Top 10 Tips for Start-up Entrepreneurs
There are a lot of issues that you need to consider when starting a business. Here are 10 of the most important ones.
1. Keep Your Cash Burn to a Minimum
You can’t operate like a typical established business. If there is no need for office space then don’t rent it. Set up in your garage or living room. Use Skype or another VOIP provider for your phone service. Use as much free software as you can such as OpenOffice, Google Docs etc. Every cost you can eliminate or reduce increases your chances of success. Look at it like this. Cash is the oxygen for your business. When there is no cash your business will die. However, if you reduce the amount of cash needed, your business can keep living for longer.
This gives you scope for failure. You will make mistakes, so it’s essential that your business keeps going long enough to learn from them. In other words, by keeping your cash burn to a minimum you have more rolls of the dice.
2. Get Another Job
I know that you want to start a business but hear me out. You need income to survive. You may have a redundancy package and some savings but you shouldn’t eat into these too much right now. A good idea is to get another job because it will provide you and your family with income until your business gets off the ground.
You are probably concerned that you won’t have enough time to work on your business. Believe me; you will have more than enough time to get your business off the ground. Here are some of the benefits. Because your time is limited, you will become more productive in your business time. You will also not make any rash decisions for your business due to personal financial pressure.
3. Leverage the Internet
It’s 2009 and traditional marketing methods are losing their effectiveness. The Internet offers the best value for you to promote your business. Do not fall into the trap of traditional radio, print or TV advertising. It doesn’t work very well anymore. If you are going to spend money on advertising, limit it to search engine pay per click.Remember, the most important part of Internet marketing is testing and measuring constantly. You will make incremental improvements that overtime will lead to healthy results for your business. Use sites like YouTube and Squidoo to improve awareness of both you and your business. Use social networking to make contacts and participate in discussions relevant to your business. You must also start a Blog that is interesting to your target market. The Internet is the great equalizer for start ups and you can use it to your advantage.
4. Don’t jump in at The Deep End
Here is a general rule of thumb. Before you eat the cake take a small nibble first and see if the cake is nice. By this, I mean you should try and make some sales before you formally set up your business. If you get sales or traction then engage in the formal business set up process. If you don’t, then try something else. I call this organic market research.
5. Make Your Business Plan Simple and Straightforward
If your business plan can be understood by a 5 year old then it is good to show investors. Your business plan should be super user friendly. An ideal business plan would have a one page cover letter and a PowerPoint slide deck of 10 – 15 slides with notes if needed. This is much better than an 80 page thesis that induces a headache for anyone who reads it. By presenting your plan in a direct straightforward way you are showing respect for those who read it. Their time is valuable, so don’t waste it.
You time is also valuable. You don’t spend as much time formatting 10-15 PowerPoint slides as you would proofing and formatting 80 pages of text. It’s a win win situation.
6. Sign a Shareholders’ / Stockholders’ Agreement
This is massively important. Don’t say I didn’t warn you!
7. You Must Self Fund First Before Investors Will Touch You
Why would anyone invest their money in a venture if the founder(s) have not put some of their or their family’s savings in the business? Besides, particularly in the economic situation we find ourselves in today, investors want to see traction. You are going to have to put some of your money and sweat equity on the line and show positive results before you will get any external investment.
8. It’s Vegas Baby!
A lot of the decisions you will make as a business owner can be best described as educated guesses. Some will work and some won’t. Business management can be boiled down to doing more of what works and doing less of what doesn’t work.
It’s of crucial importance that you monitor each decision you make in order to determine it’s effectiveness.
9. Shop Around and Negotiate Down Professional Fees
Given the current recession you should definitely try and squeeze the best value for accounting and legal advice. Many accounting and legal practices are finding the recession tough just like everyone else so make sure you get the best possible price for their services.
10. Realize That You Probably Won’t be an Overnight Success
Overnight successes are rare so the chances of your business becoming one are slim at best. However, if you aim at making incremental improvements to what you do, and never give up, you are likely to eventually succeed. Hard work is the key.
