New Business Lessons Learned – The Hard Way!
18th July 2018
Starting and running a business is like buying your first home – the excitement, enthusiasm, and emotional connection you have to your idea can stop you from making properly considered decisions.
Instead, any would be entrepreneurs should seek external professional advice wherever possible. Professional advisers have the skills required and experience gained through guiding and supporting many businesses as they go through the same process as you, and can help you avoid many common pitfalls before they occur. As I was once told “putting all the money you save from not taking professional advice into the highest interest bank account, will still not be enough to cover the cost of the mistakes you will make.”
Below are my top tips for any new businesses to help them to off to a successful start:
1. Hire the best people you can afford and make sure your team is a balance of characters.
Identifying and hiring your first employees will be one of the most important decisions a budding entrepreneur will ever make and the decisions made can sometimes make or break a business. Investing in and looking after your staff can only reflect on the long term health and wellbeing of your company.
2. Ensure everyone has a job description. This makes sure everyone understands what is expected of them. The basics you need to make sure you have included are:
• Main purpose of role
• Comprehensive list of responsibilities for that role
• Authority levels that the role entails (for clarity also list authorities the job holder does not have)
• Key behaviours required
• Key actions to be undertaken
3. Keep a daily record of your business bank balance and show it as a graph. You can then compare each year’s financial graphs to anticipate your cash position and be able to spot anything that could be going wrong, in advance of your accountant telling you. This simple tool is one of the best ways to keep on top of the numbers.
4. Remember your monthly management figures, and annual accounts are historical information.
They don’t tell you what is happening now. That said, the financial information is vital. At the very least you should have weekly Key Performance Indicators: sales, purchases, wages. Monthly management figures should also be prepared and be presented as a Profit & Loss account for all your key costs.
5. Make sure that your leadership is firm but fair.
It is essential to earn respect and this can only be achieved by being consistent and fair. Develop your own management style, but also spend time learning how to manage your team better.
6. Set high standards and act as a champion of those standards.
Making sure that the whole team understands and follows the standards you set becomes a key part of your role as manager of the business.
7. Always get a solicitor to go through any banking agreement and listen to the advice they give.
It is too easy to sign up to financial agreements and not fully comprehend what you are getting into.
8. Do not ever give personal guarantees. Closing the business is a better option. Just ask any business person who has given personal guarantees, and then they find that things don’t work out as expected. Find other ways to fund your business needs. Invoice financing or equipment leasing are a couple of examples of other ways to bring money into the business without using term loans.
9. Use an insurance broker. Do not arrange insurance direct with an insurance company. This may appear to save money, but unfortunately does not in the long run. You may find yourself in a situation where you are not be properly insured and when it comes to making a claim you then have no-one on your side helping you. This is all part of the service provided by a good broker.
10. And finally, always seek professional advice in the form of a Surveyor and a Solicitor when making a property purchase. Get a full structural survey when buying, and a schedule of condition when renting. Make sure the schedule of condition is a documented part of your lease.