As a business owner and a consultant to business I have had the opportunity to observe, learn and sometimes find out the hard way the challenges of starting up a new business. Every one of these start up businesses have some common threads, or learning’s as I like to call them, and Id like to share them with you.
- Expect a lot of energy in the start up phase, you will be bouncing around with tons of new ideas and want to talk to everyone and anyone about them. Youll mostly feel positive about the business idea and then as you start to dig a little deeper the reality of turning an idea into action starts to bite. At this stage many people suddenly get cold feet and walk away from the idea. Many entrepreneurs have felt the fear and as some author may have said done it anyway. I would encourage you to seek professional advice if you feel strongly about the idea and get the feedback you need to make an informed decision. This could be the best investment you make.
- If you’re already in a steady job and not known for taking risks, other people including family and friends may think you’re bonkers. Why risk what you already have, possibly even lose the house should the business not work out. There are ways and means to test your idea out before committing either large sums of money or walking away from your job. In my own experience Ive reduced the hours I was working to allow me to focus on developing the business to where I could demonstrate proof of concept. This can involve meeting with Retailers who would the product I had in mind to customers. I received a lot of early rejection and after a period of 12 months of trial and error I had my first sale. If I had left my job straight away I would have rapidly dwindled my savings and put additional pressure on myself and possibly rushed the early stage development.
- Roadblocks will tend to pop up everywhere as you do your research. This can test even the most experienced of entrepreneurs. It pays to see each road block as a challenge for you to solve rather than get disheartened and put off immediately. Perseverance along with a dash of optimism is an important quality in any business owner so if you haven’t got it perhaps a safe 9 to 5 job is more suitable for you. I had this great idea for an online business only to discover the cost of developing it was far beyond what I had envisaged. Crestfallen I took a couple days to mull over whether I wanted to sell the house to pursue the idea. Finally I started to think of alternative options, and discovered that actually I was thinking too narrowly and managed to source the team I needed offshore for literally a fraction of the price of using New Zealand developers. It has created new opportunities for me and enabled me to stick to my original budget.
- Capital or cash to support your idea is crucial and in my experience it will cost more than you envisage. Suppliers are always eager to drain your purse so treat every dollar like its your last. I’ve been suckered more times than I would like to admit by suppliers who literally will befriend you and then burn through your budget As a general rule of thumb, if you have a higher risk start up (a brand new never tried before for example) assume that it’ll cost you 3 times as much and take 3 times as long to execute. Banks aren’t usually a great source of funding unless you have plenty of mortgage equity AND a spouse or partner with a steady job to support the loan.
- When is an idea a great idea? There is no easy answer for that until you’ve been through the process of developing the business and tested your concept with your end customer. Even then you will still be in a process of solving fresh problems and challenges as you refine your model to make it commercially feasible. What starts off great on paper will sometimes prove fruitless, but then on occasion, through the process of business development you’ll come across a new twist on your idea that truly could be great. Having that golden point of difference that every business incubator will harp on about is important, as is your energy, support network, capital and general common sense to help you prevail and ultimately succeed. Good luck in your venture!