career and business - start up in business
Start up in business
According to recent research, mums are now leading the way in setting up home-based businesses(1). And ‘mumpreneurs’, as the media tends to call us, currently contribute around £4.4 billion to the British economy each year(2). In a Netmums survey carried out in 2005, 68% of the mums questioned felt that being self-employed was the ideal choice for combining work and home life, yet only 8% of them actually were(3). You won’t be surprised to hear, either, that 54% of women start a business so they can choose what hours they work, compared to only 35% of men(4), whilst 21% of women state family commitments as a reason for becoming self-employed compared to only 2% of men(5).
References
- A study by the London School of Economics and Yellow Pages, quoted in ‘The Daily Telegraph’, 24/01/07
- 'Mum magnates' 2008 research by Yell.com, published on www.bizmums.co.uk
- Netmums survey of 4,000 mums carried out in May 2005
- Women and Men Business Owners in the United Kingdom, quoted by Prowess
- A Strategic Framework for Women’s Enterprise, Small Business Service, 2003, quoted by Prowess
So where do you start if you want to set up your own business? Here are our top ten tips ...
- Be clear on whether it’s the right route for you
- Make sure you’ve got support
- Have a really strong and sustainable idea
- Know your market (better than your competitors do!)
- Take advice - look, listen and learn
- Write a brilliant business plan
- Get enough funding
- Get a great mentor
- Build relationships wherever you go
- Be patient and persevere
1. Be clear on whether it’s the right route for you
When you’re looking for a way to combine work and motherhood, it’s tempting to think that becoming self-employed will solve everything. You can work flexible hours, maybe even from home, bring in some money, use your brain, meet new people ... and still be there to greet your children with freshly-baked cake when they get in from school! Hmmm, whilst that may be a reality for some people, more often than not setting up in business is a hard slog. It can take over your life (and your mind), cause you sleepless nights and cost you a fortune, with no guarantee of getting any of it back! So if you still think it might be the solution for you, you need to be realistic about it. Working for yourself is VERY different to working for someone else. For a start, what happens if you’re ill - or your children for that matter - or you want to take a holiday?!
Before making the decision to go it alone, it’s worth writing down the reasons why you want to set up a business. What’s really motivating you, and is there any other way you could achieve the same things without going self-employed? It’s also worth analysing your personality. Are you a risk taker? A decision maker? A ‘doer’ who gets results? Are you prepared to work long hours? How do you deal with criticism? How do you respond to setbacks? Will you be able to cope with financial insecurity? If your business struggles in the early stages, will you stick with it or will you be tempted to quit?
Try to get an honest picture of the kind of person you are, what you do well and what you do badly. You may find it helps to think in terms of the key areas of business: sales and marketing, financial, operational, general management, and so on. See if you can get someone else to evaluate your answers - another person’s perspective can be very valuable. Identifying your strengths and weaknesses will help you to ensure that, if you do decide to go ahead, you do so with your eyes wide open. You can then take action to develop your skills in the relevant areas and/or get other people on board to help you.
2. Make sure you’ve got support
If you have a partner, it’s vital to involve them in the decision to go it alone. The same goes for your children, if they’re old enough to understand. What you do will have implications for them, and as a family you need to think through what those might be. It’s also important for you to have their support, as setting up in business is tough enough without dealing with resistance! You need people around you who will reassure and motivate you when you’ve had a bad day, not say “I told you so”. And remember, your partner and extended family could also be useful in practical ways - acting as ‘sounding boards’, helping out with the odd task or providing feedback or finance. A supportive environment is one of the key building blocks to put in place.
3. Have a really strong and sustainable idea
It’s a competitive world out there and, if you’re going to succeed, you have to have a strong idea. That doesn’t mean to say it has to be a completely new idea, but it needs to be a good one. Being first with a new product or service isn’t always best, as you have to educate a market and convince them of the need for what you’re offering. Sometimes the best way to go is to do something that’s been done before but do it better. You could differentiate yourself from the competition by, for example, including some additional features or providing exceptional customer care. Whatever you do, do your best to make your proposition irresistible.
In addition, make sure that your idea fits with your own passions and personal values. For example, if creativity is important to you, does your business reflect that? If you feel strongly about environmental issues, how can you make sure that you operate according to those ‘green’ principles? Your business idea needs to fire you up and, at the same time, feel compatible with who you really are. If it doesn’t, then you’re less likely to want to stick at it and make it successful. Research suggests that a person’s happiness is significantly greater if they feel that their life has meaning, so it’s important to build a business that has meaning for you.
4. Know your market (better than your competitors do!)
It’s easy to get carried away with your idea and think that, just because you love it, everyone else will too. And even if they do, will they actually pay for it? Before you go any further, make absolutely sure that there is a market for your product or service, in the area in which you want to operate. After all, there’s a good reason why you rarely find three petrol stations next door to each other.
Make it your mission to carry out as much market research as possible. Find out about the demand for similar types of product / service, the size of the market, what your competitors are doing, and so on. Talk to potential customers, suppliers and distributors, and especially competitors. Never under-estimate the competition - identify any weaknesses they may have and try to ensure your product or service is a cut above theirs. Competition is a very healthy thing, but you need to do constant research and stay ahead of the game. Complacency can be the kiss of death for a business.
