Russell and Mike outline the initial practical activities that any organisation needs to consider. In this episode, 10 strategic (yep, the strategy word) tips for those thinking of starting a business.
Places for Advice and Guidance (@9:30)
Business Planning (@10:00)
Market research can be a vast subject and can potentially consume vast amounts of your time. To start with you should focus on a few simple areas:
- Find evidence that a market exists for the problem you are solving or the product you are selling.
- Find some specific information: How big is this market? Who else is selling same/similar products and how much are they charging?
- Who is your ideal customer? Age? Location? Job? Issues?
CONTINUITY: Zelda enters her dad’s office bearing difficult news as a start to the day.
ZELDA: Hi dad, you got a minute
NERO: Always for you, how’s it going?
ZELDA: It’s great. I’ve been chatting to Jakob and we’ve come up with a name for the new business. It’s Sideline
NERO: Well that’s nice. Have you got your business plan coming together then
ZELDA: Jakob has decided to try something new with me and we aren’t going to push the whole strategic planning thing.
NERO: Interesting… So you’re winging it?
ZELDA: Innovating on the hoof I like to call it – Jakob is loving the break from the normal hum drum way of forming a business
NERO: I look forward to seeing the results. Did you need me for anything specific?
ZELDA: Yes, you see, I am spending a lot of my time working on Sideline… That’s such a great name isn’t it?
NERO: It’s unique, I think. Go on…
ZELDA: and anyway, it’s with deep regret th… (Interrupted)
NERO: You have to tender your resignation so you can concentrate fully on developing LifeLine.
ZELDA: Well yes… And it’s Side-line. I’m so sorry to leave you in the lurch
NERO: Don’t you worry about it. In fact, I wondered if that would be the case so I’ve rehired Lucy.
ZELDA: Lucy who left when I took over the admin team?
NERO: One and the same. In fact, she should be here at 9:00 – perhaps you could show her what’s changed since she’s been gone and we can release you to the exciting world of business startup by the end of the… (Interrupted)
NERO: No… day! I’m so excited for you I’ve moved mountains to free you up
ZELDA: (stunned) Tha…that’s nice of you
NERO: When Lucy heard you were leaving she was so eager to support your transition, she even called off the court case for unfair dismissal and accepted my new terms
ZELDA: Unfair what? She left of her own accord didn’t she?
NERO: Well… It’s complicated. Suffice to say, I’ve got you covered. Look there she is now. Go make her welcome and get to clearing your desk. How exciting is this?
ZELDA: (still stunned) Yeah it’s wonderful. Faster than I imagined.
NERO: Where are you going to base yourself? Working from home?
ZELDA: Err… I haven’t thought that through yet. The flat is a little small, but I could work at the dining table. To be honest I was thinking I could work here for a while.
NERO: Oh darling, I don’t think that would work. You need a quiet space you can mould into your ideal working environment. Somewhere inspiring. Jakob should be able to get you offices while you sort out the practicalities of setting a business up
NERO: You know, registering company names, checking domains are available, sorting out your company records, setting up your accounting, filing, computers, software, you know, the basics.
ZELDA: Of course, I’m on it. Right, yes, I’m off to sort out Lucy, clear out and meet Jakob
NERO: We’re all rooting for you sweetheart.
CONTINUITY: Zelda has called Jakob to another meeting at the Dog and Bone, which is now doubling as her office
JAKOB: Good evening Ms Zero, may I sit
ZELDA: Hi J, How’s it hanging?
JAKOB: When I know I’ll tell you! Why the long face?
ZELDA: I just left my job, I think this is my leaving do!
JAKOB: Wow! You move fast
ZELDA: Dad moves fast
JAKOB: Never one to hold you back is Nero. So you summoned me to you new office, what is your desire?
ZELDA: I’ve got to get Sideline off the ground and you offered your help, so I’m snapping you up
JAKOB: I’m here for you. I’m a good coach and mento… (Interrupted)
ZELDA: Don’t need that. I need offices, furniture, computers and to do some ‘practicalities’ apparently
JAKOB: Ok, I did look into some of those practicalities today. You know that a company called Sideline is already registered with Companies House?
ZELDA: What? No! What’s companies house?
JAKOB: It’s the government organisation that registers business and maintains basic records on them. Anyway Sideline is not available and neither is the domain name
ZELDA: Domain Name?
JAKOB: You know, sideline.co.uk or sideline.com – both gone, so I wouldn’t recommend sticking with that name
ZELDA: Bother! I like that name, I’ve told everyone – posted it on Facebook and everything… Could I spell it differently like C I D E Line or, or S Y D E Line? That would be good… Check it, check it, check it!
JAKOB: Hold on…(looking on phone) Well, that is available at Companies House
ZELDA: Oo, oo, I already have a logo forming in my mind
JAKOB: Ok, leave the logo until later… Yep and it looks like some of the most common domain names are available too
ZELDA: Brilliant! Let’s do that then Sydeline, with a Y, it is. So is that all the practicalities dealt with?
