Thinking of a new business in Ireland – test on a small scale to avoid losing your shirt
I sometimes like to read some of the posts on www.Askaboutmoney.com in the business section. Quite often I have seen posts from people contemplating starting a particular business and trying to find out how much it might cost to set up a retail store or similar business. They talk about getting loans or using their life savings to start the business.
I believe this is a fundamentally flawed approach to starting a business. I think it is much more cost effective to try and first identify a market and determine what kind of product or service they need and then provide it. Picking a business to start based on what you think you might enjoy doing can open you up to failure. This is because you get so wrapped up in the romance of what it would be like to run such a business that often the most important issue is ignored. Are there enough potential customers to sustain the business and is there a cost effective and realtively easy way for you to get your message to them.
I know someone who wanted to start a property website. They spent over €5000 getting a web site developed and a further €10,000 on an advert in one of the weekend property supplements. Guess how many customers they got? I’m sorry to say they got none – having spent €15,000 they generated no business and eventually had to abandon the project. Until you have people that are interested in your product and services and you have a systematic way to attract them to you then you do not have a solid business.
So next time you think you have identified the killer business idea that will make you your fortune take a step back and ask yourself ‘How can I quickly and cheaply test if there is demand for this product or service’.
A good example of this are the guys who started Innocent smoothies. Rather than go out and find premises and purchase expensive machinery instead the story goes they simply went out and tested their concept. They took a pitch at a music festival in 1998 and sold their smoothies direct to the public, guaging their interest and getting feedback at the vital early stage. The story goes that the had two big bins one marked ‘Yes’ and the other marked ‘No’ and they asked the public to vote on whether they should give up their day jobs to start a smoothie business.
Even to this day Innocent smoothies know that the success of their brand is built on sales and marketing, and a little known fact is that they in fact do not actually make the smoothies themselves. This is actually contracted out to a specialist food producer.
Follow this advice and you will save yourself no end of heartache. Start small, test and measure, and don’t give up the day job until you either have matched your earnings from the business or feel 90% confident that you will by following a proven and tested plan you have created.
10 tips for greater productivity and better business results
1 Try and limit the amount of times you check emails to only 3 times per day at set times. Start of day, lunchtime and End of day.
2 Limit Web browsing to just 30 minutes per day includes visiting forums etc. Keep a record of things you want to look up and then treat that as a task. Go to the web and only look for the items on your list.
3 Make a to do list for the following day made at the end of the previous day this will allow you to start the day with a clear head and clear direction of what needs to be done.
4 Spend at least 30 minutes per day away from work taking some exercise. I often find that when I walk away from work and leave my mind clear to wander that is when ideas and solutions to problems pop into my head. If you can perhaps you could bring a digital recorder with you to brain dump ideas too (see point 6 below).
5 Employ a call answering service to take your calls and then forward details to you by email. This will have two benefits it will effectively screen your calls, avoiding you wasting time talking to non important cold callers; also it will reduce interruptions which can kill your train of thought.
6 When you have reports and articles to write try and learn how to use a digital recorder to allow you to quickly brain dump ideas before you forget them. Then you can send the recordings to a transcription service and have them type them up for you. We all think and talk much faster than we can type and with the advent of freelance websites such as www.elance.com it is possible to get 1 audio hour worth of transcription typed up for less than €20.
7 Prioritise the tasks that will make you the most money. If you need to make more sales to bring in more clients for your business then focus your time around that. If needs be spend the whole day out visiting prospects from the start of the day. Leave lower value tasks like tidying your desk way down the list. If you focus your attention on the high value tasks these should yield you increased income that will give you the money to pay someone to do the more menial non key tasks.
8 Get to the office 30 minutes earlier. By starting work just 30 minutes earlier for a 5 day week over the course of year you will have given yourself the equivalent of 15 extra days.
9 Look for ways that you can leverage your time by working once and having it profit you multiple times. For example an author leverages their time by writing a book once and then selling it multiple times when they are off doing something else. Even by writing this article I am leveraging my time. This article will be a post on my blog, an article with links back to my website that I submit to article directories. I will then modify it slightly and turn it into a press release. All of these things will directly benefit my business by increasing the amount of traffic to my website. In addition all content that I create I store away for future use and one day I might end up using it for content in an information product, newsletter or perhaps as content in a seminar I give.
10 Document the tasks within your business. As you develop and grow your business one of the best tips I can give you is to take the time to record key tasks that you perform in your business. In common with most start-ups it is the owner that does everything. However if you plan to grow your business into a proper business rather than just a job disguised as a business you need to plan for other people to one day do the tasks you do. So even if you are not in a position to take on staff quite yet you can still do some of the ground work. Keep a folder with all the different tasks that you do in your business. Everything from how to check your bank balance on the online banking to the sales script you use when calling prospects. Take a few minutes each time you do a task to note down the steps you take in plain English. Over time this folder will grow and become the ‘operations manual’ for your business. Then when the time comes to take on additional help you will have tasks well documented for them to be able to follow. This will save you a huge amount of training time and make new employees far more efficient in a shorter time frame.
