Category: Business

There’s nothing quite the same as experiencing that eureka moment when you decided your idea was more than just a pipedream and it’s time you did something about it.

Telling your friends and family, brainstorming until you run out of Post-it notes, designing a great business model… these are the first steps towards becoming your own boss, and it feels great.

That’s when the stress kicks in.

The majority of entrepreneurs I meet rely on bootstrap finance to kick themselves off, but there comes a time when you really need to think about how you plan on ensuring your business has some steady cash flow to implement the necessary next steps.

I’ve written a lot about alternative finance and the different routes available for startups today.

For an investor, willingness to give away a lump sum of cash to a startup who has limited past experience and a very fragmented idea of their financials and future profits is intimidating due to the amount of risk attached to that deal.

Consequently, investors are very cautious and will ask questions and perform as many checks necessary to inspire enough confidence in your business model to justify their signature on the dotted line.

It’s hard for startups not to bite the hand off any investor offering much needed capital to facilitate growth. However, this is where a lot of entrepreneurs go wrong.

This being common knowledge, it’s hard for startups not to bite the hand off any investor offering much-needed capital to facilitate growth.

However, this is where a lot of entrepreneurs go wrong.

Due diligence doesn’t just work one way; you need to have enough assurance in your idea, your team and your pitch to make an investment deal work for you.

When you’re pitching, think about your hook – tell a story and get them excited, don’t just bog them down with figures that may or not come to fruition. Illustrate your passion and remember that, as a startup, all good investors will expect you to fail at first, so never overpromise and under deliver.

It’s important to demonstrate how your investor can realise their investment by outlining a prospective exit strategy.

Whilst it’s very important to talk about numbers, scale, growth and margin, don’t leave out how you plan to execute your strategy.

Ideas in themselves don’t make money. It’s excellent execution that delivers results.

Appointing an investor to your board is like a marriage, you need to work with them day to day. ​

As an entrepreneur, you need to know what kind of investor you’re looking for. It’s not just about finding a person with deep pockets to keep financing your company; it’s about finding someone who believes in your product almost as much as you do.

Appointing an investor to your board is like a marriage, you need to work with them day to day. Whoever you chose is likely to be on the board for years, therefore, you need to consistently work on the relationship, which will take time to nurture.

It should also be a pre-requisite that your potential investor has experience scaling and selling a business in the same industry as you.

Remember that the best thing about angels, other than their money, are the contacts they’ve managed to curate over years of experience. The doors that could be opened by appointing an angel investor absolutely have the potential to transform your business.

By sitting on your board, the investor will play an essential role in discussing and setting the strategic direction of your business. By pulling you away from the day-to-day to focus on the strategic issue of what maximises value creation they will hone your strategic thinking and steer the direction of the business.

This is exactly why working with the wrong investor could be a major deterrent for your business.

If you’re in the phase of pitching for investment, be sure to ask every relevant question you can think of can and learn as much as you can about them and their experience, before you make a decision.

If they’re a right fit, this could be the first step towards success, not only in this round of finance but future rounds (depending on your relationship management).

On the contrary, if they’re not right, don’t be afraid to walk away, otherwise, you’ll end up with a pile of legal fees trying to get out of a sticky situation.

Whether it has been consciously designed or not every business has its own unique culture and you can always tell what that culture is by simply spending some time inside the business.

Regardless of any values you’ll find written on the walls or championed on the website, the truth will out.

Culture is an atmosphere. Culture is a feeling. It cannot be hidden, and it cannot be cheated.

Even the most inspirational cultures find themselves under constant threat. Threats from targets not being met, threats from competitors, threats from growth. Yes, growth is a serious threat to any culture, for it often leads to new people entering the workplace.

With new people, come new dynamics and consequently new challenges.

So how do we navigate the risks involved with bringing new people into your business?

Whilst CVs have proven themselves to be ideal for understanding a candidate’s experience and skills, embellishments aside, they offer little insight in terms of what really makes a person tick.

That’s why we have interview processes, as ultimately we are looking to answer one simple question with any new hire: can we trust them?

Trust them to deliver, to fit in, to add value, to take the business forward.

Most people wouldn’t get married to someone after the first date, so how do we establish enough trust to make a decision to hire?

Today, most businesses try to adopt a ‘hire slowly, fire fast’ approach to recruitment, getting to know candidates better before making a decision, yet so much of our hiring processes are built to establish reliability, not trust.

And even the ‘fire fast’ aspect can create some accountability problems for a business. Imagine for a moment that you were unable to fire at all. What would your recruitment process look like as a result?

It may sound crazy but Next Jump has adopted such an approach. A job for life. Their attitude to hiring can be found on their culture page which simply states: “We don’t hire employees; we adopt family members. We don’t fire… we coach.”