JAKOB: Well, not really. I’ll send you some links so you can register these
ZELDA: Ah, well, yes… I only have a mobile phone now. Dad took my laptop away because it was a business one
JAKOB: That dirty…. (Mumble). I’ll get the Companies House registration going but there will be decisions to be made on the structure of the company
ZELDA: Whatever… Details, details
JAKOB: Ok, so it looks like we need to get you some kit too. We’d better go shopping tomorrow. Do you like Apples?
ZELDA: Yeah, but I prefer pears… Hold on, how am I going to pay for all this? I’m unemployed!
JAKOB: Hmmm, I wonder. C’mon let’s get you a leaving drink
RUSSELL: Ouch, that was one brutal exit that Nero engineered there
MIKE: Yep, you do get the feeling that Zelda has been pushed into this venture instead starting it on the basis of sound strategic plan
RUSSELL: And there’s the Strategy word again, what is Zelda avoiding by, what did she call it… “Innovating on the hoof”
MIKE: This word ‘innovation’ is misused a lot and misunderstood. What Zelda thinks is innovation is just muddling through… She is actually being a bit lazy by not doing anything
RUSSELL: It may be that she has watched her dad manage a heavy strategic planning process and she just didn’t that burden, and so she’s avoiding it
MIKE: Yeah maybe, but setting up a strategy doesn’t have to be a long drawn out event. You could spend, as a start-up, a single day on some strategic planning and work with that for quite a while before you need to revise it and then revise it once you’ve made some progress
RUSSELL: So perhaps a good point on this episode is to run through some basic strategic pointers, I think we’ve got 10, for those thinking of starting a business
MIKE: Firstly, and we mentioned this in the last episode – you need to do what you know and what you’re good at and what you’re passionate about. It’s hard starting a business and there are tough time. If you’re not passionate about it you won’t see it through and doing stuff you know and your good at just shortens the amount of time it’s going to take you to bring your ideas to market. The learning curve is a lot shorter.
RUSSELL: Absolutely, and if you are going to start a business, no matter how passionate you are, if probably best to start one when you already have an existing income. So if you can start a business alongside your current income, your current role, your current job, whatever it might be, that would be preferable. Because it does take some time to implement some of the strategies we’re just about to mention. (Expand)
MIKE: Thirdly, We’d recommend you get some help and advice. Don’t rely on Mr Google to tell you everything you need to know. Go speak to some people because that will shortcut a lot of the things you need to do. So go and seek out help and advice.
RUSSELL: We mentioned this last time, we’ve got things like the growth hubs and there are funded organisations can help you do this and give you some advice. So, and one of the things these funded organisations will draw you to and help you with is create a business plan. Now it’s one of things people shy away from a fair bit and it doesn’t have to be a tome. All we need in a business plan is you being very clear on what your business does, little bit of an idea on what market you’re trying to attack and whether it’s actually there or not. How are you going to organise this business how’s it going to be structured and setup. And the perhaps a little bit on how you’re going to do your sales, how you’re going to fund it, especially in the short term, especially when you’re starting up. And then that all important financial projections, cause that allows you to be a business. That’s the ultimate part of the plan, can you afford to do this and what do you need to back it.
MIKE: Yeah, and really, this is something you’ll hear from Gydeline a lot, this doesn’t have to be a verbose, long wordy document that contains a lot of peripheral fluff. It’s got to be something you can use on a daily basis to see how you’re doing against your plan. The fifth area, and related to the business plan because you’ll need to do this to put information into the business plan. Do your research; Who else is out there? Who else is selling similar products or services to the ones that you’re think of selling? What are they charging for it? Who are their customers? What is going to be different and unique about you? There are a wealth of research resources available to you on the internet. Whilst you might not want to use that for some advice, for doing research on what’s out there and where you might fit in the market and what sorts of products and services you might offer it’s a fantastic resource. But make sure you do that research and get very specific about what it is you’re doing and why the thing you’re doing is going to be successful.
RUSSELL: Yeah, absolutely and that goes hand in hand with the sixth point which is: If you can, Try and get some customers through the door before you formally launch. Get people signed up to the concept. Get people signed up to your prototypes and having used some of your early product, maybe or your early services. Because if you can say people are already using, already buying it, you’re already hitting your marketplace. That lends itself so well to getting additional funding, additional support and it encourages new customers to buy from you as well. So, if you can get those customers lined up, at least, if not actually purchasing from you already. (Expand)
MIKE: Apart from anything else you can use them as early testers, early feedback. So that you can understand whether these services and products you are intending to launch meet their needs. So, it’s a very useful way of finding that out. Point number seven is that we think you need get other professionals involved. It’s all very well taking advice, but you will need other professionals to do things for you, so there will be areas where you don’t have the expertise and, frankly, it’s just more effective and efficient for you to use other people to do things. Things like getting an accountant to do your accounts, getting someone to do your payroll, getting someone to setup your IT systems, getting lawyers to look over your contracts and things like that. Those are going to be services that you’ll need.
RUSSELL: It’s easy to skip over thinking you can do all this yourself. And to a certain extent you can. We not saying that you can’t, but sometimes watching a you tube video on how to do you accounts is not necessarily the best way to product professional accounts.
