The challenge of small business and start-ups in the current economic environment is definitely a multifaceted issue. I would not claim to be a guru in this arena, but I can offer advice from my experience in both working for small business and start-ups as well as being in a position where I have started and run businesses at several stages through my career (including my current venture).
Over time and repetition you tend to see a pattern in those ventures that succeed against almost impossible odds and those that tend to wither and die in more favorable conditions. Hopefully the advice I am providing in these posts allows some small business owners / operators to be a little more prepared and possibly prevent closing their doors in the current economic environment.
7. Have a business plan
Everyone says this, I know. Your business is little more than an idea, a fuzzy concept when you are starting up. Typically you are not 100% certain at this stage how the business will evolve and how it will become a venture that can successfully remove you from the 9-5 treadmill. So isn't a formulated business plan a little premature at this stage? Possibly yes, but you need to take time to sit down and think about how you are going to make this idea into a business.
You really don't want to follow the Underpants Gnomes business model - Phase 1: Collect underpants, Phase 2: ???, Phase 3: Profit (Google South Park Underpants Gnomes - For those South Park fans among us). You need to have a sufficient idea of how your business is going to operate to fill in the Phase 2 of your plan in some detail. Basically without this middle step you are going to end up with little more than a "cave full of underpants" and no profit.
8. Start small
When you are starting out on your business venture and trying to build up a customer base and a reputation, the last thing you need is to have an army of sales and operational staff looking to you for a regular salary while the phone / email is silent most of the week. I'm sure we all dream of the day that we are the CEO of a multimillion dollar enterprise, where we have staff for every conceivable role in the company. Unfortunately if you are starting up, that day is not likely to be today.
You will need to do a lot of the roles in your enterprise yourself to keep costs down. Employ only key staff at the beginning and make sure these staff are competent at more than task. By keeping your costs down you will be a little more prepared to survive the early stages when you are yet to see the fruits of your labours.
9. Working from home is not the same as staying at home
For many new enterprises the early days will likely be run from a home office in order to keep costs at a minimum. Usually you have just transitioned from full-time employment to your new venture and not in a position where you wish to add expense to an unproven business. You set aside an area in your home to conduct the business and with all good intentions leave your employment role to get started.
You (and your family) need to come to terms with the fact that while you are, technically, at home during the day now, you are there solely to build the business. Learn to focus and not be distracted. When you were employed those little jobs around the home were left until the weekend. Now you see them everyday, do not be tempted to spend you working day doing household chores, pulling the kids out of day-care or any other task you would normally not perform during the week. Weekdays are to be spent on building your business. Set boundaries and do not cross them. If you spend most of your working day doing chores around the home, when are you exactly going to devote to actually building a business? Nights? If this is the case then you should have kept your job and worked after hours on your business as a part time enterprise. Basically if you are serious about this being a full time provider for you and your family then it needs to be a full time concern.
You may find yourself entering into arguments with your spouse regarding this matter but you need to keep the above point in mind. Many home businesses never evolve or fail due to the operator never taking the time during the day to actually nurture the concept.
10. Value your staff as business grows
As per point 8 above, when you are starting up you will likely have a very small contingent of highly competent and flexible staff. These staff members know your business intimately as it is growing and tend to become the "go-to" people when there is a new task that needs completing. In early stages this is out of necessity as you often don't have the resources to employ more staff, however when you business becomes more successful and you are employing more staff, remember to take time to evaluate how much work is being done by key people and whether some of this workload can be relieved by employing more people in the department or reassigning workloads amongst existing staff.
We tend to gravitate towards exceptional employees. We place a lot of trust in these people and as such, often unknowingly, continuously add to their duties and workload because we trust them to get the job done. When you are running a large successful enterprise and a particular department is significantly smaller than others in your corporation, it is time to look at the workloads of the people in that department. Otherwise you run the risk of these key staff members feeling burnt out and eventually resigning taking a lot of key competencies of the business with them.
I hope you found the advice and insights from these 2 posts to be helpful in getting your enterprise up and running and possibly preventing some key mistakes in early stage entrepreneurship.