Lessons Learnt over 40 Years
Starting a business is both exciting and daunting and it is essential that you make as many of your initial mistakes on paper; rather than when the business is live.
If you are working for someone else and considering starting your own business I usually suggest keeping your day job for as long as possible before making the final leap. Cash flow is the most important aspect of any business, other than making a profit, and is often ignored by people starting out. If you have a mortgage or rent to pay you need regular income. Giving up your day job too early can severely affect this and may put your home and family at risk. There is nothing wrong with working for an employer while building your business, as long as you continue to give good service and are not in a conflicting area.
I always suggest to others to build their business until it has at least five streams of income, which in total should exceed the income from your day job, before jumping ship and going it alone. I say this for the reason that should any single or even two sources dry up then the remainder should make sure you have time to replace the ones lost without terminally affecting the business. Cash flow is king – never forget that.
My initial advice is to write yourself a letter explaining to why you want to enter business in the first place and what you want to get out of it. I find this focuses the mind and even now, after over forty years in business, it is still a practice I follow. You need to be clear about what you want and how you intend to get there. Once you have done that you are ready to continue your self-addressed letter by adding what it is you intend to do and what the business you are about to enter is all about. By doing this you will find things jump out at you that you hadn’t previously considered.
Ask yourself some of the following questions:
Where will I work from? Home/Car/Serviced office.
Will it be quiet enough to work here? Kids!
Can people park when they come to see me?
Will I need a phone or will my mobile suffice?
These are a few elementary questions, but are nonetheless important.
Working from home is something I advocate in the early stages and with mobile communications it is now possible to work from home for a very long time, and in some instances forever.
Don’t be rushed to take on overheads, especially not fixed overheads such as offices/cars and suchlike. It is easy to convince yourself that you must have an office where people can come and see you but in reality a hotel or café will suffice for all but the most formal meeting. Work from home but make sure you have a dedicated space such as a spare bedroom or shed/garage where no one else moves your papers and the kids are banned unless invited in.
My own kids always knew and now even my grandson knows that when I’m in my study I should be left alone unless I invite them in, door knocking is permitted but not too often! It is essential to be disciplined and be able to focus and concentrate on what you’re doing without continual interruptions. Explain to your family if you have one living with you that your study/home office is the engine room of the household’s economy and without it everyone will suffer at Christmas!
In this regard, working from home is preferred and working from a borrowed space at low or no cost without any notice period is next best. If you do decide to work from a serviced office, remember that there will be a notice period, often a month, but sometimes three so be careful to read the small print and ask questions. Try to get them to agree to a week, it’s not as unusual as you think.
Cars are another thing that I advise against investing in. If you already own one, that’s fine, but it is unnecessary to take out additional finance or leasing. Stay with whatever you have until you can really afford to change it; most business associates or customers won’t even notice and if they do tell them you would rather put your money into expanding your business than expanding a car dealers profit! In many big cities like London, Manchester, and Birmingham most people you meet never even see that gleaming new BMW or designer truck you have just tied around your neck for three years anyway. Put your money into advertising, PR or any other item that produces business; cars and luxury items can come later.
Whatever you do good luck and avoid signing any contract longer than three months until you’re established.
Original article for the Urban Times May 2013.