MIKE: It’s best use of time, in terms of taking advice. Taking this advice now, don’t spend all your time doing your accounts or doing your contracts get people in that do them because your time is better focused on growing your business and developing your business, not doing those things.
RUSSELL: So, a lot of these strategies lend themselves to understanding your market, having a good business plan and understanding your financial projections and forecasts. These will all help you get further financial backing. You might be able to back yourself off your own finances. You might be able to work off your savings or some payment you’ve have for redundancy or the whatever. But make you you’ve got adequate financial backing to be able to get through the early days. Financial projections can sometimes be a little bit optimistic, let’s say. You might find yourself running out of savings very quickly and having to turn to lending. The other thing to consider, there are grants out there. Even in this changing world of losing the EU, if we do (I’m not going to go into that!). There are grants out there, some of them whole grant which will help you buy equipment, other are part funded grant or match funded grants which will help you bolster your existing. Perhaps , instead of spending £1000 on kit, you could spend £2000 on kit, part of it funded by grant. A lot of it is reasonably easy to get hold of, just don’t be frightened of the grants process. It just needs a little bit of work. And of course, you’ve also got those investors. There are opportunities to go out to an investor market place and see if somebody what to put money into you business.
MIKE: There are a whole number of ways to get financial back and maybe it a topic for another time. Cause there are numerous way of going about that. Ninth, and really close to our heart at Gydeline… is get the compliance right. The number of our customers and other people we see that just miss this. This is all about making sure you follow the law and you do the things you need to do. So, things like the Sales of Goods Act or Health and Safety or having the correct HR contracts in please or looking after peoples data properly. All these things are covered by law and all things you need to comply with. So, don’t ignore them, don’t stick you head in the sand. Otherwise they will come back to bite you. Number 9, make sure you deal with compliance.
RUSSELL: It’s definitely worth reiterating, ignorance of what your compliance requirements are
MIKE: Ignorance is not an excuse in a court of law
RUSSELL: Yes. I didn’t know I have to pay VAT m’lud will not stick with the HMRC they will just close your business. Finally, and this is an interesting one, plan for the worst. Consider what you would do if it’s not successful, or your business partner dies or you’re so successful that you want to move on to other things… A lot of times you hear the phrase Exit plans and you hear people say “What’s your exit plan” and you think I’ve only just started this, why the blazes would I want to think about exiting it. But sometimes having that view of “what would happen if” I got into this situation or if this happened. It just means you’ve got a grip on well, sometimes the worse and even what could happen if the best happens as well
MIKE: And that’s a tiny, teeny window into the area of risk.
RUSSELL: Which we will cover definitely later
MIKE: Which is not just about the worst things that happen but also about the best things that can happen as well. Something we’ll touch on another time. So, none of this, what we’ve discuss over those 10 points, needs to be wordy or beautifully presented, it just needs some time and thought. To start with, the documents you produce will be for your use only. It’s only when you start involving others, like investors or a bank, that you could give some more attention to the presentation.
RUSSELL: Need to be pragmatic and reasonable. The idea of business planning is not to be unreasonable or put an unrealistic burden on a business owner. The idea is to put something together which works for you.
RUSSELL: So, looking back at Sydeline again and going back to the drama as it unfolds. Was it right for Nero to take away Zelda’s Laptop and phone?
MIKE: Absolutely. Keeping control of your physical things, like IT, and ensuring that you maintain the security of the data particularly that contained on them is absolutely paramount.
RUSSELL: It’s important for us to appreciate and for Zelda to appreciate, that you need to consider the practicalities of setting up a business, and purchasing equipment and software, is as equally important as being continually aware of that asset and that equipment and making sure that the practicalities of running the business means you need to maintain it, you’ve got to keep up-to-date, you’ve got to keep it current, you’ve got to keep it useful. And keep track of what you own and use it and make sure it’s kept safe. So, it’s absolutely right for him to do it. It was just a bit brutal
MIKE: It will be interesting to see if Zelda does that once she’s got Sydeline going.
RUSSELL: Very much so. Ok, so I just wanted to take a moment to reflect, because this is a sad episode today
MIKE: Why’s that?
RUSSELL: Well, you may not have realised, but this is going to be the last episode when it’s just us two for a while
MIKE: And that makes you sad
RUSSELL: Nope. You’re right, I’m delighted, as I’m talking to Dan Orasnjak in the next episode which is called Money, Money, Money
MIKE: Which kinda works for Dan as he works for an Accountancy partnership called Lang Bennetts
RUSSELL: So I’m looking forward to that. What are you going to do with yourself whilst I’m off hogging the microphone with Dan?
MIKE: Relish the peace and quite in the office
RUSSELL: You implying I’m noisy
MIKE: Well, no. I’m just telling you you’re noisy
RUSSELL: Right … I’ll get my coat – Bye!
MIKE: So now he’s gone, all I need to do is thank you for tuning in and ask you to like, share, comment and anything else to your hearts content. If you’ve enjoyed this, tell everyone else and if you think it could be better, tell us. One way or another, share your thoughts. So Russell will hog the microphone next time in Money, Money, Money – if you can bear it, join him again.
RUSSELL: (Distant) I heard that!