Smart entrepreneurs survive

Thought there was no room for start-ups in such uneasy times? Well think again. The trick to success lies not so much in your timing as in your survival techniques. Here are 5 + 1 great tips to get your new business into tip top shape.

1. Make small mistakes

Start small so that your first mistakes are small. That way you’ll learn and not drown with a single disaster. Test the water with a pilot project, use borrowed or second-hand equipment and casual labour. Borrow as little money as possible.

2. Cash is king

Treat your cash like the king it is and pay your urgent bills. No matter how rich you are in property, orders or a fat debtor’s book, your creditors will foreclose on you and your business will die if you don’t have cash to pay them. Don’t even open your doors if you can’t do a cash-flow forecast. Ask a friend or accountant, do a course, but learn how. Ask yourself four months in advance: How much cash is coming and when? Enough to pay the bills and wages?

3. Staff is family

Your staff should be part of the business. They must be incentivised to share the responsibility. They will do so only if they feel they are part of the business.

4. Sales, sales, sales

Have a healthy emphasis on sales without neglecting the rest. Sales are most important for a start-up. If you don’t have a typical sales personality, remember that it isn’t about tricks and false smiles but about commitment, diligence, honesty, listening to people – and, just being yourself.

5. Borrow before you need it

Secure finance long before you need it. That’s when benefactors and institutions are willing to lend you some and more. Use your salary even before you leave your job to raise some start-up finance. Sign up for a range of credit cards and keep them as emergency finance for your business. Extend your home loan and overdraft facility. When you do have money in your business account, regularly ask the bank to extend your business’s overdraft. Look for loans in non-traditional places; rather than pay your suppliers in cash, open a line of credit with them. Apply for small loans and pay them back diligently, just to illustrate that you can.

Extra online tips

6. LEAVE MANAGEMENT- SPEAK TO THE CONSULTANTS

Don’t get too distracted by “management speak” - it’s designed for larger companies. Rather work on your personal effectiveness. Concepts like Service Leadership, Total Quality Management, and Triple-bottom Line Accounting are relevant for larger business. Wait until you’re big before heading that way.

7. BECOME EFFECTIVE

Stick to the basics. Make yourself as effective as possible. Your employees have no-one but you to follow and they will copy your time-management, punctuality, neatness, ability to prioritise, attention to detail, respect for planning and deadlines, and administrative efficiency.

8. THINK CAREFULLY BEFORE ENTERING INTO A PARTNERSHIP

Think twice before going into business with a partner. A small business is a personal labour of love and often best not shared. Partnership politics can hold back otherwise perfectly healthy businesses. Rather try a temporary joint project or loose association with defined responsibilities and benefits.

9. COLLECT CUSTOMERS

Quickly spread your business and avoid dependence on a single client.  Although it is easy to service only one client and even easier to grow your business with that one client, it is risky. Failure is always only one ex-client away.

10. SYSTEMS, SYSTEMS, SYSTEMS

Build systems into every facet of your business. The best systems run on their own, independently of the owner. These systems survive even when the owner moves on. The best system is one based on delegation. Start by delegating the most mundane tasks from day one. One way to test whether your system works is to go on holiday and see whether the business still runs smoothly.

Bonus tip: The perfection bottleneck

As a new entrepreneur, you are more than likely a perfectionist. Lose that trait quickly; it just suffocates your business. Deliver good work but don’t agonise over detail that does not improve your service or product.