So you’ve ditched the job you hate or put your hand up for redundancy and you’ve decided you’re going to be your own boss in 2014. Congratulations. It’s a big step and not one to be taken lightly. The bad news is that the percentage of small businesses collapsing is on the rise, according to ASIC figures.
How can you ensure you’re not one of the 44 businesses closing their doors in Australia every day? Below are five tips to ensure you focus on the right things in the early days.
Get business news first
Sign up to SmartCompany’s daily newsletter
1. Don’t sweat the small stuff
It’s easy to spend too much time thinking about a name and logo for your business. Similarly, money can be poured into cool looking websites and fancy business cards. This is a waste of your precious time and money when setting up a business.
Even if you’re in an ‘image conscious’ industry like ours (PR), it really doesn’t matter as much as you think it does. Of course if you’re going to be selling products online you need to invest in your website, but otherwise, get a basic one set up so people can find you online. This is very important – choose functionality over how it looks.
A website isn’t something you can set up and forget, we’ve had four different websites in five years as we’ve grown out of each one, but in the set-up phase choose a basic one and concentrate on getting money through the door.
2. Spread your risk
Many businesses start with a customer the founder may have worked with before. It’s important to use your contacts and industry knowledge as much as possible. That first customer is very important as they provide you with a potential reference for future work.
However, be careful not to rely on one customer – this is a very risky strategy. If you only work for one customer, you haven’t really established a business; you’ve bought yourself a job. Of course you have a little more control than you would if you were employed by someone else, but ultimately this is all you’ve got. So you need to find time to do some business development and quickly.
3. Start selling
You can spend so much time developing business plans, marketing strategies, attending various events and reading all of the excellent online resources that are available to small businesses today, but ultimately you need to start selling.
Your family and friends may have told you your product is great and they will have every faith in your skills and business idea, but you need to start making money.
This could involve contacting prospective companies, launching a google ad campaign or attending relevant events. You need to be able to explain what you do concisely and sell your business and the services you offer. The more practice you get at this the better.
4. Know your numbers
Maths might not have been your favourite subject at school, but you’re going to have to understand what revenue is coming in, what costs are going out and how to read a profit and loss statement. Cash flow (along with bad management) is still the main reason why so many businesses fail in Australia. On average it takes a small business 55 days to get paid in Australia.
Don’t wait until the end of the year, or even the end of the quarter for your accountant to tell you how your business is performing financially. There are some excellent cloud based accounting packages which can tell you in real time just how financially healthy your business is. You can also send and reconcile invoices from your mobile phone and send customers online payment options, making it easier for you to invoice and easier for customers to pay.
5. Do what you do best, outsource the rest
In the first 12 months it’s important for you to understand every facet of your business. This will make it easier to outsource and delegate tasks in future, but you can’t do everything. Business owners can struggle with this, they do have ‘control freak’ tendencies, believe me I know, but you have to do it to grow your business. The early days of setting up a business are the hardest, but they can also be the most rewarding.
Jocelyn Hunter is the managing director of Bench PR.