5 things you’ve not considered when starting your business

There are many issues that you need to consider when starting up on your own.

And you’re probably not going to cover every aspect or angle before you launch but here are five key factors that you may not have thought about.

Think about these points fully and carefully.

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1. Are you mentally ready?

There are many attributes you need to make a success of your new venture. I speak a lot about having the need to have drive, determination and belief in yourself.

But there’s something else.

Your mental toughness.

Are you mentally ready to take all this on?

Here are some stats (source).

UK:

• About 673k new companies were incorporated in the UK in the tax year ending April 2019. This is an increase of 8.5% compared to the prior year.
• However, there were also c.509k companies dissolved in 2018/19, which is the largest number of dissolutions since 2009/10.
• The life of the average company is falling. The average age of a company on the Government’s register was 8.5 years, down from 10.7 years in 2000.
• According to the ONS, 57.6% of companies that started in 2013, failed to survive 5 years (source).

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• In the US, of all the private sector businesses that started in March 2014, only 50.9% of them had survived 5 years later in March 2019. (Source)

Starting a business for most people is hard but maintaining your survival can be harder.

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Having said that, it is not all doom and gloom.

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Some more stats (2018 figs, same sources as above):

• For UK and US companies 89% and 80% respectively survived their first year in business.
• The chart below shows that from 1994 to 2007, the number of US private companies between 0-2 years old as a percentage of all private companies remained relatively steady, albeit declining slightly. Then, during and post the financial crisis, this understandably dropped dramatically. However, in the past 5 years, this has been rising again and notably at a faster rate more recently for companies that have managed to survive up to two years. This could imply that getting through the first two years in today’s market environment is the toughest part.

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So, if you can survive your first two years of operation, then perhaps you have a greater chance of making a success of your business.

Once you have processed this, you need to get over the mental hurdle that prevents you from properly pursuing your startup business idea.

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You need to consider Omission Bias.

Omission bias refers to a human’s tendency to react more strongly to harmful actions as worse than equally harmful inactions and as a result, judge them to be less moral.

So, with regard to our topic, it is easier to think about everything that may go wrong when starting a business and the knowledge that everyone will know that and therefore do nothing, than imagining the potential upside that may materialise.

The introduction of social media over the past 10 years has been a key factor in heightening omission bias and thus making people more cautious about starting a business. Is the public failure of a business worse than just failure of a business? Is this going to stop you pushing though with your promising business idea?

You need mental toughness.

You need to rewire your brain to accept that the downside of starting a business is worse in your brain than perhaps it would be in reality.

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2. What would you do if you make no money?

What would you do if you didn’t make any money at all? Literally zero.

You’re probably thinking that this won’t happen. It’s impossible. Someone will buy my product or service, surely.

Well, maybe not.

And the probability that this could happen is higher than you may think.

Many entrepreneurs may believe in their idea or product so much, simply perhaps because they have spent so much time building it up, that they are blinded by the potential that it’s not needed or wanted by the target audience.

If you had no income for weeks or months after launch, how would you cope?

It is always a good idea to have a back-up ‘worst-case-scenario’ plan. Some questions that you may need to find answers to:

• Have you prepared an exit strategy?
• Could you go back to your old job or find a new one easily?
• Have you built up financial reserves that you could fall back on or do you have other means of accessing funds to pay for bills, for instance?
• How long would your savings last?
• Are you prepared to live more frugally for the foreseeable future if you need to?
• What would you do if the unexpected happened? For example, you may have an idea to start a revolutionary new driving school. What would happen if your car irreparably broke down?

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3. Do you truly understand your customer?

So many entrepreneurs start by building a product or service.

Then they try to sell it to the market.

Then they fail.

One of the key factors that prevents people from launching their business or not succeeding after launch is because they don’t understand the customer or their target audience well enough in the first place.

You need a deep level of understanding of your target customer to achieve your business goals.

This is so important that I discuss this in detail in my freebie product 'Starting Your own Business or Building Your Startup' but let us keep it relatively brief for now.

So, what are my key findings in dealing with and understanding your customer base?

• A few interviews or dealings with customers doesn’t cut it. Especially the ones who you know will probably validate your idea. Take time to get as much feedback as possible. Get a database of unbiased information.
• Deal only with customers that you believe will need or want your product or service. This is the only data that matters.
• Be transparent. Be open and honest with your prospective customers. Don’t forget, these potential clients may become your real clients one day.
• Even after you have launched your product, maintain constant contact with your clients. Engage with them. Ask them what they like or dislike. This is how you can adapt to provide your customer base with what they need, not just what you think they want.
• Use customer tracking tools like Google Analytics to gather more information about where your customer base is, what outlets they used to get to your site and how they interact with your website.

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4. Have you built up a network?

During the startup phase of my own business, I found that building my own base of contacts, which included potential competitors, customers or colleagues was invaluable.

Networking helps you build confidence both in yourself and the product or service you’re bringing to the market.

It helps you connect with other small business owners who could provide you with ideas, help or even act as a mentor to provide support during your startup journey.

Don’t be afraid to engage with others. You will realise that many are in the same boat as you or have encountered the same issues you’re going through.

More people than you think will be keen to help you.

I also realised that networking was an important way to find new prospective customers. Even if the people who you encounter don’t need what you sell, they may know people who do. Referrals will be key to your business expansion and an important driver of new business.

So, generating a wide, relevant network where you have built strong relationships will, in my view, be so important ahead of launch but also must be continued as your business develops.

Set aside time every week for networking and don’t forget about it.

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5. How does starting up a business impacts your family or social life?

Starting your own business is not easy (I’ve said that before, right?!).

The research, planning, testing, strategising, building, networking, selling, managing, recruiting, monitoring (and repeat). It takes time, effort and dedication.

It will likely affect your physical and mental wellbeing (see above) and you need to be aware of this.

If you’re dedicated to making a success of your business idea, pretty much every aspect of your life as you know it will certainly change.

But the people who you live with, dine with, sleep with, socialise with and play with will also be affected.

It is not all about you.

You will need to make sacrifices in your life on a major scale.

Changing large chunks of your lifestyle as you know it will be necessary and it is likely that not everyone will be keen on those changes. Whether it be the amount of time you spend with your family, how often you see your friends or the commitments you have with your kids or to your book club.

The point is, others will be affected by your actions, so let them know beforehand. Be upfront and communicate with them and come up solutions that they will also be comfortable with.

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Conclusion

I’ve been upfront with you about some of the key aspects that I believe many will overlook when starting up on their own. Issues that should be considered before taking the plunge. This is not to put you off taking the entrepreneur path but I find it is always better to have more information to enable you to prepare for the future more effectively.

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