There are some things I wish I had known when I started my business, as they would have made the path easier and helped when things became challenging. These are the top 5…
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Understand ‘WHY” (and write it down)
Knowing your ‘why’ helps you make decisions. I met many entrepreneurs who weren’t sure of their why and were lured by the bright lights of the ‘start -up’ scene. In their minds they’d be posting pictures of themselves at the ‘office’ (beach) whilst collaborating with others doing the same and making millions. This is rarely reality.
Work out what you want from a business before you do anything else and write it down. Trust me, in the darkest hours, it will remind you why you are doing what you are doing and urge you on.
When I started Recovery Partners, I wanted work to be financially and emotionally rewarding with people who inspired and were a joy to be around.
I wanted Recovery Partners to grow into a larger enterprise. I did not want to be a sole trader or a 2-3 man show. I loved working in a large company and wanted to cherry pick the things I liked about the big company and remove the intolerable bureaucracy.
This vision stands 14 years on.
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Have a strategy when you start
I still have the first business plan I wrote in 2003 before I started my business in 2004. I’m a planner and there was no way I was leaving the security of a well-paying, secure role that I really enjoyed without a fair dose of crystal balling.
Strategy means different things to different people but for me it is the who, what and how.
WHO – there are 2 parts – internal and external. You need to know who you are selling to. This is your target market. You need to know how big your market is, how attractive it is, what the barriers to entry are as well as the target demographics. You also want to know who your competitors are without becoming obsessed with them. Don’t waste hours trawling through their website and social media platforms. It’s best to have a simple spreadsheet of who they are, what they do, where they do it and how much they charge. That will suffice.
Internally you need to know who has the skills and competence to deliver the product and service. When I started out, it was just me, so I focused on delivering those services that would we see me earn the highest profit. I also kept my eye on where I wanted to be and how I was going to grow.
WHAT are you delivering. What is unique about your offer? Clearly articulating your offering is crucial. Its also beneficial to work out what you aren’t offering. For example, we offer a range of psychological services, but we don’t offer 24/7 support for employee assistance counselling. Why? Because it wouldn’t be commercially viable for us. We can’t ‘win’ in that space now. It may change in the future, but we aren’t going to do it now.
HOW is how you are going to win. How are you going to generate revenue? How are you going to grow? Are you going to go it alone or are you going to consider a joint venture or acquisition? Will you have a premium price or be price competitive?
How is this going to be achieved? What’s the timeline?
A good strategy helps you make good, consistent decisions. It is most useful when it helps you say no. An example would be the luxury brand Tiffany and Co. You wont see them in Target or offering huge discounts. That isn’t their space. You are however likely to receive a Michael Hill brochure in the mail advertising huge discounts. Neither approach is wrong. The approach of each is congruent with their strategy.
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The ATO is not a line of credit
Oh man, this was a hard lesson to learn. As your business grows, so does your tax obligations. The money owed to the tax department can grow and can grow quite quickly. To make things worse, your clients can be slow to pay you. In some cases, you are at the mercy of large corporate account departments and payments can be 60-90 days late.
It’s very tempting to ask the ATO for a payment arrangement. In fact it’s too easy in my opinion. We found ourselves using the ATO as a line of credit with a high interest rate and the debt was suddenly called in. The amount we owed was significant and we had to draw down on our mortgage to meet the payments. Payment arrangements are handy if they are used as short term options and well controlled. Ours got way out of hand and it hurt us badly.
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Get advisors in every step of the way
My business is very different today to what it was 15 years ago. The advice we needed initially was about the most appropriate structure, contracts and business development. Today we need different types of advice given our business is in the mature stage. There are people out there who have done what you want to do. Find them and pay for their advice. It is investment in your business and will allow you to do what you do best.
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Be prepared to work really, really, really hard.
I don’t know anyone, and I know lots of entrepreneurs, that opened their doors and were an immediate success and enjoyed an easy ride. Every person I know, worked their butts off. It means working all hours, having no cash, desperately needing cash, doubting yourself constantly, being responsible for everything (including IT – which I hated), having difficulty getting finance, no paid holidays (I haven’t had a work free break since 2004). It’s also really lonely, especially if you’ve come from an environment with a high social aspect.
The hard work is relentless but I wouldn’t change a thing. I’ve loved everything about the ride.
