In response to requests from clients and acquaintances in the last few months, many of whom are thinking about going it alone, I've written a series of bite-sized blogs that look at the 5 steps to starting your own business.
You will already find Steps 1-4 posted on the Business West site, covering Step 1: Developing your concept and proposition, Step 2: Understanding your Opportunity, Step 3: Developing your Business Plan, and Step 4: Funding and Finance options.
The final step in your ‘going it alone’ journey draws the series to a close by looking at the people that will be helping you to achieve your dream of going it alone.
Step 5: Building your Team and Support network
Even if you intend to operate as a single person in your business, you will need a team (even if virtual) and a support network to help you overcome obstacles, keep you motivated when the going gets tough, and most importantly to celebrate with when you hit some milestones.
These can be broken down into 4 main groups:
• Your team in the business
• Your suppliers
• Your family
• External support
1. Your team
It is highly likely that you will be a ‘one person band’ for quite a few months after launch. If your business is based on you and your expertise, that is probably going to be the way you choose to operate long term, although you may need the services of a remote executive PA to manage calls, arrange appointments, and sort out follow up contacts.
However, most businesses will need to employ staff, especially as they grow, which has a big cost attached to it – not only financially but also emotionally and professionally. The day you take somebody on you also assume responsibility for helping them to achieve the goals that you set together, training them as required, motivating and rewarding them, and unfortunately in some cases, removing them if things don’t work out. Even as a start up you have a duty to manage individuals in a professional way. This involves having a proper employment contract and job description, holding annual appraisals (although I’d suggest more frequent less formal ‘how am I doing?’ discussions over coffee initially), and developing them through stretching projects that help them grow in their roles.
The days of unpaid interns are thankfully coming to an end, but you are unlikely to be able to pay market rates, certainly in the early days, so selling the dream of working in an exciting and rapidly changing environment is your main pitch to bring the right people to your business. Younger workers are now more motivated by working in companies with a ‘Purpose’ rather than earning high salaries, so if your business has a social or environmental angle to it, you may be able to attract them and benefit from their terrific energy and enthusiasm, and ability to use technology.
There is a saying that ‘salary buys you hours, equity buys you engagement’ which is something to bear in mind when developing your staffing plan. After all, if you had been given a real stake in your employer’s business would you still be as keen to leave? Possibly not.
Offering shares, or the prospect of shares in the future, is appealing to employees if it is based on achieving certain targets, but unless you have set up a formal share scheme from the start, be very careful about promises made at this point. You don’t know where you will be in 3 years time. A 10% equity stake might not sound overly generous at first when there is no value in the business, but in 3 years when your company could be valued (especially in the tech sector) at a few million, would it be proportionate for that person to be rewarded to that level?
Thinking further ahead, the offer of shares might be needed to retain staff (or at least your most important team members) should you to get to the stage where you needed to open up your company to new investors in order to fund the next stage of your growth. You would want to demonstrate your commitment to the team before embarking on such a journey. It is too late to think about it when your staff are getting nervous and start to leave you!
2. Your Suppliers
Your suppliers will come in different forms depending on your business. They could be manufacturers, parcel couriers, designers, products development specialists, IT systems support, or finance through your accountants. The key thing to remember is that when it comes to choosing suppliers, take a view of what you need now and in the next 12 months only, using your Business Plan as a guide.
Select the ones that really understand your size and stage of business, and have the ability to scale up with you over the next two years if all went well. Do not assume that you will go from start up to £2m inside 12 months. It is unlikely to happen, and if it did that would be a nice problem to have. Flexibility and adaptability are surprisingly hard to find in suppliers, but find people who believe in you and want you to grow and you are half way there. If you choose a supplier that is too large or complex, with overly rigid ways of working, you may quickly become frustrated, and your business could suffer, so even the reduced rates that they might offer initially to encourage you to work with them seem too high.
3. Your family
When you decide to start up a business it is by its nature a ‘family business’. Your highs and lows will be felt by your loved ones, and whilst you will want to shield them from some of the problems, they will always have your best interests at heart so be prepared to ask for help. Let them know how things are going, explain when money is tight in the early days so you don;t feel so bad about always having to say ‘no’, share your new ideas and get their input, even get them to help stuff envelopes and pack up product samples if needed. They will appreciate being involved and it will be even better when you all can celebrate your successes together. Don’t exclude them from your journey.
4. External Support networks
There will be times when you need some objective expertise in certain areas of your business, so you need to know who and what is out there that can help you. You may have some really excellent Growth Hubs in your area so they are worth getting in touch with, as are other Business Networks. You may find peer group support networks (coffee clubs, executive breakfasts, networking lunches) are available to join and often just having someone completely unconnected to your business but with similar experience can help you see a problem from a different perspective. You may not have to pay to join in, so do a search online for local business networking events.
If you need some specific help then you need to find a local consultant , advisor or mentor to give you some direct support through a specific project or period of challenge or change. As I mentioned in Step 4, you may find that some of these can be subsidised by the local government business support groups, so it might not cost you as much as you think. Often particular areas such as preparing your business for exporting, exploring new sales channels, or creating a high impact marketing plan will benefit from a little external expertise.
Starting up your own business is an amazing experience, but it takes a lot of hard work, and there will be times when you wonder whether it’s worth it, especially in the early hours of a no-sleep night because you are yet to make a sale. There is nothing worse than the heart palpitations resulting from not knowing how you will pay your rent/mortgage this month. Having faith in yourself and your idea is crucial, and this can be sorely tested when you see the bank balance dwindling. It is often at the very last minute, when you think you’ll have to give up and return to the employed world, that the big break comes along, so stick with it.
You don’t have to face it on your own though. Choose the right team and support network and you will have all the help you need. Having a mentor help you talk through decisions and issues in your start up is one way to ensure that you have a much better chance of success, as you will continue to need that objective questioning voice to keep assumptions in check. Also as starting up a business is such a unique experience, it can help knowing that your advisor has been there before which is why I currently mentor a couple of start up/early stage businesses. It's great fun, and provides a 'safe environment' to voice those worries and concerns as well as having someone to celebrate successes with when they happen - and they WILL happen!
All the very best in your adventure. I truly hope that it is the success you have dreamed of, and if I can help you more specifically please feel free to give me a call.
Have a great day!
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