You’ve started a business, probably one that’s 6 months old. You’ve achieved the significant part of your dreams but what to do when your business becomes a stubborn child?
Whatever you do, don’t look it in the eyes or try to confront directly. We’ve got ways to overcome some common challenges associated with start-ups to help.
This is a broad category that I will break down into capital, cash flow and frugality.
When it comes to capital, the source that you pick matters. Going along with family and friends will definitely be easier but may not challenge you to see little gaps in your business plan. Unless of course, your family or friends are well versed with the business world. Considering an investor or venture capitalist that funds start-ups would be a good way to go about it. Investors have prerequisites and question aspects of the business plan prior to the receipt of the capital. This in turn builds a certain level of confidence as you start out.
Savings are another option that can keep you out of debt initially. But whatever you do, ensure you have passed the plan through mentors in business who can analyze your business plan and anticipate any red flags. So will it be Aunt Kabuga, an independent investor or savings? Your pick.
In terms of cash flow, tracking revenue versus expenses is paramount. Even without extreme accounting expertise, it is important to track your books of account…what you pay suppliers, employees, your sales team and what you are raking in return as revenue and eventually attain as profit.
Frugality as an overall pointer of finances cannot be overemphasized. When starting out, you are essentially bootstrapping to keep expenses on the low. Find affordable suppliers, use wise but pocket-friendly sales tactics, and cut down on luxuries.
I find that this is one of the most underrated business issues. We are living in a world of massive data yet, many businesses fail to do their homework well before starting out. You may have the big business idea figured but you must be willing to anticipate and forecast market trends. Or else, you could end up building the business in your head than at the actual marketplace.
Research involves a variety of mechanics and even better, a combination of these mechanics. You will need some hours on the computer and in some cases, may have to buy data to check on competitor information. The target market will be your next best source of information. You need to sell something that people need. Sometimes, people don’t know what they need till you sell it to them, so you could check on that too. Research also involves anticipating various changes that could affect the business and mitigating against such.
Do you build a fancy website, set up a cool office hub or start out by working from home? A number of businesses are encumbered by unnecessary expenses as they set up shop because they lose focus on priorities.
A detailed business plan will map out areas that need fundamental attention and those that can be invested in later. Otherwise, you will keep having revenue that you can’t amounts to nothing. It also helps to frequently ask the question, “If I were to eliminate one thing in my business right now, what would it be?”
Prioritization also depends on your principal motive of starting the business. Were you genuinely seeking to make money by serving a need in society or were you escaping the 8 to 5 employment vortex? The former is a lot more solid and while the latter is valid too, you might be surprised that as you start out your business, you need an 8 to 8.
The way a business prices its commodities when starting out is critical. Many proprietors price too low initially and do so emotionally. After the low penetration price, the business begins to crawl weakly and are forced to effect a surge which consumers may not have anticipated. It then becomes harder to gain loyalty. Pricing rationally and suffering from an initial low market share would have been much easier. As Maya Angelou said, “Ask for what you want and be prepared to get it.”
Besides, only you can relate to the hours you put into the business. Therefore, charge accordingly, not desperately or emotionally.
The one-man guitar show
Are you taking on too many roles that you need help? This can take on a heavy toll on your business. While it’s alright that initially you are the strategist, salesman, accountant and admin, consider getting some professional help once in a while. When you can afford some more, hire great talent to sort you out. The two important aspects you really need to consider, especially if they are not your core specialization, are legal and accounting expertise.
Too much time in business could make some relations suffer as you play a one-man guitar show. You also need to maintain your support network of family and friends.
We wish you success in all your businesses as you work through the challenges and would love to get your thoughts and contribution on the topic!