Have you dreamed about being your own boss?
Have you carried out an assessment to see if your business idea will be a success?
Before you get all excited, there are some things to remember that will keep you grounded.
All too often, budding entrepreneurs forget figure out what their products is, and how they will take it to market and get bogged down in by spending all of their time planning the business structure and how to finance it. They seek professional advice and imagining their potential success, all before they know if the project is feasible.
When starting a business, it is wise to speak to and seek the advice of people in your industry. These are the entrepreneurs, who have already been down the road and seen the potholes and dead ends that you can fall into, who will give you the right directions.
So, here are nine things that you should NOT to do when setting up a business from the wise Irish entrepreneurs.
1 You should not mistake your enthusiasm for a product or service for that of the consumer.
There’s a reason why “the customer is always right” is so meaningful. Because, without customers, you do not have a business. While your own belief that your business idea is great is very important, you need to get the opinion of customers to ensure that they carry a similar belief in the business.
Put yourself in your customer’s shoes and think about every aspect of your business from the customer’s point of view.
It is so easy to inflate the viability of a product because you would buy it yourself. The fact that you buy the product is not the basis of a successful business. Only if lots of people want to buy the product, will your business be a success.
It is important to identify who your future customers are, survey them about your idea and get as much feedback as possible. Customers are the experts in what they want and will buy.
As well as ensuring that your customer wants your product, you need to make sure the market is ready for your product also. All aspiring entrepreneurs should test the market before blowing €100,000, which is so easy to do.
2 Avoid trying to do everything yourself
One of the biggest challenges all entrepreneurs face is delegating and letting go. Too often, they won’t let others share the load and operate in the belief that only they can make all the decisions.
If you try to do everything yourself, you will spread yourself far too thin on the ground. By hiring staff and getting their help, you can free yourself up to take care of the more important issues that arise. You work on your business rather than in it.
It is difficult to grow a business, when you are the only person involved. You can’t do it alone. It’s going to be the team effort that will make the business successful. You can rely on the benefit of having a team and the strengths they have that you lack. It takes expertise in finance, legal, technical, human resources and marketing to run a business and you cannot do them all.
3 Raise sufficient money
Finance is required, not just to fund the rent of office space, the purchase of equipment, stock inventory and marketing, but is also needed to pay salaries, electricity bills, insurance, legal fees and other overheads before the business starts to makes a profit. And, if you are obliged to sell your products on credit, the time between making the sale and getting paid can be months and the carrying of these debts must be financed until they are paid.
It is important that you procure enough finance money from all sources, such as investors, banks, or through “angel” capital.
Everything takes longer and costs more when you are starting a business. You should plan for all costs and a longer timeframe. Don’t be over optimistic on the timing of revenue flows. Also, even though it might be costly, it is very important to get the legalities, the contracts, the intellectual property etc in order from the beginning. It’s very expensive to go back and to do those things and correct mistakes later.
New entrepreneurs should remember that customers asking for credit and seeking credit from suppliers is often the norm.
It is very easy to burn through money and have no idea where it was spent.
4 Saying yes to everything; learn to say NO!
If you try to do everything for everyone, it is a certain road to disaster. So, spreading yourself too thinly on the ground diminishes quality. It also eats into your time, which is one of the most precious commodities when running any business.
We advise against saying yes to everyone and everything that comes your way. So don’t waste, that most precious of commodities, time by saying yes to things you know you do not have the time to do.
5 Keep doing what you used to do in your old job
Many entrepreneurs, who have set up a business, are unable to let go of old work practices and initially spend too much time doing their old jobs.
For example, a software engineer might leave his employer to set up his own development company. He then spends most of his time working on software as a developer rather than building a business as its director.
All entrepreneurs must make the transition from being an employee to the chief executive.
If you just want to do your old job for yourself then you become self-employed and sell your time. If you want to be an entrepreneur and build a new business you must embrace finance, sales, operations and human resources. The hardest thing to do is stop doing your old job as you know it best. In order to build a successful company, you have to let go of the things you did in the past and get to know and better at the things you need to do for the future.
6 Save money; stop spending lots of money on consultancy fees
We all know that consultants do good work and their analysis may be thorough and they may have great insights but it comes at a cost. You can also get good advice and support from other entrepreneurs, and that won’t cost you anything.
The consultants may not be an expert in your industry, but they do have seen a lot of different business models and the problems they have.
Also, there are things you don’t want to discuss with your team or board. It is good to have other people in the same boat, who have faced the same issues.
7 Avoid exchanging working 9 to 5 for longer hours
Many people want to escape the 9 to 5 routine of working for someone else, and choose their own working hours. They think that, by starting a business, they can control their working time. However, the reality is a lot different. You are required to commit huge amounts of time and energy into a start-up, and will probably end up working many hours far more than the 9 to 5 employee.
It is true to say that, most people do not realise that you end up working an 80-hour week in order to avoid a 40-hour week.
You are setting up a company as well doing your day job working billable hours. You might do 35 to 40 hours of billable work. Then you must find time to prepare presentations, pitches, organise staff and finances. So you end up doing two jobs at once. So, if you like comfort and security don’t start a company as you will end up working at least 80 hours a week and might not get paid.
8 Get much more with the investment money
When raising money from investors it is an essential requirement that you look at what they can bring to the table. Start-up companies can be picky when choosing an investor, and shouldn’t just accept any investment money for the sake of it.
You could get a lot of money from an investor but they might not have the experience to be able to add anything to the business. It’s better to get investment money from an investor who can bring experience to the table.
9 Incorporating too early; trial before you incorporate
Some companies don’t need an elaborate corporate structure when they are in start-up mode. Being new to the business world, it is easy to think you must incorporate as a limited company immediately. However, you can initially operate as a sole trader or partnership, before becoming a limited company.
A limited company isn’t really tax efficient until your trade exceeds €300,000 in turnover. There is a lot of paperwork and costs associated with incorporation in becoming a limited company.
Unless you’re planning a major investment for growth or a piece of unique technology that is going to revolutionise the world, then there is no urgency to become a limited company immediately.”