Whilst this approach may not suit everyone, there is much to learn from their approach to hiring and talent development and it all starts with values.

Just as culture eats strategy for breakfast, values trump performance. Values are the currency of trust.

So, why values? Taking the literal meaning, values are “principles or standards of behaviour; one’s judgement of what is important in life”. Sounds pretty simple, right? So all we need to do is ask people what their values are and we will know if they are a fit for our business or not… not quite.

Values only manifest themselves in our behaviours, which in turn determine the actions we take and the results we achieve.

This is true not just in business, but in life.

What do values come from?

So, how are values formed? Our experiences in life inform our beliefs, which in turn shape our values.  Once established our values rarely change and provide us with an operating framework, guiding all of what we do. It is for this reason values are critical to the success or failure of any new hire.

Just as culture eats strategy for breakfast, values trump performance. Values are the currency of trust.

So how do you hire to values? The law of attraction will play a big part in this process, so try not to make your company, or a role within it, appealing to everyone or chances are you will fail to attract the people you really want.

Start with a wish list, but along with skills and experience spend equal time thinking about ideal personality type and behaviours.

What characteristics are you not willing to compromise on?

Consider every point of engagement as a potential filter to eliminate those who do not match your wish list.

Once you know the type of person you want you’ll need to create a job description, but don’t limit that description to tasks. Take the opportunity to convey the experience of working in your business. What does an average day in your company really feel like?

Every touchpoint with a candidate is an opportunity to demonstrate your culture and express what makes your business unique. Think about how you want your dream candidate to feel when they read the job description – you never get a second chance at a first impression.

Equally, consider every point of engagement as a potential filter to eliminate those who do not match your wish list. Don’t be afraid of putting people off. The more unsuitable candidates you can eliminate at this stage; the more time you can spend getting to know those who do possess the qualities you are looking for.

Crafting interview questions

Next, you’ll need to think about your interview process and technique. I would suggest always setting some form of challenge to respond to. This can be something relatively simple that’s designed to test a candidate’s attention to detail or you can ask them to prepare a short presentation to gain the first-hand experience of their approach to problem-solving.

The way we approach one problem is typically representative of how we approach all problems, so this exercise can be very insightful. You should also look to include focused, open-ended interview questions to encourage storytelling, whilst mixing things up with the occasional high leverage question to gain insight into how they see themselves.

Storytelling questions such as ‘tell me about a time you did x or y’ can be related directly to your company values and will encourage candidates to draw from real-life experiences. High leverage questions are designed to provide maximum insight with minimum effort and again can be linked to your values.

Storytelling questions can be related directly to your company values and will encourage candidates to draw from real-life experiences.

A great example of a high leverage question comes from The Luck Factor by Dr Richard Wiseman, which argues that people who see themselves as lucky are generally happier and easier to work with than those who don’t. The question, in this case, would be: ‘how lucky are you on a scale of naught to 10?’

You should also include questions designed to see beyond a candidate’s response to the role on offer. Asking them about what their ideal job would be can expose hidden skills and talents which your company may later benefit from.

Finally, think about how you accept a successful candidate into your business. Acceptance is another opportunity to make a lasting impression, so make it memorable.

Also, be sure to say no to those candidates who are unsuccessful.

Not only will they value hearing from you, but your brand reputation will get a boost from treating every candidate like a human being.

Of course, the process doesn’t stop at saying ‘yes’ – in reality, that is just the beginning. Your induction process needs just as much thought and attention as your selection process.

I know the rollercoaster ride entrepreneurs face when first starting out, I know how tough it is to get started and how easily you can become dejected and lose focus.

Sadly, there is no foolproof guide to creating a successful business – it takes hard work, dedication and a serious commitment and belief in your business.

As the old saying goes though, you have to be in it to win it!

You will make mistakes throughout your business journey – it’s inevitable that somewhere along the way you’ll say ‘yes’ to something you should have said ‘no’ to, focus on an idea that doesn’t have legs or try to run before you can walk.

While you can never prepare for every eventuality, I wanted to share the top 10 mistakes startups make during the first 12 months and. more importantly, how you can avoid them!

1. Not actually talking to potential customers!

I can’t explain how many times I’ve spoken to entrepreneurs who swear they’ve talked to potential customers about their business, only to have it transpire that in actual fact they’ve merely spoken to a handful of people.

Why would you go through the effort, stress and workload of starting your own business if you don’t know that there are customers out there willing to pay for your product or service? It’s daft!

You need to know the structure of your business and be able to show this to investors and be confident that it encapsulates every vital piece of information they’ll be looking for.

Before you even think about speaking to investors or spending money on employees or assets, make sure you speak to people.

Go out into the city and stop people on the street to ask them about your business, hold focus groups, talk to people on social media, grasp every opportunity available so you can prove to yourself and future investors that the demand is out there.

