So you've been dreaming of escaping the corporate world to start your own business but don't know where to start or what's involved. With a growing number of women deciding that climbing the corporate ladder isn't all that it's cracked up to be and preferring the independence and freedom self-employment offers it is vital to understand what is involved.
I left the corporate world for my own businesses in February 2001 and am so pleased I did. Even though I read part of a small business manual book and some magazines I just didn't get my head around the sort of things you need to do regularly and the costs to be covered. This makes a huge difference to your pricing and being able to get done the core activities.
I love having my own businesses and wouldn't change it for the world but make no mistake, it's hard. You have a lot of 'character development' times when you feel like getting hit around the head with a three day old smelly fish would be easier than some of the hard lessons and exercises in bravery you endure. But the wins make it worthwhile (or so I tell myself).
As there is a lot to it I thought a series of articles would help break it down and give you a sound idea.
20 Top Business Tips - Part 1
If you run a product based business, that is, one where you sell tangible products such as jewellery, clothes, books, stationery - any physical object - you'll need to:
1. Manage supplies so you have the right balance of stock on hand to attract customers in your shop. If you're an online shop then it's about having enough stock on hand to meet expected regular orders.
2. Know how long it takes to get new stock in - the lead time from ordering to receiving. Remember, you have no control over another person's business nor Australia Post or courier companies.
3. Find the right suppliers in the first place - this can be rather tricky. It took me years to get the right combination and I'm still always on the look out as suppliers change their businesses and product range.
4. Order the stock at the optimal time for your supplier so you fit in with their routines and get the products when it suits you.
5. Understand the on costs for your products such as GST, shipping, PO box rent, transport costs, shop or warehouse rental, insurances (product, public liability, contents, bricks and mortar etc), utilities such as electricity, gas and water, staff, taxes, and that's just the start of it.
6. Costs are always lurking around the corner and must be covered, otherwise you don't have a business. If it is just you in the business you still have to have money to live - pay for your housing, groceries, transport, insurance, utilities - you know what costs are in your personal budget and if you don't, make sure you do so you have a chance of succeeding rather than becoming part of the failure statistics.
7. Cash flow is God. Stuff up your cash flow and you can loose your business very quickly. You can get away with making lots of mistakes in just about any other area of your business but there's not much room for cash flow mistakes. Most businesses fail because of cash flow problems - having more going out than coming in within a set time frame.
8. Plan ahead with your budget so you can look after your cash flow - knowing when you have big costs (money draining out of accounts and wallets) and little costs happening and when money is coming in makes all the difference. If you don't know what is happening with the money in your business then you can be ruined suddenly and without warning. If you know you have a lot of expenses coming up in eight weeks then you can save for them.
9. Being in control of the money in your business is fun. Being overwhelmed with money problems in your business is sickening.
10. Take risks early so you have room to recover if things do not work and can leverage when things do work out well. This also works when playing games like backgammon.
11. Never be rude to customers. I can remember the two times I've been rude to customers and still shudder about it because I was wrong. That they were rude and wrong too does not make a difference. I am responsible for my behaviour as well as the reflection it has on my business. Always be polite to customers, no matter how rude or foolish they become.
12. Customers can be wrong and you do not need every single customer. Some customers cost you more than they are worth. Get rid of them. And don't be a crappy customer to any other business - you'll lose too much face and make a fool of yourself.
13. Make customer care the core focus of your business and put yourself ahead of the pack. Always have a smile for customers - whether they are spending money or not. They will either talk about you or come back or both.
14. If you have a space to fit out then think carefully about what money you have for you and your business. What percentage of your money do you want to go on fit out and what amount to go on marketing, stock, insurance, rent and all the other considerations? John Ilhan, founder of Crazy John's, fitted out his first shop with second hand carpet so he could put money into marketing and getting customers. A very smart man. You can make a great story out of how you upcycled and recycled fun pieces for your space and use it in your launch press release. Plus it lets your creativity out to play.
15. Understand that marketing is the secret to success. If you do not get the message about your business out to your target customers you will not have a business. If you rely solely on passing foot traffic you will have some painfully dismal sales days. You can have a lot more control over the profitability of your business if you choose to get the message of the business out to your ideal customers. Marketing includes advertising, promotions, press releases, launches - anything that promotes your business.
16. Be very careful with spending advertising dollars. Be sure you know what you are expecting to get out of a promotion and how the costs balance out - how many things at your average price point do you need to sell to cover the cost for example.
17. Pay per click (PPC) can be a really practical way to manage advertising costs but set yourself affordable limits and closely track results. Give yourself time and opportunity to test different campaigns and advertising copy. Learn from others what works and what does not. It takes a very short time to set up a Google ad. It takes a lot of time to make it work and deliver profitable results.
18. Print advertising is more about branding than sales. If you want it to be able sales make it easy and attractive for customers to make the effort.
19. Online advertising can be great for branding as well as sales as well as achieving other goals like ranking high on Google with content specific direct links back to your business.
20. Social media marketing is a must for any business now. The good news is the field is wide open as many have not figured this out yet and many haven't learnt how to do it well. Skill up and go for it. There are costs to doing it well - whether that is your time or paying for another's expertise and time.
I know I'm being very straight forward about the realities of running your own business but if you don't have some heads up about it then some of these lessons can be exceptionally painful, especially those connected to cash flow.
Not all of us are entrepreneurs, most are actually best suited to permanent employment and there are a lot of upsides to that way of life. We are all individual creatures and need to figure out what sort of life suits us each best. My mum's neighbour's grandchild at three years old is already obviously going to be a tradie. Not many of us get to know from an early age what we'll love doing with our working lives. For most of us we must try different things in life to chance upon what we are naturally suited for.
So if you have been thinking of taking the leap from permanent work to running your own business I hope these tips and this series are very helpful for you. Preparing, training and educating yourself across the many varied areas a business owner must be in control of is a lot easier before you are in the midsts of making sure you have enough money coming in.