One year ago, my business partner and I left our corporate jobs in order to start our own business. With natural excitement, we embarked on an incredibly well-trodden, notoriously difficult, and somewhat risky path.
Even with so many 'new business experts' in the market, we knew that nobody could directly imprint their knowledge and experience of building a business directly onto our brain and guarantee that their success would also work for us.
So we pushed through, re-inventing an age-old wheel - sometimes finding a shortcut, sometimes missing a shortcut, sometimes feeling we knew what we were doing, but most of the time feeling like we didn’t.
We looked back on the journey to try and boil down the 10 most important things we have learned (and are continuing to learn).
Let's get into it!
1. Don’t go it alone. Find a partner you trust
It is probably tempting to start your business by yourself unless there is an immediately obvious partner. Otherwise you have to go searching for someone, make sure you have the same vision for the business, make sure you can trust them etc. It all sounds pretty hard compared to just getting started. However, all the evidence points to the value of having a larger, diverse team to share the burden and draw on different backgrounds and experiences.
More directly, there is a startling amount of work involved in getting a business off the ground. Legals (incorporation, ownership structure), accounting systems, payroll, insurance, rent, utilities, telecommunications, banking, etc… This is a long list and it’s just the boring stuff before you even consider the product or service you’re delivering to your customer and the endless work of developing, iterating and marketing it.
Share the burden with at least one other person who feels as passionate about the business idea as you do. Split the work, hold each other to account, and motivate and challenge each other — nobody else will care about your business as much as the founder team!
2. Get strong mentors and bug them for help
Mentors are anything from commercially experienced friends and family, to investors, to 3rd party mentors available through services like BizConnect.
Once you have the mentor, talk to them a lot. It is tempting to hold back on your mentors for fear of “annoying” them. Don’t!
Mentors help you with many totally critical things:
- Save you time by answering questions: starting a business involves answering hundreds of questions, from what professional services to use, to product design, to marketing to your customers. What will take you hours to answer incorrectly might take a mentor two seconds to nail upfront.
- Considering doing a mail-out in your local area? Ask a mentor who has already done it: how did you do it, how much did it cost, and how many customers did you get out of it. If the question doesn’t apply to them, they can probably give you the phone number of someone who can answer it in a heartbeat.
- Help you keep perspective: you can lose perspective when you’re buried in the detail of getting the business running. Mentors help you step back and make sure you’re still serving your customer and have the right priorities on your to-do list.
- Impartial feedback: mentors are gold for driving quick product improvement.
3. Do small tests for each business risk
Every business has risks, even if you’re selling a well-established product. Are you marketing to the right customers? Do you have the right inventory? Is the storefront well-arranged?
Make a list of every risk you can think of — identify where you might make a wrong decision that would impact the business. Prioritise the risks — which ones would have the greatest impact on your customers and on your costs? Then find inventive ways to do low-cost tests.
Wondering whether you should hold a particular piece of inventory? Get a small number of them and place them prominently. Wondering how to market? Try a little bit of everything, and then ask your customers how they found out about you — see what worked and test if it scales to more people.
4. Change what you’re doing if it isn’t working
All the testing in the world won’t help if you don’t act on the results. If your testing indicates you need to do something different — act quickly. Make the change, keep testing customer reactions, and keep confident — if the customer pain-point was real, you will find a way to solve it, even if you don’t nail it immediately.
Identifying when to change is the hard part. If you’re anything like us, part of you will want to immediately change something when a customer criticises the business. Another part will tell you to stick to your guns and your careful planning, and that chasing every piece of feedback will waste valuable time. A final part of you will constantly question whether your customer tests are large enough to justify a big change — after all, maybe it’s just that customer that feels that way…
There’s no easy answer here, but one thing to do is to set expectations upfront about when you have enough information to change e.g., “If 10 customers tell me they don’t like X when asked about it, I’ll change X.”
5. Don’t think about the competition too much
Thinking about competition can be a big time-sink. While you’re still planning your business, thinking about competition is great — you can identify their strengths and weaknesses, and plan for what you will do differently/better than them.
