This month we have a guest blog written by Robert Lomax.
It might be that you like the idea of being your own boss.
But perhaps you also find the idea intimidating:
I founded my business when I was nearly thirty; but I now realise that I could have done it sooner.
In this post, I want to share some ideas which might have given me the confidence to get started when I was in my early twenties.
This isn’t a detailed how-to guide. After all, you’ll have no difficulty finding extra information about each point elsewhere.
I’ll have done my job if this makes you pause for a few moments, and wonder whether it might in fact be an achievable ambition to make a living as an entrepreneur.
1) You ARE an expert – already!
It’s normal to assume that you’ll need to be in a 9 to 5 job for many years before you’ll understand the sector well enough to see where the hidden opportunities are.
But in fact, the best ideas often come when people stop scouring the horizon for pots of gold, and start looking at the world around them.
Look at the services which you already use and the objects you rely on daily, and ask yourself how they might be done differently. Develop this into a mental habit: like an author who instinctively raids strangers’ conversations for character ideas.
It isn’t always necessary to have an idea for how you could do a thing better. Just play with the different approaches which might be possible – and then start to think about how some of these might offer new kinds of value to clients or consumers.
2) Don’t let a good idea become a complex idea
Your idea won’t fly if it’s weighed down by ten tons of interesting features and add-ons.
Make your product extremely simple – simpler than you would like – and don’t add complexity unless your customers clearly want it.
I discovered that I was losing a lot of potential members to my online 11 Plus exam service because people found the various subscription options too difficult to understand. I had to work very hard to present it in a clearer way.
With hindsight, I should have structured the product more simply in the first place.
In the same way, a straightforward name which describes your product directly is usually a far more effective starting point than something catchy but unclear.
3) Take business plans with a pinch of salt
TV shows like Dragon’s Den have helped create the myth that a detailed business plan is the sine qua non of being a real entrepreneur.
The truth is that when you launch a new product, you’ll probably only have a vague idea of where it will end up. It’s only through selling it and listening to your customers that you’ll get a clear sense of what you might be able to do with it next.
An elegant five-year plan risks finding itself screwed into a ball and lost behind the office fridge within a couple of months.
At any rate, by developing too clear an idea of where you want the business to go, the most likely outcome is that you will miss out on other possibilities: you won’t see them because they weren’t mapped out in your plan.
Instead, I suggest focusing on two core ideas before you make your first sale:
These two concepts offer a framework for testing each choice that you face as your business develops.
(Needless to say, you’ll have to create a business plan if you want to raise finance, because lenders or investors will expect to see it – but that’s another story!)
4) Small is beautiful
You may well be able to fund the business yourself if you start small and focus initially on improving it more than on growing it – especially if you can build your business while doing other work, and start with a fairly a simple product.
This way you’ll have freedom and a lack of pressure, and the time which you need to learn about your market.
Too much attention to growing revenue early on can be a distraction from getting your main product right. It can also lead to a lot of money wasted on panic-driven marketing campaigns!
Focus on your product or service and on building strong relationships with existing customers. Let the money follow in its own good time.
5) Be generous
Be prepared to give up a great deal of your time, and perhaps even of your product, for free.
This is the best way to develop word-of-mouth interest in your brand. We devote as much time as necessary to helping customers who contact us, even when they just want advice about their children’s education. It’s worth the sacrifice. We also create lots of high quality free resources (school entrance exam guides, for example) which we could sell, but which we prefer to offer for free in order to build our reputation for expertise.
None the less, if you decide to give certain things away for free, do so with a clear idea of how this will help you to generate future revenue: either directly, through sales, or indirectly through enhancing your reputation.
Be generous, but focus your generosity so that it produces clear value for you as well as your customers. Otherwise, you should be starting a charity rather than a business!
6) Dot your “I”s and cross your “T”s
However your business is structured, make sure that you know your legal responsibilities before you start trading. Above all else, you need to understand your own relationship with the business’s money.
You may not want to spend money on accountancy advice before you have earnt anything; but you should be prepared to. It’s an area where saving money in the short term can turn out to be very expensive in the future!
Use proper accounting software such as Xero from the very start. Otherwise you’ll find yourself in a few months’ time with months of spreadsheets, boxes bulging with unsorted invoices and receipts, and a very large accountant’s bill.
7) Treat your website as an assert
Whatever your business’s niche, aim to write a handful of excellent blog posts in the first few months, making each one the most useful online article about its topic.
Stick to a number of articles which you can keep an eye on: which you can keep improving, and which you can build links to over time.
These articles won’t conquer Google straight away; but in the medium term, they may become one of your most valuable business assets. For example, this list of free materials brings a lot of well-motivated visitors to our website every month. Because they find the article so useful, many stay to look at the other content on our blog; and many of these people come back to buy from us.
This one article is among the most important things we own.
Robert Lomax is an author and a director of RSL Educational Ltd, an educational publisher.