By Oleg K Temple, June 2018
PART 1 of 3: An overview of risks and best practices when starting a company
Starting a business has never been more of an intense commitment than it is today. Will new business ideas conceived today still be viable in 2019, 2020 and beyond?
With the accelerating onslaught of globalisation, automation, artificial intelligence and ever increasing competition, entrepreneurs and investors need to think long and hard before shelling out actual resources for a hypothetically profitable start-up company. The outlook may be rosy, but optimism a business strategy does not make. “A bird in the hand…” as the saying goes. The most pertinent questions are these: is the proposed business model relevant to the market and sustainable? And are the people at the helm of the project credible, reliable and passionate about the venture?
The days of if-you-build-it-they-will-come are long past. Nowadays, competition is at fever pitch in virtually all sectors of moderate investment. One must exhibit heightened senses of strategy, mental agility and foreplanning finesse when entering the business arena. So, rest assured that we are not going to leave you at the mercy of fickle luck and guesstimation. Of course, every business is unique and the start-up experience can be fraught with nerve-wracking anxiety. But the more research and due diligence you perform in the prelude to launch, the better insulated you will be from uncalculated risk and the more prepared to tackle whichever curveball life inevitably fires your way. Here is some actionable advice for when you begin your entrepreneurial journey. The first part of this article, broken into five tips, will give you a better chance of having an exciting adventure, rather than leaping off the ledge into the unknown. Here is a comprehensive checklist of what to do before and during the process of starting a business.
Keys to starting a successful business
Tip 1: Write a comprehensive business plan
Even if you have no intention of pitching the project to an investor… Do put in the work. For your own peace of mind. Granted, things can and will begin to change the moment your company’s wheels hit the business road, but a business plan will keep you on the road. Think of it as an elaborate thought experiment that allows you to compile an long list of potential problems and solutions without facing any of the actual risk or repercussions. Outline your goals and expectations, practice unbiased, critical thinking and ‘sell’ the idea to yourself again, when you have all the facts, pros and cons before you. Step back and consider the entire process from start to finish. You know what they say about a stitch in time, right?
After you launch your company, you will most certainly need to spontaneously adapt to situations on a case-by-case basis. However, if you planned your journey and outlined your goals ahead of time, you will have set off in a sensible direction to begin with, the ensuing problems will not throw you into disarray, or worse still, derail your entire campaign. Unlike if you begin your journey in a chaotic fashion, relying on vague instincts and luck. In a nutshell: if you have a guide or navigation chart, you will be able to adapt and adjust your course, keeping an even keel throughout. Without this tool, it will be a rocky ride and too easy to over- or under-react to unforeseen stimuli, get lost in doubt and lose control over increasingly more significant developments.
It should be noted that this is the one tip to rule them all. If you take the time to complete this step properly, all the other tips will be obvious to you. A caveat at this juncture: do not allow your imagination to run overly wild. It is very easy to get bogged down with an information overload and this can eventually lead to inaction or decision paralysis, which by definition is counter-productive. As Zig Ziglar aptly put it: “You don’t have to be great to start, but you have to start to be great.” So give yourself four to six weeks to perform your due diligence and get your head around your big idea. Then, if the idea still looks good after the careful scrutiny, dive in and learn on the job. Do not fall into the trap of writing a business plan for six or more months—most business plans become outdated and require revision annually, as the market shifts and your competitor analysis will no longer hold true. If you don’t have the patience to do the theoretical work on paper, you will fail in reality. However, remember that building a business is about action, so set a deadline and hold yourself to it. So, even if your plan is not perfect (and it never will be), have the courage to start with what you have. Stop making excuses and shift focus from spending money to making money!
Tip 2: Consider your appetite
Weigh the ‘X factor’. Starting a company is easy, making it successful is far from easy. Your passion and commitment for the project cannot be measured and only you know how deep your reserves run. Question why you are starting this company. Which problem does your business solve? Is this something you can see yourself doing five, ten years from now? How will you protect yourself and the business from burning out?
Most of the greatest entrepreneurs never started with their number one goal being the generation of wealth. Granted, money is a useful tool, but should never be the primary, or worse still, the only reason for your company’s being. As Henry Ford said: “a business that makes nothing but money, is a poor business indeed.” Avoid getting your priorities mixed up.
