Starting your own business inevitably produces a combination of fear and exhilaration. Today’s global, tech-driven marketplace is challenging for everyone, and there is either going to be a market ripe for your specific brand of business, or (unfortunately all too often) there may not.
There’s advice aplenty for you as well, and everyone’s got some. Lachlan Grant, CEO of accounting, financial and tax advice company Vital Addition, believes the best advice will come from those who’ve trodden your path already. So find a mentor. Mix with people whose values align with yours. While trusting your instinct is imperative in business, it pays to listen to, and heed, professional advice at critical junctures.
It’s Lachlan’s philosophy that in small business, there is ‘strength in numbers’, that owners and Founders should be empowered to make informed business decisions, and face the challenges associated with growth, with optimism.
Consider these five vital components to a successful start-up as you weigh up your options:
Self-fund to start
Don’t hit the ground looking for investors or funding on Day 1, before you know if your would-be enterprise has a chance of making its mark in the marketplace. As much as you can, fund the business yourself to have an opportunity to really test (and hopefully prove) whether or not your idea, your concept, your product is a viable one before you expose yourself, and your weaknesses, to investors.
Take care with whom you share the spoils
While there may seem to be a host of investor opportunities out there, the process of having someone else come in on your venture is a two-way street: not only does it have to be right for them, it has to be right for you, too. Having business partners is like a marriage; choose them wisely.
Make sure you can trust who’s around you
Find your tribe. This is your livelihood we’re talking about, so making educated and considered decisions about who’s involved is critical. Make sure the people around you are people who you trust, who are smarter than you, and who can (and will) give you an honest assessment of your business every step of the way.
Also, there’s no point being anything other than completely honest with your advisors. Accountants or other advisors you can really trust will keep you up to date with changes in technology or legislation that can save you time and make your business more efficient.
Know what the future holds
This is easier said than done, right? We can’t accurately predict the weather most of the time, let alone what the world of finance, trade and commerce will be doing in years to come. But when it comes to your business, you must have a vision of where your business is going, based on today’s market. Especially if you are working with investors, having a clear vision of your 3-5 year business goals will ensure that your shareholders, team and board are clear on the steps to get there at every point.
Understand your unit economics
Unit economics in this case, can be broken down into three components: beginning with Acquisition – isolating the costs related to winning and onboarding new business; Retention – knowing what percentage of customers return to do business with you (and who doesn’t – and why!); and Monetisation – how much gross profit is made per client. It’s important that start-ups have a clear path to a business which has underlying profit that can subsequently be reinvested, either through its own funds or venture capital, to promote rapid growth. While your numbers may not look so good now, planning is key. You’re not forecasting to run at a loss forever – why would you be in business if that was the case?
At the end of the day, not everyone’s going to make the cut as an entrepreneur. It’s not something that necessarily comes naturally. There’s often trial and error, and success and failure in equal measures, and that level of uncertainty – zigging when you feel you should be zagging – isn’t for everyone. But with careful planning, the right professional, and a healthy attitude towards, and appetite for, risk, the possibilities are endless!