As we approach April Fool’s day, Business News Wales’ panel of business experts give advice on avoiding foolish mistakes in business.
Karen Thomas | Head of Business & Corporate Banking
Don’t think it is going to be easy. Having a skill or an area of expertise is a long way from running a successful business.
Barclays top tips to consider if you are thinking of becoming your own boss
Ask yourself, have you got what it takes?
You will need initiative, determination and persistence, resilience and a willingness to take personal responsibility for your successes and failures.
Develop a comprehensive plan
Although this does not need to be a formal document, you do need to plan how you are going to tackle all areas of your business. The plan should then act as a guide and measure your progress.
Research your market
Make sure you understand what market you are in, who your competitors are, why a customer should buy from you rather than your competitors and whether the market is growing or declining.
Make sure that you take advantage of the extensive advice available from Business Support Organisations. The majority of assistance provided is free and these organisations have the experience of seeing hundreds of business plans every year.
Recruit the right staff
Small businesses, with limited financial resources, have to rely heavily on the quality of their people to provide excellent service and to differentiate themselves. Ensure that you take time to select the right employees for the job.
Ensure that you have the right balance of funding, including risk capital and long term loans, to finance the business as it develops.
Stay in control
Don’t let the business outrun your ability to manage it or your resources to finance it. Make sure that you manage carefully your debtors and creditors and don’t be tempted to overstretch yourself or your business.
Remain aware of market changes
In the event that your regular monitoring of the marketplace identifies a particular threat or opportunity, your plans must be flexible enough to allow you to change direction.
Set appropriate prices
A sensible pricing policy is vital to success. It is important to understand your own break‑even point and your competitors’ prices and set your own prices accordingly. It is essential to price for profit, as selling at the cheapest price alone is a poor option.
Take a long-term view
Above all else, you will need to start your business with the right attitude. If you want to develop a successful and growing business, it is essential to borrow long-term, to re-invest profits and to train and develop employees for the future. The view should be to building a successful business for the future, rather than purely for short-term survival.
Elaine Ballard | Chief Executive
There’s only two things you have to get right – the people and the money! Take a long hard look at yourself – what are your skills, where do you lack expertise, who else can help? Either recruit, use consultancy, or if you’re really pushed, learn about your skills gaps. If you are a business owner, then you are your most precious asset – pace yourself, have realistic goals and don’t burn yourself out before your business has got off the ground. Working long hours is all part of setting up a new business, but it’s important to know when to give yourself a break.
Customers are the next people priority – listen, understand, problem solve, be flexible. Your product or service will not be desirable unless it gives your customers something they value – does it make it easy, save them time, open up new possibilities for them?
Then there’s the money – you need a really sound business plan, which anticipates lean times and is not over-optimistic. Investors would rather see moderate growth that is underpinned by carefully constructed and credible projections, than unrealistic forecasts you can’t back up. This is one area that you definitely need to get right, so get a good accountant if this is not your forte!
Alex Parr | Manging Director
Working within the translation industry, one of the biggest mistakes companies can make is to put costs over quality. Cutting corners when it comes to translation projects will only produce more work and ultimately increase costs in the long run. A good example is an e-commerce start-up looking to translate their entire website into four languages. They had a very limited budget and Wolfestone advised them it would be better to get key pages translated by a professional rather than use an online translation tool for the entire site. The client went against our advice and several months later we received a call saying it had been a nightmare. The company had received a huge amount of complaints over inaccurate information on the website. Plus, they were not ranking in the search engines and any online traffic generated was not converting into quotes.
Matthew Sutton | Corporate Director
The best piece of advice I could give to businesses, especially start-ups, is to get the basics right from the outset. Your company name, for example, is a customer’s first point of contact with your business and could be the difference between success and failure. Pick a name that is unique and tells your customers what your business is about. But most importantly, make sure the name you choose is available, is in accordance with company law legislation, and hasn’t already been trademarked!
Secondly, protect your company’s brand by ensuring you register your trademarks. Registering your trade mark will allow you to take legal action against anyone who uses your brand without your permission. Remember that if someone else registers your trade mark before you, it is very difficult to get it back. Registration of trademarks can be complicated so I’d strongly advise getting a good IP lawyer to assist you with the process.
Kevin Dooley | Marketing Manager
The critical factor in success for start-ups is creating products or services that customers really want, that solve real, demonstrable problems, that add value and that have potential to scale.
A common mistake many make is not putting in enough time and effort to really understanding how customers operate and what they are looking for.
Another mistake is focusing solely on one product or service and not giving thought to the development of follow-up ideas.
Many start-ups fail because they get stuck in one place and have no prospect of growth. Funding is a crucial issue for start-ups, and gaining investment can be a long and arduous process.