Once you launch and have an endless to-do list, thinking about competitions can be a distraction. The human competitive streak will kick in, making you want to do better than them, rather than focusing on your customer.
There are enough hurdles without thinking about the other guy.
Often the reality is that you and your competitors can both exist and thrive (particularly as startups), and to the extent that you can’t, focusing on the customer will serve you better anyway!
6. Plan well beyond just opening the business
It is tempting to tunnel-vision for the day you throw open the doors and shout “hello world!”. Unfortunately, if you’ve just been planning for your launch, there might not be anyone waiting for your product on the customer-side.
It feels premature, but think early and clearly about marketing, ongoing customer service, and growth. It will give you a raft of benefits, including:
- Your business model will be better — it is easy to make decisions that work with 10 customers but don’t scale to 50 customers. Plan for the scale you want to achieve to make sure you can deliver
- You will have fewer surprises when it comes to marketing and distribution — customer acquisition is hard. Think now about how you will get them later, and you might be able to kick off some early low-effort marketing that will pay-off in easier customer acquisition post-launch
- You’ll be ready to answer hairy questions from investors and partners — you will probably have a lot of conversations about your business, and be expected to describe everything from legal regulations, to operations to marketing and customer service. Being able to talk about all the issues early boosts your credibility
7. Engage excessively with your early customers
This probably goes without saying, but we were still surprised at how much our platform changed through talking to our customers — things we thought were clear, weren’t, and our customers wanted information we weren’t giving them.
It can be daunting asking a customer for help — after all, you want to appear professional, and want their engagement with you to be as easy and fast as possible. That said, we were pleasantly startled at how happy our customers were to personally give us feedback. People love to be heard and have their opinion valued. As a business owner, you give this opportunity to customers, and the sincerity of your thanks will be very clear to them!
8. Be open and transparent about your hopes and concerns
You might think that it’s your role as a founder/manager to hide your doubts and disappointments from your business partner, family and friends. But building a business is a marathon not a sprint, and while some short-term emotional bottling might be sustainable, you’re going to need to vent occasionally to maintain your sanity.
This is part of the reason having a partner and team can help. Buoying each other up makes you that much happier when times are tough.
9. Set expectations. It will be hard… and rewarding
Getting a business up and running can take years.
Dealing with disappointment is important. Things won’t always go to plan. The upside? Where one door closes, there were 50 others that you haven’t tried yet. After all — it’s your business, so the world of potential for products, customers, partnerships and investors is endless. Use errors and failure to refocus you on new opportunities.
10. Plan money-needs early
Every business takes money to get up and running, and getting startup funding is one of the hardest things of all. Getting a startup loan is tough, and even if you manage it, it will probably mean putting your house and personal assets up as security.
Some thoughts from our experience to ease the money burden:
- Minimise every cost you can — work from home, do early marketing through free online platforms, use lower-cost legal services like LegalVision etc. This approach isn’t without its tradeoffs — you don’t want to be wasting hours just to save $10 (your time is certainly worth more than that), but if you are heavily capital-constrained, you might end up doing some tasks you would have preferred to outsource.
- Start operating and selling as soon as you can— most lenders have a minimum “time in business” requirement before they will lend to you. The sooner you have your ABN and are selling anything to your customer, the sooner this clock starts.
- Work with family and friends as your first source of funds — as mentioned above, getting approved for startup loans is hard, and can be a waste of time and effort while you’re trying to get off the ground. Family and friends might get you there faster and with less stress.
What do you think?
So these are our top-of-mind thoughts. Ask us in 6 months time and the list might look very different! We’re really interested to hear what other business owners wish they’d known when they started out. Give us a call on 1300 780 568 and let us know! We’ll love to feature you on our social channels.
Alex is the co-founder and CEO of Valiant Finance. He brings a wealth of experience from his time as a banking consultant at McKinsey, and has a background in Business and Law.