After having started seven businesses over the last 10 years and as an Enterprise Ambassador for The Prince’s Trust, I have been fortunate to view startup businesses and entrepreneurs in a variety of contexts. Below are seven lessons about starting up I have learned along the way.
Don’t Start Out With Capital
It doesn’t matter how great an entrepreneur you are or will be. If you have a big pot of money up front, you’ll likely waste it. I know I wasted some of what I managed to pull together when I started my first business (printing too many copies, having an unfocused marketing plan, etc.), and if I had more I would have wasted more. Instead, you need to complete the “hard yard” first. Get out there and test the concept with your customers. Nothing ever works out as planned and there will be unexpected problems. Find them before you waste money on them. Once you’ve proven the concept and have a better understanding of how the business will work, then it’s time to use capital.
Don’t Call Yourself a CEO
…unless you are actually running an executive board. When I started my first business I was embarrassed to have the title of Managing Director when I had no staff. When I hear people introduce themselves as CEO of a small business, my first thought is they are simply in it for the prestige associated with the title. Work to put the business first and try to sustain and grow something exciting.
Think Big and Plan Backwards
Ideas should be hugely ambitious from the beginning. Only after having proposed it should you work your way backwards to determine whether or not it is feasible. At my companies, I am only interested in ideas that sound a little crazy. That’s the time to get involved and create an achievable plan. For example, we wanted to launch a scheme to get independent publishers and bookshops to work together across the country. To execute, we started off in London with ten bookshops and a select group of publishers. The scheme, called Exclusively Independent, grew into the UK’s largest project bringing independent companies together. While it might have seemed far-fetched from the beginning, we were able to break it down into feasible steps and go from there.
Implement the “Double and Half” Rule
When you produce your first projections, it is fair to assume that the revenue will be half and the costs will be double. In my first projection, I proposed making a small profit on the first product. I saw myself owning an island by year three, as I increased production. Though these projections were completely unrealistic, they were the start of the learning process about forecasting. Keep working on your projections. When they stand up to your revenue and costs models, you’ll be that much closer to a sustainable plan.
Don’t Mistake Action with Progress
You have to throw everything in when you start a business (I managed to take only one day of leave in my first four years of running my first company). That energy is what will sustain you during the initial years. But it is worth constantly stopping to evaluate what you are achieving and whether it will provide a return on your time. The moment I feel like I have been doing any task for a while, I make myself stop and consider whether this is the best use of my time. Time management and prioritizing will become an increasingly vital skill as your business grows.
Stop the Bad and Scale the Good
Stopping when something isn’t working is a harder skill to learn than it sounds. I have always found it difficult to accept when an idea turns out not to work in practice. As an entrepreneur, you have an innate drive not to give up and to turn a situation around. But learning to be honest with yourself and knowing the right time to stop is key. Conversely, you need to move fast as a small business. When something is working well, focus on how you can scale it quickly into something much bigger. If you’re given a window of opportunity, take advantage of it.
Always, Always Learn
Any day you haven’t learned something is a disaster. Since launching a global licensing business, I have had to learn about a wide range of subjects, from different markets and cultures, to open access debates and tax law. If you want to evolve and grow your business and staff, you should be involved in the process no matter what stage, and you should constantly be looking to learn from it. This can come through meetings or partners, or even by obsessively looking up new information on your phone every evening. I’ve found the best business leaders are constantly listening and learning.
Always understand what you are getting into and why as well as what is required to be successful. Using these as starting points, a founder can wisely grow his or her business while learning valuable lessons along the way.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Image credit: CC by tec_estromberg.