10 things to keep in mind when starting a business

I came across this very interesting article by Duncan Cheatle, founder of business advisory body, Prelude2Business on the ten things to keep in mind when starting a business. Duncan is known as the “business doctor” in Great Britain. I thought I might share it with you and see if you agree.

Do it for passion not money. Things don't happen overnight, so do something you feel passionate about. Do not start something with an exit and a fortune in mind. You'll probably fail. This was commonplace during the dot-com era where people came up with ludicrous business ideas to be delivered by inexperienced teams.

Do something you know about. Philip Green, the retail entrepreneur, gave this advice. He and his family only invest in retail businesses, because that's what they understand. If you go into something you know little or nothing about, you have made things much harder from the start.

Don't give up too early. Successful businesses are usually very different from those described in their original business plan. Try something and if it isn't working, try it a different way. The key is not to give up too early. Persistence is a vital quality of any entrepreneur.

Have a mentor. The hard work is up to you and your team. Having a mentor can be a huge support and can help you see the wood from the trees. First-time entrepreneurs often fail because they don't have a more experienced mentor from whom they can learn and turn to for ad hoc advice. Everyone needs a sounding board.

Funding. Businesses often spend too much time and money chasing the wrong form of funding from the wrong people with inappropriate terms and then raise too little. Sales always take longer to close and working capital requirements can fluctuate far more than you might expect, so don't go overboard but do get enough cash. Otherwise you'll spend all your time raising money and not growing the business, and no-one will thank you for that.

Cash management. Cash is king. Manage it well. Ensure you have appropriate forecasts and monitor against expectations. You will not need a full-time finance director but do not think a bookkeeper will suffice. You need both skills from the start.

Build sales before anything else. A lot of people spend too much time getting things such as a nice design and the website sorted, instead of getting out there and closing a sale. You can always adapt designs but you need a reference client to build sales from - even if you initially offer them a reduced rate, a free product or service. Get out there and sell from day one.

Don't try to rush. There are very few propositions that mean you must get ahead of the competition. Winning clients takes time - sell, tweak your offering, then sell again. Nothing can replace experience and you don't want to alienate potential clients by getting it wrong.

Be wary of bad advice or suppliers. When cash is tight, you don't want to get locked in with the wrong suppliers or taking bad advice. Asking a friend can be fatal at times. Do your homework before you pay for advice, ask for references from their previous clients, for example. Look for pointers from someone who's been involved in your kind of business before.

Keep things at a variable cost. In the early stages, particularly when you are a small business, you don't want to get locked into anything you can't get out of easily. Don't be afraid to use a probationary period for staff. Be wary of recruitment fees but similarly know when to pay a bit more for quality staff. Your model will change so the more flexibility you build in, the more you will be able to change and adapt. Fixed costs may bring higher margins in the long term, so it's all about knowing when to convert to a fixed model.

What do you think? Do you agree or not? I wanted to ask entrepreneurs out there what are their 10 things to keep in mind when starting a business? I would like to congratulate the president of the Philippine Retailers Association Cebu Chapter Melanie Ng for opening a new store at the Ayala Center Cebu Mall. Gems and Designs is a bigger store, a sign of confidence in the improving economy. Congratulations Melanie and thank you for continuing to show us the way to go.

Let’s follow the examples of these ordinary individuals as they strive to make a difference. Each week, lets all get together and share knowledge, stories, experiences, information, all for the sole purpose of getting One Step Up.

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