘must-have’ services,” warns Lambert. “Don’t be panicked into buying anything you don’t need. Sleep on every major decision.”
He adds that you should ignore blogs with titles like ‘17 things you must do before breakfast to avoid bankruptcy’. “The simple fact is if you get the basics right you’ll still be ahead of 80% of your competitors. Worry about the finer detail later.”
Become hypercritical about your time
You should expect a business to be a full time commitment not a hobby you can dip in and out of. Fledgling businesses need constant care and attention in the unsteady early years before they can fly on their own.
“Become hypercritical about your time,” explains Liquid Labs’ Jozefak, “Start-ups tend to be extremely chaotic […] Use calendars and set up timeslots for almost everything you do. Set time aside to do emails and once that time runs out, move on to the next thing. Be diligent about sticking to your schedules and adapt as you go and learn.”
Likewise, he adds: “Don’t worry much about your spare time. Since you should be completely focused on your business, you have no need to worry about what you do outside the office.”
Glass Halo’s Trevor Lambert says you should “establish a routine” to ensure you stay on track: “I always go to the gym in the morning. The drive to and from my nearest David Lloyd is my ‘commute’ and gets me into work mode as I arrive back at my desk.”
Keep the cash flowing
Cashflow is the lifeblood of every business. Failure to maintain a consistent revenue stream could inhibit your business’ growth and eventually lead to failure.
“If it doesn’t drive cashflow, don’t do it is a good rule to live by,” says Jozefak: “Cash is everything in start-ups and revenues are the best type of cash. Understand exactly what is coming in and what is going out. Measure what your investments into the business are generating in terms of cashflow.
Lambert says you shouldn’t “be afraid to chase for payment if you’ve done the work… If possible ask for payment up front and if not keep payment terms short with new customers”.
Only recruit the best
The best doesn’t just mean the most talented – you need someone who gels with you and is ideologically suited to your business. You’re going to be spending a lot of time with your any staff you hire and you need to know you can communicate effectively when you’ve got a problem.
“Only allow the best into the company and remove those who don’t perform immediately,” advises Jozefak: “You can never fire bad employees too early – learn to deal with it and be just as good at hiring as you are at letting people go”.
Lambert advises you to hire people that can do the things you can’t to ensure you can stay focused on the business: “Get a good accountant. Get a web presence – as basic as you like. When you’re ready get some kind of marketing support or advice. Outsource those things that distract you from what you are best at as soon as is practicable.”