Don't waste time on a name, spend time on a plan!
By Luke Mitchell - Director at Murchisons
Many small businesses start with an unsatisfied company employee believing they can solve the issues faced by consumers more effectively if they did it themselves.
Reasons for start-ups can often include:
- Not liking one’s current employer or office politics
- Being unable to work well with the other staff
- A Belief that one’s current organisation is inefficient or is not adapting to market changes quickly enough
- Having that “grand idea”. The individual may farewell their current employer when they have finally ‘had enough’.
It’s at this stage the adrenaline rushes in and the ‘new business idea’ gets bounced around with friends and family, and dreams of becoming the next inventor of Skype start drenching daily thoughts and conversations.
This is the exciting part, but it is also the most important phase in any new business. Aside from late night brainstorming around the grand idea or company name and countless conversations with newfound LinkedIn connections, there also needs to be focus on a solid strategic plan.
Creating this gives the newly appointed entrepreneur confidence and something to turn to when they are feeling the pressure.
It would be hoped this was completed before they’ve resigned. It is always the intention of the new entrepreneur to get to it; but commonly due to a lack of resources they may defer until they have the necessary funds to invest in it: “I just need some money right now”.
Planning and being able to invest more than just your time, but actual cash, into the early stages of the business is imperative. With a more structured approach to growth and identifying at which time to delegate some of the responsibilities that are initially all on your shoulders is critical.
Another important milestone is knowing when to employ or outsource part of your business so that they can contribute to the growth and value.
So before you spend another week Googling domains that haven’t been taken yet in order to get started with your ‘big idea’, I would ask you to sit down and seriously think about your strategic plan. I would advise some of the following steps:
1. Define your value proposition and target market
2. Research the market and get potential customer feedback
3. Document your marketing plan and business plan
4. Create a financial model of your business including the resource requirements by way of staff, asset purchases etc. so you have a clear indication when investment into the business is needed to continue sustainable growth.
5. Get the structure right – for asset protection and tax obviously, but don’t forget to keep it simple to understand and easy to use. Seeking investment will rely on this so take your time in getting it right.
6. Ensure you have defined a customer feedback system to adapt the business from because you will make mistakes, and the quicker you identify and respond to these, the more time and potential income you can save.
7. Get a trusted team around you so that you have people to bounce ideas off. They may be part of the industry, other entrepreneurs that have made their big ideas work, and someone with a financial background. Formalize a reporting structure between them.
8. Review, review, review! There are no statistics but I am sure there would be close to no plans which do not get improved upon during the startup phase. Your original assumptions will be tested and the review allows you to adapt and improve. It will give you the confidence, particularly when things are tough, to either continue on or identify where and what in the plans need changing.