Almost a decade ago, my wife and I decided to start a business.
At the time, aged 27, we were thinking about a few life options and had narrowed down what we wanted to do to two possibilities: start a business, or take a year off and go travelling around the world.
Thinking that it would be easier to try to start a business without having kids, and that if the business didn't work out we could go travelling anyway, we decided on the former option.
Funnily enough, when you start a business you start hearing statistics. "90% of businesses fail in the first two years" you get told.
Then when you get to two years, you start hearing, "90% of the businesses that survive to 2 years will fold before they reach 5 years old".
Once you reach 5 years, people will tell you "A business is sustainable after 7 years".
The reality is that a business survives because the idea is right, the market is right, the hard work put in is right, and the persistence is right. And also that you have a bit of luck go your way. There's a plethora of books, networks, videos, services, courses and people dedicated to helping new start ups address key areas like this, so I don't want to go there.
But when we started up, and in the first few years, we received a few key pieces of advice and worked out a few fundamental truths about running a small business (and credit where it's due, it was my wife's business nous that really worked these things out - business is in her blood!) So I wanted to share these five tips for starting a start up.
Money. The key constraint for the majority of new businesses, so what's the best way to approach it? Do you raise capital (by selling shares in the business)? Go to the bank? Scrounge off your parents and friends?
Perhaps the best bit of advice we received before we started our business was to "Start with as little money as possible". This might sound strange but the reality is that every new business makes mistakes...and quite possibly lots of mistakes! The crux of the issue is that if you don't have a lot of money, your mistakes are unlikely to be expensive ones.
Yes, you've stuffed something up and, yes, you might have a hole in your morale. But this can be repaired a lot more easily than a huge hole in your bank account.
You'll dust yourself off and get started in a new direction - and that's the key. You will respect every dollar you have, every dollar you make and every dollar you save. You'll have a laser focus on profitability and this will hone your service or product to make sure it fits your market better almost anything else you can do...after all, your dinner depends on it!
Remember that the corporate landscape is littered with countless examples of huge start-ups that had hundred of millions of dollars in capital, only to go under after just a few years (Solyndra and Better Place, to name just a few). Don't let that be you - start with nothing, make your mistakes inexpensive and focus on building the best product or service you can.
- 2. "It's the Fish that John West Rejects"
John West, the canned fish producer, put out a brilliant series of ads some years ago with the ingenious tagline "It's the fish that John West rejects that makes John West the best". It's one of those taglines that not only emphasises the quality of their own product, but that subtly suggests that other competitors don't have the same approach to quality (like Miele's tagline, "Anything else is a compromise").
In the early days of being a start up, particularly one with no money, you'll be looking for opportunities: opportunities to bring in money, opportunities to collaborate, opportunities to improve your product or service.
This is a hard, but exciting, time in the early phase of a start up.
Many entrepreneurs will tell you, that their finished 'product' or 'service' looks very different to what they had originally envisioned it to be. Your business will be evolving and improving and you'll be trying to take advantage of as many of these opportunities as possible. But as a start up you have to make choices. You can't do everything, and your business can't be everything to all people.
So eventually you're going to have to start turning down opportunities. And this is the key point - it's the opportunities that your business rejects that will make your business the best. Go with the flow and keep an eye out for opportunities, but knock back opportunities that clearly don't fit your direction.
Apple didn't become the world's most valuable company by spending decades making their products the most complex on the market.
Making something complicated and multilayered, whether it is a product or a service, is easy. Making it super simple is incredibly hard.
Keep it simple. It's a lot harder than it sounds. End of story.
- 4. Work With Your Wife (Not Your Friends)
People generally laugh when I raise this point in conversation. Usually the first thing I hear back is "Ha ha, I could never
work with my [insert 'husband' or 'wife]...I don't know how you guys do it!"
But, honestly, I don't know how we could do it any other way.
Because running a business with someone is more akin to a marriage than it is to a friendship. It involves a deep amount of trust and understanding. It requires the ability to have a shared vision for the future and to work hard on your communication and mutual understanding.
And it also requires you to be able to have big fights about little things...but then to get over the fights and get on with it. Just like in a marriage, things in business can be excellent, but they are rarely perfect - so you have to work hard to make them work.
And, like divorce, business break ups can be horribly messy affairs.
So for me, I would rather work with my wife, whom I trust implicitly and who I know will always be fearlessly honest with me (for better or worse) - because these are things that will help push our business further.
Now this point isn't to say that you shouldn't
go into business with a friend, or that it can't
work out. You can, and it can. The point is simply to be realistic
in your expectations about what running a business with someone entails: brutal honesty, strong communication, shared vision (which you have to fight for), and hard work by all parties towards the success of the enterprise.
The final bonus of working with your wife (or husband) is that the equity of the business is kept 'in the family'. Whatever you create with your business is yours to keep as a family unit.
- 5. Focus on Your Own Game
When we were planning our business we had some discussions with potential investors. As part of those discussions, we had to share our initial business plan with a couple of organisations that were interested.
Eventually we decided to start with as little as possible, but were shocked to find (about a year later) that one organisation we had discussed potential investment with had taken our business plan and were starting to implement it themselves!
We were both angry and anxious - this organisation hadn't only been dishonest, but had a lot more resources to throw at launching a new business than we did.
So we decided to do the only thing we realistically could: we decided to focus 100% on our own game and ignore them.
This decision was also one of the best we could have made. Yes, it's always good to know what the competition is up to. Sure, they might beat you occasionally to get something new up and running. But one thing is certain - every minute you are focused on them you are not focused on your own business. Obsess about the competition and you'll always find yourself in the position of being reactive, not proactive. Following, not leading.
Like many new businesses, our approach and offering changed quickly from what we had originally planned as we responded to what the market needed. The other organisation that had stolen our business plan just kept following the original ideas we'd written down. And funnily enough, we survived and their venture didn't (and they probably burned a whole lot of cash in doing that).
The morale of the story? Focus on your own game - if you focus on someone else's, your fate is already sealed.
Rob Malicki is an international education innovator and disruptor. He is one of Australia's leading student mobility practitioners and advocates and is a member of the Australian Government's New Colombo Plan Reference Group.