5. Take advice - look, listen and learn
Pick people’s brains! When starting out in business, the more advice you can get, the better. It’s far better to learn from someone else’s mistakes than with your own money! Find other business people you respect and be prepared to really listen to what they’ve got to say. At the same time, make sure you don’t just swallow it whole without making a judgement as to its value to you, in your particular set of circumstances. Not every piece of advice will be good, and not every piece of advice will be relevant to you. Learn from others, but have faith in yourself and your own instincts, too.
When you’re short of money in the early stages of setting up a business, you may feel that paying for an ‘expert’ is a luxury you can’t afford. And yet a few words with a trusted professional - such as an accountant, lawyer or business advisor - can make the difference between success and failure. Just choose carefully. Before hiring a professional, you should visit several to compare and don't necessarily make the decision based purely on price.
6. Write a brilliant business plan
Many people think a business plan is a boring bit of bureaucracy required only for getting a bank loan. Whilst it’s true that almost all funding bodies will want to see one before they even contemplate giving you money, this is not the main purpose of a business plan. More than anything else, it’s a way of crystallising the ideas in your head, getting them down on paper and gaining real clarity as to how it will all work. You’ll find that the bits you struggle to write are the bits that you haven’t really worked out yet … and now’s the time to do it, before you start the business!
In addition, preparing a business plan will force you to get to grips with the numbers, as you have to include financial information including a projected cashflow forecast. This will bring you face to face with the money side of things, and will probably show you how much you’re going to need to borrow! Scary stuff and yet, once again, now’s the time to tackle it!
A business plan should be a living document that you update on a regular basis and use both to guide you and to assess your progress. There are umpteen books and sources of advice available to help you write a brilliant business plan. Check out the Resources section of Mummo Knowhow for more information on where to look.
The figures you put in your business plan for a start-up can only ever be estimates (or ‘guesstimates’!) but, assuming you’ve been realistic and thorough, they should still give you a good idea as to how much money you are going to need to get your business of the ground.
There are various sources of finance available, depending on the type of business you are planning to start. More information can be found in the resources section. One key point to bear in mind, though, is to always ask for enough finance. It’s far easier to organise the money up front than to have to try and get your hands on some in a hurry! Cash flow problems are one of the main reasons why new businesses fail, so make sure you ask for what you will need, not for what you think you can get.
Remember – two heads are better than one, especially when you are just starting out. A great mentor will help you work your way through some of the challenges you’re bound to encounter, and give you the benefit of their experience and expertise. Seek out the advice of a family friend, or someone who’s been recommended to you, who is or has been successful in business. Or just be cheeky - approach people you respect in business and ask if they would be prepared to mentor you. After all, if you don’t ask, you don’t get! Consider paying them, or giving them a share of the profits or equity in your company in return for advice. It could be well worth it. Think of ‘Dragon’s Den’. Sometimes it’s better to have a smaller slice of a bigger cake!
9. Build relationships wherever you go
If success in business had to be put down to just one thing, this might well be it! Relationships are absolutely fundamental, and they include your relationships with your customers, potential customers, suppliers, distributors, networking contacts, business partners and colleagues, staff, professional advisors and, of course, your bank!
The importance of developing contacts and relationships with people who support your ideas can never be underestimated. They may never actually buy from you, but if they like you and like what you’re doing, chances are they’ll tell other people about you. Word-of-mouth is the best, and cheapest, form of marketing.
One of the great things about working for yourself is that you can choose who you deal with. If you don’t like somebody or don’t feel an empathy with them, then don’t go with them, however good the deal may be. It’s not always possible but it’s a great freedom.
Wherever you go, whatever you’re doing, whether you’re on work business or at the supermarket checkout, make a point of being polite and pleasant to everyone. Opportunities often occur in the most unlikely places. Actively seek to build relationships with all kinds of people, without having an ulterior motive. Gone are the days when networking meant asking for referrals there and then. Nowadays it’s all about getting to know people and people getting to know you. It’s about giving as much as taking. The pay-offs may not be quick, they may never come, or you may never know about them … but you can feel comfortable in the knowledge that, if nothing else, you’re giving out good karma! And the rewards for that, financial or otherwise, can be huge.
Success rarely, if ever, happens overnight! Setting up a business is a long-term project and you’ve got to be prepared to stay the course. Remember, you may have to change people’s buying habits or introduce them to a new product, and that’s going to take time. Experts suggest that it takes about three years for a business to develop to the point where you actually start making some money out of it (or not, as the case may be!). The first year you’ll probably say “what the hell have I done this for?!” when you haven’t made any money and it’s cost a lot. Hopefully by sometime in the second year you’ll have turned a corner and by the third year you should be starting to reap the rewards for all your hard work. So think in these kinds of timescales and be prepared to ride the peaks and troughs. With any luck it’ll be worth it in the long run!
Here’s to success, whatever that means to you and whatever you decide to do …
