Today, we present a guest post by Adina Luca, director of Profitable Insights. Adina is a seasoned businesswoman, a numbers ninja who helps business owners make sound financial decisions. These are the top ten tips she has for budding entrepreneurs.
What I wish I knew when I started my business
I am assuming you are considering starting a business on shoestrings providing a service rather than selling a product. As in you are going to help other businesses or people with a value-added service, such as consulting or marketing, rather than reselling dresses or building a bakery. Well, you’d better be, because that is what I am talking about below when I mean ‘business’. Also, if you are considering the type of tech-based investment-hungry business, don’t listen to me. There are plenty of more informed people out there.
I have started three service businesses, and I learned my lessons the hard way with the first one, made other mistakes the second time, and I like to believe I got it right the third time. I will be attempting to synthesise the pits I fell into and some ways to avoid them in ten points. I am hoping they will be useful for you when taking the very first steps to your dream business.
1. Start when it’s already working
Incorporate your business after someone has already paid for what you have to offer. In other words, if you already have clients, go for it. If one single person paid you once, someone else will again.
I bet you already know the corresponding don’t – don’t set up ‘shop’ and look for clients, whatever form that may be (usually a very fancy website that competes against all other fancy websites out there). For heaven’s sake, don’t pay Google for advertising – at the beginning, you are smaller than the proverbial needle in the haystack.
2. Don’t waste time with elaborate business identity and marketing brochures
Find a simple name for your business and create a logo. Don’t overthink the branding – for the first three years of your business, people will buy you, not your company. Literally, no one will care about your choice of colours and fonts on your slides.
Most of my clients have never seen my website and don’t realise I have an inappropriate drawing of a boat for a financial analysis service logo. You will change them anyway once you figure out what you actually do and for whom. I have changed the name of the business, and my clients did not flinch. (My boat is there to stay though …)
3. Say yes to everything
Say yes to all the opportunities to make money at the beginning. This is not the time to be picky because you don’t have a market yet and you don’t really know what you are selling. You may have decided you are selling X, but it will take years for you (sometimes up to the first five years) to understand that your clients see your service as Y because that was what met their needs.
4. Always ask a client
If you are unsure how to package or price your service, ask a client who has already experienced it. That is the most informed advice you can get. It goes without saying: you have to create the type of relationship with your first clients that would allow you to ask for their advice. Your relationship with your first clients will make or break your business.
5. Learn Excel
Learn how to use Excel to put your numbers down from the very beginning in a coherent form. That ability alone may make the difference between succeeding or failing. Don’t rely on your accountant to help you with your business decision. A lot of people fail out of pure ignorance.
6. Do your cashflow forecast first
Put those Excel skills to use to do a cash flow forecast at the very beginning and start by putting down what amount you need to live on monthly as the first line of cost. If you cannot pay yourself when you embark on this adventure, your enthusiasm will sour very quickly.
And we need you to stay very enthusiastic for a very long time. Contrary to popular belief, businesses don’t fail in the first year of life, but in the second or the third, when the entrepreneurs run out of steam with low financial gratification.
7. Ask your clients for referrals
Grow your business by asking your clients for referrals. Again, you have to create that type of relationship with your first clients that would allow you to ask for that. If it comes from them naturally, that is the best feedback that you are doing a good job.
Don’t expect new clients by cold calling – you are an unknown entity. Stay away from the numerous networking opportunities available that will get you chatting with people like yourself, who are also looking for clients. Those will get you nowhere and will be a massive waste of time.
Don’t waste your selling time; it is precious.
8. Your price will not be the problem
Don’t worry about your price being too high, and that is the reason why you are not getting clients. You will most certainly undersell your services initially as you will be too grateful to be working anyway that you would do it for free if asked. There will be a time for recalculating your cost and reset your price later when reality hits.
9. Do a business plan for practice
There are plenty of free business plans available online – Google is your friend here. They will ask you all the relevant questions to get you thinking about what you are doing. But don’t spend more than one Sunday afternoon doing that, as the chances are that whatever you are planning at the beginning will have no relevance once the real work with clients starts.
10. Expect mayhem
You may, of course, plan to spend a certain amount of time a day in your business. However, the business will take all the time you have and the time you don’t have. It’s like a small baby that will successfully compete against your real babies and your entire family until it grows up to be independent. And certain businesses never become independent, but that is another topic of scaling up.
About the author
Adina is a director of Profitable Insights. She helps SMEs in professional services improve their finance for profitability. She is a seasoned entrepreneur and draws on her 18 years of experience in consulting using a rare combination of skills: KPIs, financial modelling, HR systems, project management, research and cross-cultural expertise. Outside work, Adina is working on her second novel and is currently training for a marathon.