Sir John Harvey-Jones: ‘Need for start-ups never higher’
Sir John Harvey-Jones explains the importance of new firms and offers some advice
The need for new small businesses has never been higher, and they have every advantage over the large corporates. By operating in niche markets, often with little or no competition, they do not have to play ‘catch up’ with foreign firms and are free to focus on a changing business climate. They see business holistically.This means they can react immediately to new competitors and can change their processes overnight. Another advantage over large firms is that they know their customers and their employees in detail, and are in a better position to move quickly and decisively. There are also two key problems that need to be addressed before starting your own business. Almost by definition, new startups are run by people who have never managed a business before. Life is full of nasty surprises, and in business you can’t afford surprises – when starting out you need to be prepared for every eventuality. Some people start by selling their skills – becoming freelancers – rather than by seeing a gap in the market which they can address by applying their skills, and filling that gap with a new product or service. You need to go for a niche that has been overlooked by other suppliers. If you have a unique product, for example, you may only have a dozen sales a year. It’s not worth their development time and money. The advantage for you as a small businessperson is that you are close to your customers and can continually develop your product, based on feedback from the real world. The market for your product will grow as the product improves and your customers testify to your commitment and specialism.
It is this continual development that will most effectively protect your idea – or Intellectual Property. A latecomer who sets up as a competitor will only be able to copy what is already in the market. Whereas you will have been working on development of the next revision of your product, which will obsolesce the competition. You will be the market leader. Startup companies tend to use other startups as suppliers – there is an understanding and shared experience. It is in both their interests that they are successful and this helps expand the ‘startup economy’. New businesses need a network of advisers and specialists in key areas. The Business Startup exhibition for example, of which I am Patron, is one such place to source these contacts and to find the products and services you need when starting a business. The show features expert speakers and exhibitors from almost every field of commerce who can advise you how to achieve return on your investment and grow your business. It is also the premiere event in the UK for networking and meeting new customers and suppliers face-to-face. Considering the importance of finance, it is essential that you are mean when it comes to spending your money. Avoid employing people full-time in the early days and watch your overheads – don’t rent premises, work from your spare room or garage. The golden rule is ‘don’t spend it until you’ve got it’. Starting up a new business will also affect your family and you must explain its implications to your partner and share your ambitions – if you do not it is a recipe for divorce. You will never work so hard in your life – your business will take priority over everything, so you must enjoy what you are doing. The good news is that there are few satisfactions in life better than running a successful business.
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