If you started a businesses because you hate your boss and after six months you still hate your boss…seek professional guidance!
Monday, 14 April 2014
Year One: Start-up...A Great Beginning
Major Challenge: Ramping up sales
Starting a business…especially for the first time is, quite frankly terrifying. People start businesses for a variety of reasons. There are two groups of commonly cited reasons for taking the plunge. One group centres on money, the other on frustration.
Many business start-ups come about as a result of unemployment or underemployment. My father started his business during the depths of the recession in the eighties because the firm that employed him went out of business. His former clients actually phoned him; they needed his engineering expertise. You could say that they started the business for him!
Immigrants often start their businesses for similar reasons. They possess a skill set, but may not be employable. The alternative is to start a business. Amazingly few people start businesses, especially first time businesses with the goal of getting rich. They are really hoping that the business will survive and that they can actually support themselves.
The second group are the ‘corporate refugees.’ I started my business when a client offered me a contract. The truth is that I never really ‘fit in’ to the larger corporations for whom I worked. I was lucky, I had some great bosses, but others tell me that the reason they quit is that their boss was so bad that they couldn’t stand working for him or her.
Everything seems new when you first start out. You work hard to impress your clients, especially those early larger clients on whom your business really depends. Many businesses do not make it past the first year. They can’t ramp up quickly enough, they can’t make a profit or the business many not have been viable in the first place. Many survive but are not sustainable.
The Year One Challenge: From Need to Demand
Demand = Need + A Visa Card
There is an enthusiasm that comes with the start-up. Most people start with the expectation that the world will love their product just as much as they will. Unfortunately, that is not the case. Many people are unable to make their case to their potential customer. I have heard many business ideas that sounded almost perfect. There was a real need for their product or service. Unfortunately, there is a big difference between need and demand.
As business planner I have some bad news for you…there is almost no way to discern between need and demand when starting a business. I tell my students and clients that their first year in business is their final step in market research. My dad knew that there was demand because his clients found him. Others aren’t so lucky.
One of my seminar participants started a business providing credit and collections services for small and medium sized businesses. During his market research he called businesses, explained his concept and asked if it was the kind of service they might need. Everyone he called was enthusiastic about his service. He started the business and had no clients for six months. Those he spoke with needed the business, but they didn’t demand it…they didn’t see the need to purchase.
Your first year is a roller coaster. It is tough, but exhilarating at the same time. If you can fight through and achieve success by the end of the first year, it is one of the greatest accomplishments you can make. Then, you are ready for year two…development!