But many make the mistake of only putting the required efforts into planning for funding when their funds are at risk of drying up. By then it can be far too late.
Liz Brookes | Director
When Grapevine was first starting out I struggled with pricing my event services. I was so keen to get the business that I ended up under charging and even working for free! As a start up I unfortunately believed people when they advised I should work for free or a reduced fee as a way of proving what I could do! I learnt the hard way but I learnt very quickly that I didn’t have to do that.
By researching the market and talking to businesses who used event management services I learnt what people would be willing to pay for the level of service I could offer.
People will always try and take advantage but learn to negotiate and prove your worth every penny by offering an amazing service so that customers can’t question the price and don’t be talked into doing things for free just because you’re new.
Mark Hindmarsh | Director
Making mistakes is part and parcel of building a successful business. The trick is not to repeat the same mistakes but learn your lessons (sometimes painfully) and take positive steps forward.
Just because you’ve got a product do not assume you have a business.
Ensure there is a viable commercial market fit for your product or service or you’ll struggle to secure paying customers. Without customers you have no revenue and there’s no future for your business.
Don’t think you don’t have competitors.
If you believe you’re the only player then you’ve probably not done your homework, because there is always competition. The reality is that there are no new ideas, they’ve all be done before you just need hope you’re doing it better, faster and more innovatively than anyone else.
Cash is King!
Revenue is vanity. Profit is sanity. Cash is reality. Keep an eye on cash-flow and manage expenditure.
Don’t think you know it all because nobody does.
Value people – Surround yourself with as many smart individuals as you can be they advisors, mentors or domain experts. Remember no question is a stupid question if the answer you get helps you progress.
Don’t put all your eggs in one basket.
Relying on one or two key strategic customers or partnership alliances is dangerous especially if things don’t work out. Avoid having more than 50% of your revenue coming from a single source.
Chose your investors wisely and also opt for smart money.
Only seek external funding when ready and if you really need it. Take the right type of money at the right time and from the right source.
You should look for three things in an investor:
- Willingness to Work for you
Alastair Millburn | Managing Director
The fact is everyone makes mistakes in business.
The important thing is to learn from those mistakes and not make them again.
You soon learn that when someone promises you their business it will not necessarily materialise.
In turn, do not spend cash that is not in the bank – i.e. assuming that money that is owed to you will i) be paid to you, and ii) in the time your customers have told it will be paid. It doesn’t always happen.
This might sound like a terrible thing to say, especially in Wales, but – trust no one.
Or certainly, do not trust someone until you have built a strong, working relationship. Credit checks and the like are critical – no matter how tempting the business might appear on the surface, or indeed, how desperate you are to get new business.
Carys Murphy | Solicitor
Have a written agreement in place. It should clearly define who has control, contain duties and obligations, financial details, procedures and also consider what should happen in the event of a dispute. It should be detailed with clear definitions as disputes often arise when terms are ambiguous.
It is also imperative you seek legal advice at an early stage. An experienced lawyer can assist you with preparing business documents. Many will forego having an agreement or try and prepare one themselves. Important details can be missed out which causes significant problems further down the line.
Although you may think that obtaining legal advice is expensive, the money you would spend on initial advice outweighs spending thousands of pounds if an irreconcilable dispute arises. Many business owners do not appreciate this simple cost-benefit analysis. Spend a little money and time now to get it right, and you will avoid headaches in the future.
Wendy Weber | Head of Workforce Skills
We deal with a lot of new start-up businesses when they are looking for advice on taking on staff or training opportunities. Enthusiasm, hard work and a great idea will go a long way as long as they have done the market research and truly understand the market as well as being honest with themselves about capacity and capability with in the first 12 months of trading. Any entrepreneur should aim high but remain realistic about time-frames and raking in the first million £.
Unable to fulfil orders or offer services is just as bad for reputational integrity as not having any at all. Consumers expect to receive what they are promised and competition is so fierce that not many new businesses are given a second chance to “get it right”. Nurture the first clients and make sure that they are able to tell the world about their positive experiences.
Abigail Moses | Founder
Don’t count your chickens before they hatch
As a new business we have enjoyed the benefits and challenges of start-up life. One piece of advice that we would give is to not jump the gun. What we have found is that people can agree with a proposal verbally and easily go back on their word or change their focus. This is why it is important to have contracts and legally-binding documents in place, making for effective working relationships that serve all parties well. The key here is growing your business naturally and working smart, not wasting your business’ time or resources before having a concrete plan in place.
Know your strength
While we all possess a need to present ourselves as specialists in our industries, the truth is many of us are learning every day. It is essential that we are clear about our strengths in business, refraining from over-promising and looking foolish later on down the line.
To see more of our features and commentary from our panellists, take a look here.