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Looking to set up in business? Want to increase the odds of success?

11 November 2020
Mark Friend
Digital & Tech, Building & Construction, Ambitious Startups, Accounting & Compliance, Building a Business
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Have you recently or are you now looking to set up in business?

Well if you are then fantastic.

Get it right and this could be the best decision you ever made.

Over the years I have met with hundreds of business owners, most of whom were excited and enthusiastic when they started.

The vast majority are highly skilled at what they do whether it is making cakes, manufacturing machine parts, servicing boilers, human resources and so on the new business owner is usually highly proficient at their job.

Most will also be highly confident because they earned their previous bosses lots of money so it can’t be that difficult to do the same for yourself, can it?

If you haven’t read ‘The E-Myth Revisited’ by Michael Gerber then I’d recommend you give it a try. It’s one of the best books any budding entrepreneur could read to get a better understanding of what going into business is really about.

The problem is that the reality of being in business is totally different from the dream. In practice only 50% to 60% of new businesses will make it to their 5th birthday. In fact in year one 20% of businesses will fail. Worse still, if you’re in construction your odds of surviving to your 5th birthday is no more than 1 in 3.

So why do so many businesses fail?

The lack of cash will probably be the final nail in the coffin for most businesses, but the reality is that the problems are far deeper.

In fact the problems started on day 1 with the assumption that an individual who understands the technical work of a business can successfully run a business that does the technical work.

For most business owners scalability is key, unless you are looking for a lifestyle business and just need enough money to get by.

If you’re fortunate you may have a business which will pay you huge sums of money for your expertise or you’re a singer, IT consultant or something similar where you can design or produce something which can be replicated and sold in the thousands. However for most small business owners this will not be the case. Most businesses sell either products or services which have modest margins or value and which will require a significant volume of transactions to make money.

The big problem- time!

 This in turn leads to the big problem that your time is limited and running a business isn’t just about producing goods or services but also includes time on book-keeping, marketing, selling, management of people, raising finance, dealing with customer queries and complaints, administration and so on.

Time is one of the largest problems for most business owners. Time is finite. There are only 24 hours in a day and when you are in business the demands for your time are never ending.

Most business owners simply go into business and then find that over a period of time they get busier and busier until they are forced to take on somebody or turn the work away. If they take on someone then initially all seems well but then the problems arise. Mistakes happen, customers become dissatisfied, your time is spent not just in production but sorting out the problems your new employee has created. The freedoms you expected to come from a being a business owner are gone and you now feel trapped with the worst boss in the world – yourself!

So what can you do?

The strategic plan

Firstly be clear about why you have gone into business. What is it you really want to achieve both financially and physically – quantify the amount you want to earn and the hours you want to work.

Secondly look forward to say five years’ time and picture what your business needs to look like to deliver what you want, then consider whether it can actually deliver on what you want. If it can’t, you need to stop and rethink your business. If it can, then think about how big your business needs to be and how it should look. Consider the following:

  • What will the turnover need to be?
  • How many team members will you need to have?
  • Where will your business establishments ideally be?
  • How many establishments will you require?

This is also the opportunity to think big. As the saying goes “shoot for the moon and if you miss you will still be among the stars”. The size of business you create will be dependent on your vision. If you limit your vision you will limit the size of your ultimate business.

Consider what your organisation needs to look like. Think about whether you’ll need a marketing manager, a director of sales, an internal book-keeper, support staff etc… Creating an organisational chart helps to further visualize the business and to identify your future role in the business and the key personnel you will need.

The next step is to start building your business prototype by creating and documenting the systems to enable the business to grow effectively without you. The systems to document will include how you will interact with your team and how your team will produce the goods and services you need to sell and to develop a sales and marketing strategy.

All of this needs to be encapsulated into a strategic plan. By breaking the creation of your ideal business down into steps you make what at first sight may seem an incredibly daunting task achievable. Try breaking your plan down into a number of projects with milestones for their individual completion.

From the plan you need to ensure that there are no more than 1 to 3 projects to work on at any one time to move your business forwards. Whether it is to write up a system, employ a key member of the team, find new premises or design a marketing plan you need to ensure you find the time to work on projects designed to work on your business rather than in your business.

Sounds daunting? Yes. But is it effective? Definitely yes. Building a great business is simple but it isn’t easy. Only by finding the time to work on your business rather than in your business will you create success.

If you already have a business and are floundering then it is never too late to take a step back and create the business you truly want.

So what do you do next?

The solution

The important thing is to take the time to plan your ideal business or restructure your existing business. If you need help then find a consultant to work with you who has been there and done it. Someone who has built their own successful business and truly understands the daily pressures an entrepreneur will go through to build a business.

My accountancy and tax practice was established way back in 1992 from the back bedroom of my home. Over the years we have successfully grown the business to a size where we currently employ over 25 team members within my own business premises. We are still growing.  I also have other business interests and I have helped hundreds of business owners to build their own successful businesses. We work with a number of businesses assisting them with basic technical advice through to helping to create their strategic plans. We also work with a select few businesses to help make their dreams a reality by providing in depth support through regular meetings designed to help keep the business owner accountable and on track to succeed with their plans.

If you need help with your startup or to grow your business then please give me a call.

If you want to find out more about why the above will increase your chances of success then why not read Michael Gerber’s book the “E-myth Revisited”.

We have also created a New Business Start Up Kit. You can download this free from our website and it details many of the technical issues you will experience when setting up in business.

The content in this blog is correct as at 11/11/2020. See terms and conditions.

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