How not to start a small business in Ireland
Here is a real life lesson that should be a warning to would be business owners in Ireland. Someone I know recently opened up an alternative health centre. They had an idea that they would like to offer Reiki services, and because they had an interest in angel card readings they also decided to open an shop selling Angel products. They rented a two room premises on the first floor of a high street. They spent 2 months fitting out the shop, buying stock and ‘getting everything ready’.
Now 3 months after they began they are starting to panick, everything is set up and they have spent well over €10,000 but there have only been a handful of customers and sales of less than €500. Given that this person gave up a well pad job of over €40,000 per year they are starting to get pretty worried about how to turn things around.
This person has made the classic mistake of thinking that because they have an idea and a premises and stock that they have a business.
They couldn’t be more wrong. What makes a business is customers, and lots of them, and a proven system for getting more customers, looking after the current ones and keeping in touch with them.
What she should have done? If we were to rewind the clock with the benefit of hindsight this is what this person should have done before quitting a well paid job and spending €10,000 of their hard earned savings.
- Start small on a part time basis. Rather than launching full on with all the overheads of a premises and no initial income I would have recommended that she hang on to her job, taken just one room of premises or maybe even started from a spare room at home. If things started to take off then she could have then tried to cut back on her work and gone part time. People often forget how hard it can be and how long it can take to replace a full time income from a new business. Often it can take entrepreneurs years to get to the stage where the income they take from their business is on a par with that from their previous jobs. Sure sometimes you can get lucky and have a business that takes off like wild fire in the first month but hey you also have a chance of winning the lotto too…
- Not tried to do too much. Instead of trying to open a shop and provide therapies at the same time I would have held back on the shop and just focused on one core aspect of the business, the therapies. Once that was up and running then by all means add on other additional services.
- Perfected the marketing. Rather than spending all her savings on stock I would have recommended she invest her money wisely on a proper marketing plan and execution of that plan. It can take a lot of time and resources to identify which is going to be the best way to attract paying customers and better to do this when you have the safety net of a secure income from a job to fall back on rather than when you are down to you last few euro.
The trouble is everyone who ever started a business always presumes it will be a huge success and doesn’t consider
failure. All to often people focus on what I call the ‘fluffy’ aspects of starting a business such as buying a flash computer and making their premises look just right. Don’t get sucked in by having to have a fancy website, stationery and other such things. Instead if you focus on the one thing that matters – getting and holding on to customers – then you will do much better in the long run.
How to get things done
One thing that can make you more efficient is to make a to do list for the next day the night before, that way everything that needs to be done is fresh in your mind. You can hit the ground running the next morning. If you leave your to do list until first thing the next morning you can lose valuable time trying to remember what you needed to get done.
Another suggestion is to make yourself unavailable and turn off your mobile and email and skype. In these times of instant communication and making ourselves accessible to everyone and anyone it can be difficult to actually find a block of time to get things done.I recommend turning off phones and email for set periods of time during the day and making your staff know that you are not available. You might also consider hiring an assistant or telephone answering service to take messages from callers. You can then assign a block of time during the day when you call people back.
Try and determine which time of day is your most productive and then plan your do not disturb time around that. Likewise then try and determine when you find it harder to concentrate on written work and use this time to return calls and meet with clients.
Set yourself realistic goals and targets. For example if you are writing a new brochure or book then set yourself a target of a certain amount of words per day. This way it will seem less daunting to try and write say 400 words per day rather than trying to find time to write 2800 words during a week.
One suggestion that works for me is to keep a daily to do list on a 125mm x 200mm spiral bound pad and tick off the daily tasks as you complete them. This will give you a feeling of accomplishment as you cross items off and allow you to see at a glance what needs to be done. This is far more effective than trying to keep a to do list in your head. My final tip is to try and complete unpleasant tasks as early in the day as you can. It is human nature to try and put unpleasant things off and this can affect our performance throughout the day as we subconsciously keep thinking that we have this unpleasant task to deal with. You are far better to get the unpleasant things out of the way as soon as possible and then they are done and out of the way.
Remember successful people and unsuccessful people all have the same amount of hours in a day. What separates the two groups is what you choose to do with your time. We all have a finite resource of time, it is up to you to spend it wisely.
Peace of mind for 11 cent per day
If you are like me then more and more you rely on data and files stored on your computer to run your business. Add to that all of my personal files like digital pictures of my family. It would really be a nightmare if I lost this information.
I have always known that I should be backing up the files on my PC, but up until now I just haven’t got around to it. I had looked at a few options but to be honest the hassle of manually backing up files was something that always came bottom of my to do list.
Well I can now smugly say I have found a solution and implemented it and it has been virtually painless, and now for less than 11 cent per day all of the files on my PC are now continuously backed up as I work automatically, without me having to do anything. What a nice feeling! Hopefully I will never have a need to restore files but it sure does feel good that it is one less thing to have to worry about.
Check out this handy online backup from Carbonite for yourself.
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