2. Having little structure to your business

When you start a business you need to properly and thoroughly define the responsibilities of the directors, the kind of business which will be undertaken and the means by which your shareholders will exercise control over the board of directors to establish your company.

No one will pay any attention to you if you can only give them a wishy-washy idea with no substance behind it.

You need to know the structure of your business and be able to show this to investors and be confident that it encapsulates every vital piece of information they’ll be looking for, otherwise you’ll be seen as a risk and never get investment.

3. Hatching a business over a glass of wine and go 50:50 without thinking about the consequences

After a few glasses of alcohol you might think you and your pal have the best business idea ever and already be spending the millions, you’ll make in your head.

But in the cold light of day you need to ask yourself is it really a good business idea?

And, if it is, is the person you enjoy having a glass of wine with really the ideal business partner?

We all have friends we got on well with, but would never want to work alongside, so make sure you really think it through before setting up a business with someone. Especially if you’re going to go 50:50.

There’s always going to be a leader, there has to be, so really think through how your friendship dynamic will affect your business before signing anything.

4. Over-egging what the sales will be in year one

Creating a successful business takes time. Some entrepreneurs, like me, are optimistic, which is great when faced with difficult situations. But, in order to be a successful entrepreneur you need to be realistic.

There’s no point in over-estimating what your sales figures will be in the first year because you’re just setting yourself up to fail, and you’ll then have to explain to stakeholders and potential investors why you under-delivered. Set yourself goals and aim high, but keep it real.

There’s time yet to reach for the stars!

5. Thinking it’s easy to bring in investment

The harsh truth of being an entrepreneur is that you aren’t guaranteed to get investment. Not everyone who starts their own business will be able to successfully court an investor and as those who have done, it will know it’s no easy or quick, task.

It takes time to get investment – you need to think about what you want, what your business needs, how you will use the investment, how you will convince investors your business is the right one for them to spend time and money on, and you need to forecast what this money will mean for your business.

Yes, you might get lucky and have a chance of meeting with someone who decides to invest in your startup.

But realistically it’s a hard slog and you might need to speak to several people before you find the right one for your business.

6. Thinking that you can do it all yourself

Look at me – I’m a super entrepreneur! I started my business all on my own and am going to develop and scale it on my own, too. Wrong! You can’t do everything yourself.

If nothing else, no one person is incredibly skilled at every single aspect of a business. You might be great at marketing and speaking to potential investors and customers, but do you know enough about forecasts and banking, and the legal checklist you need to tick along your entrepreneurial journey? My bet is you don’t.

Set yourself goals and aim high, but keep it real. There’s time yet to reach for the stars!

That’s why you need to hire smart. Look for people who fill the gaps in your skillset and build a dedicated, hard-working team who have bought into your vision.

You’ll see much more success this way than trying to be a super entrepreneur all on your own – and it’s less lonely too.

7. Getting fooled by consultants who charge a small fortune for useless stuff

A lot of first-time entrepreneurs are approached by consultants across various fields who offer their services in return for a fee and an often hefty one at that.

While it might seem like a great idea when they’re giving you their marketing spiel, make sure you take some time out before agreeing to anything.

It’s easy to get caught up in the moment and say yes to things you don’t need for far too much money, but don’t let yourself fall into the trap and take some quiet time on your own to review things before you decide anything.

8. Neglecting networking

You’ll never get anywhere if you don’t get yourself out there and meet people. I can’t stress enough the importance of building a relevant network. Whatever you do and wherever you go you should always be speaking to people, whether it’s online or offline – you never know who you could meet by making the first move and saying hi!

9. Spending time with a laptop rather than human beings

If you’re searching online to see if your business is viable then you’ll likely always be able to find some piece of research which says it is.

But no investor is ever going to give you money based on some research project done in the west end of nowhere back in 1999.

As I said earlier – get out there and speak to people! Have a human conversation and ask people what they think about your business.

Find out if there’s a market for your product or service and ask questions to determine what shape this product or service should take. You’ll get far more value out of a day spent speaking to people than you would a day stuck behind a computer.

10. Overthinking your business plan

Yes, your business plan is important and it is vital that you get it right. But don’t overthink it or you’ll just complicate things.

Your business plan isn’t something you write when first starting out that then remains static, you’ll have to revisit it time and time again and make some changes depending on the focus of your business.

Your market isn’t stagnant; so your business shouldn’t be either. You have to move with the times and be flexible to change, so there’s no point in spending weeks stressing over making your business plan perfect, just make sure it reflects the key points of your business as it is now and is easy to understand.

No one is perfect and no one is able to simply wake up one day with a successful business – you have to ride out the highs and lows along the way.

But, if you can avoid these 10 mistakes, or remedy them and make sure you don’t repeat them it will go a long way to helping your business!