Having worked as a coach with a number of startup businesses, it’s rewarding to see the owners take a leap of faith, manage the risk, and complete their brave endeavours.
Small businesses, entrepreneurs, and risk-takers are the backbone of our economy and communities. I am lucky enough to count myself as part of the tribe, having been there and done it a few times for my own companies, as well as coaching others.
The success and growth of new businesses really matters, not only for the personal and professional reasons of the business owners, but also for the wider economy through employment and financial support within communities.
It’s disheartening however to still see that it’s estimated up to 50% of businesses still fail within the first two years.
Failure is a subjective term and there is a great deal of variation between industries, not to mention wider events such as Covid-19 throwing things off. But the general point is clear, too many small businesses fail, and they need not in many cases.
From our experience, if a business is set up in the right way to start with, the odds improve immeasurably. So what is the right way to set up a new business?
Two key steps for setting up a successful business, from a startup coach
Business vision and plan
Imagine you were building a house.
You need to have a decent plan in place to start with, and that plan will tell you the most efficient and effective order to do things in. You would want to build the foundations first, then the walls, then the roof, and not in the opposite order.
The same is true for building a business.
Starting off with what you want the business (and you personally) to achieve will make everything clearer and smoother on your journey ahead. It’s much easier to build something when you and indeed others, understand what it’s supposed to look like.
To do that in a business sense, generally speaking, you’re setting out the service offer. This includes who your clients are going to be, what you can do to help them, and how you’re going to monetise that service.
Marketing plan & operations
Once you understand what you’re trying to deliver, you’re going to need to build the marketing systems to support it. Marketing will generate the demand (in the form of leads), which you can then convert to sales and orders.
Once you have some orders, you will also require a good operational structure for how you are going to provide your service to customers.
- Who is going to be involved
- What roles will they perform?
- What are the outcomes and deliverables for your clients?
Once you’ve built a positive customer experience, your reputation will help you generate secondary sales.
With good client retention on existing clients, and a successful mechanism for generating new business too, the next thing is to build and structure your team for the future.
The biggest mistake you can make is thinking that being good at a job (in someone else’s company) is the same as being a business owner
A lot of people who set up a new business were really good at their technical role, and therefore expect that running their own business can be done in a similar way to how they ran their job before.
In fact, there is a very large gap between being good at a job and being good at running a whole business.
It’s this gap that is the single largest pitfall and the reason why many businesses fail so early on. Whilst most people were trained for a role within a company, they were not trained for the running of a business as a whole.
For example, the operational expertise of plumbing isn’t the same as the expertise of marketing, sales, financial planning, strategy, team development, systemisation and a whole wide range of other business skills. These business skills are never taught when you are learning to be a plumber in someone else’s company. The same is true for other industry sectors (professional services, construction, fitness, manufacturing and so on).
The assumption of a job and a business skillset being the same that causes lots of business owners trouble. When this happens they rely on their operational expertise to overcome the gaps in knowledge for the other areas of business…and they are simply too different. It’s like thinking a knowledge of hunting would help you build a shelter; there wouldn’t be much overlap and they are very different skills.
The tendency of many startup business owners is to try and bypass this massive gap in knowledge through trial and error, or by employing the cheapest possible solution (e.g. read a book rather than get some proper training). That cost cutting, or shortcutting, of true expertise, is in fact hugely costly to businesses in the medium-term.
Three wise recommendations from a startup coach
- Stop and take a breath to consider and document what you want this business to be. This should involve looking at the marketplace, your own skills and expertise, and recognise what you do and what you don’t really know about running a company. What do you need to learn and develop? Importantly, include your own learning and development into your business plan. If you grow yourself, your business will follow.
- Be realistic about the financials of the business and how you are going to deliver it. Too often I see startup business owners feeling overconfident that it will be easy for them to win new business and convert enquiries because they are good at their technical role. Yet the world is littered with business failures, where people actually have a very high operational skill set, but no ability to communicate it effectively (through marketing), or to convert the customers (through sales) that they really need. Being great versus effectively persuading others that you are, are two different things entirely.
- Recognise that as a business owner you will have a wide range of responsibilities but only limited hours to get them done within. Establish what are you best at and where you are best to seek help from others. This is a really important early question to answer to avoid wasted effort and time.