First Year Jitters
Wednesday, February 25, 2015
The first year of any new business is a fraught one – and the time most likely for a business to fail.
Passion and enthusiasm will only power a young business so far before one or more of the common newbie stumbling blocks may appear.
Becoming your own boss brings with it a daunting set of challenges that even the most prepared can be derailed by.
From managing cash flow, raising your brand’s profile, keeping on top of tax, to thinking creatively about marketing, the job comes with many hats. The feeling of being overwhelmed by responsibility too often goes with the territory.
Business coaches are in the business of stepping into the breach where and when new business owners get swamped. Seeking advice on healthy business management can be a valuable lifeline in the heady early days of finding your feet as a sole trader or business owner.
In her work advising small businesses in the lifestyle sector, Kate James tends to come across the same set of problems amongst new starters.
But being aware of those common pitfalls, and how to deal with them, can help set a steadier, fail-proof course for your business in the early days.
Among her clients are chefs and masseuses, singers and artists, all with creative passion, but, in some cases, less sense of how to translate those passions into a sustainable business plan.
“Feeling like you’ve not got all the knowledge you need to be able to operate in the business in a successful way is a common problem,” she says.
As a professional investor in small businesses, James Hayes, is also familiar with the pitfalls of being a new business owner. He helps to establish and fund as many as five small businesses a year, at the same time offering his mentoring skills to those heading-up those businesses.
Based on the experiences of both Kate and James, here are a list of possible missteps to avoid in that first critical year of a new business endeavor. Being aware of the problems and having some practical advice on how to address them can make all the difference in the sink-or-swim culture of start-ups.
No clear vision
The biggest issue James Hayes sees when advising new businesses, is a lack of purpose. Knowing what that business is designed for and how it will provide an income over time is key. “Is it an asset you want to grow over time and eventually sell?,” he asks many first-time owners. “Or, is it a business designed to be a reliable source of income - an income replacement source?“
Many entrepreneurs make the mistake of not deciding what they want out of their business before launching headlong into it, he says. Being clear on this long-term vision will help you set reasonable limitations on the time and resources you invest in the business now.
Lack of Confidence and Self-Belief
For Kate James, business coach, self-doubt is often the biggest stumbling block for new entrepreneurs. Sometimes, her clients aren’t themselves aware of how big a problem it is but can unintentionally hold their business back on account of those doubts. For some, this may mean not marketing the business as aggressively as they otherwise might, or unwittingly limiting the types of goals they set themselves as a business.
“Self-doubt is a really big problem for people,” says Ms. James. “Many small business owners have strengths in a certain area but might not feel confident in marketing their business or selling themselves, or creating systems in the business that are actually going to make the business sustainable.” Her advice is always to look at where you can get some support. If you can’t afford a business coach – and some can cost up to $10,000 a year for a twelve-month program– she advises partnering up with another small business in your sector to talk through concerns. In addition, Small Business Victoria offer some business mentoring on a more affordable basis. Her own coaching program, designed specifically for creative and wellbeing businesses, costs $795 for three sessions.
Outsource Your Stress
Recognise early where your strengths and weaknesses lie as a business owner and outsource those weaker areas where possible, is the advice of James Hayes. “I mentor a lot of first-stage businesses and one of the first questions I ask them is: What is it that strengthens you? Not their strengths and weaknesses but what do they do that makes them feel strong? What do they do that makes them feel weak? For example, I’m not details person so when I get down to do my accounts, I’m really good at it, but it just exhausts me.” Where possible, outsource the things that exhaust you. And do it from Day 1, he says.
Changing Bad Habits
Resetting broken communication patterns can be a big step forward for a businesses’ productivity. Business mentor Hayes uses the principles of neuro-linguistic programming – or what you say to yourself internally and how you convince yourself to do things – to reset the familiar thought patterns we all have that may be holding us back. He explains: “Neuro-linguistics is the language you use inside your head that is the mind-read you have of somebody else. For example: Well, he’s doing that because he doesn’t like me.’ Or, ‘he cut in front of me because he’s an arrogant prick.’ Or, ‘My supplier didn’t reduce my price when the dollar changed because he’s just trying to rip me off.” The truth is, he says, is its partly delusion. Furthermore, in a business setting, it’s often bad business. Resetting those habits means you no longer have those limiting conversations with yourself. The result is a more open approach to business.
One of the most common of the self-imposed problems a small business can create for itself is that of trust – or lack of. When you are a sole trader, and competent at all aspects of running your business, trusting anybody other than yourself to run things can seem a tall order. James Hayes says this is the most common stumbling block for small businesses operating at $500,000 to $1 million in annual turnover, or between eight and twelve staff. This is the point at which a business owner must learn to delegate managerial responsibility in order to break through to the next phase of growth.
His advice to business owners struggling at this step is to stop looking for that perfect employee – the one who has to be as good or better than you. “How do you find them? Well you don’t because they are all out running their own businesses. You find someone with potential and you train them.”
The Business is Not You
This point is often the hardest one for a new business owner to grasp, says Hayes. Breaking out of the ‘the business is not you’ habit means breaking the cycle whereby every decision in the business is an extension of your personality. He explains: “What a lot of small business owners will say is ‘We don’t do that.” Who is ‘we’? What is the culture of your business? What is the personality of your business? It’s not your personality.” By personally identifying yourself the business with your own belief system a business owner is automatically limiting the businesses’ ability to grow. The habit can take years to unlearn, says Hayes, and the best treatment is forcing yourself to take a step back from the business and occasionally bringing someone else in to run it.