Tip 3: Be careful when selecting key people
A partnership is a long-term commitment, not too dissimilar from marriage. Do yourself a favour and take the decision when choosing a partner, as seriously as you would when selecting a spouse. Especially in the early stages of your business, you will likely see more of your business partner than you do of the person you have chosen to spend the rest of your life with. Do not capitulate your principles or personal standards to investors’ whims. Yes, financing is extremely hard to come by, but so is a great business idea. Bad ideas are a dime-a-dozen, but just like film producers, investors are not swamped with brilliant projects. Indeed, they have a lot of choice, but good projects are few and far between. Believe in your idea and see it through to completion without selling its soul. If the investor is not right for you, don’t force the relationship. Have the courage to walk away, or you will likely regret your rash, near-sighted decision. The repercussions of a wrong partnership can ruin your life, never mind your business!
And remember that it is not just your primary business partner you need to be careful choosing, it is every key member of your team. Surround yourself with clever, capable people, nurture and harness their passion and be generous when you reward them for common triumphs. For the driving force behind the success of any company is its people.
Tip 4: Location, location, location
We have all been taught that location is a crucial consideration when starting a business. When future-proofing your company, location is an important attribute not only from the point of view of your customer base, but from the perspective of the industry, as well. For instance, if you’re considering launching a taxi or transportation service, you may be spooked by the advent of driverless cars. How much will they cost? Who will repair them and who is accountable in the event of an unfortunate incident? Alternatively, you may see driverless cars as a great boon, a way to save on labour costs, e.g. buy a couple of cars and set them lose in the streets to make you a passive income, while you watch movies at home or travel. However, while Uber, Lyft and other major people-carriers will doubtlessly adopt some form of autonomous technology by 2020, this will, initially, happen in select cities in the most developed nations on Earth. The truth of the matter is that neither infrastructure nor legislature is ready in the vast majority of the world’s cities to accommodate driver-less vehicles. If you are launching your company in Eastern Europe or South America, it is unlikely that these high-tech AI solutions will affect your business model in any meaningful way in the near future. Transport companies in Latvia, taxis in India, stevedoring companies in Spain and truck companies in Poland will, most likely, continue to operate in a familiar format over the coming two decades. Just like the initiatives to phase out diesel vehicles or wean consumers off fossil fuel vehicles all together, the next generation of vehicles will take time to introduce. In truth, it will take much longer for the market to accept driverless vehicles as an industry standard than it will to kill off diesel engines or adopt electric cars.
Tip 5: Be open-minded and ready to evolve
One aspect of this masterful mind-set is to diversify your income streams—don’t bet on one horse. Arrange your affairs in such a manner that you always remain cash-positive. With virtual stores, this is relatively a cakewalk, as the next part of this article will show, but even if you are going into a relatively rigid, one-sided business such as a bookstore or taxi service, try thinking outside of the box. Perhaps you will be inspired to rustle up parallel profitable ventures such as a book review club, language lessons or coffee and pastry corner for the bookstore and guided driving tours, office shuttling or moving services for the taxi company. However, not putting all your eggs in one basket is but half of the story, you also need to be able to recognise and seize upon lucrative opportunities whenever they present themselves. What’s the point of being prepared, if you are unable to act, right?
The second aspect is to hone mental agility. Be willing to admit your mistakes and move on. Never stop learning. Keep your ear to the ground and strive to know more every coming day than you did in the past. Knowledge is power and your key to survival and ultimate success. Do not let your mind stagnate and decay falling into a humdrum routine. Read watch and listen widely, but do not believe every bit of information sent your way, rather, analyse and cross-reference the information, distilling the truth from multiple sources.
When your business gets rolling, never settle and become complacent, keep focus and work with the same passion you had when your company was just a start up business.
In part two of this article, we will look in detail at the specific types of companies that do well in the turbulent modern conditions and are likely to be durable enough to survive and adapt to the future. Of course, starting a company is a huge responsibility and everything depends upon your determination and leadership. We are just providing food for thought and look forward to hearing what you think.
Did we miss anything? Perhaps an alternative, interesting point of view occurred to you after reading this article? Let the community know—sound off in the comments below and start a discussion! Or proceed to Part two of this article — Low Risk, High Reward Ventures to Build Your Future.
About the author: Oleg K. Temple has worked as an editor and consultant on numerous projects advising various start-ups and fledgling SMEs (mostly in the travel, accommodation, tourism and HR sectors) for over 12 years. His main project has been The Cornerstones of World Business, international business directory focused on bringing to light the best companies from each country and state, providing them with affordable advertising and marketing opportunities while encouraging them to engage in lucrative B2B and B2C relations. For travel information such as hotels in California, accommodation New York, hotels Illinois and other destinations across Europe and USA; or if you seek reliable financial, real estate, consultancy, insurance, construction or shipping partners – welcome to CornerstonesWORLD.com.