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Starting up a business – BOOK REVIEW

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‘Small business for Dummies’ by Eric Tyson and Jim Schell

If you are thinking about starting up a business, you should read this book.  I have chosen this book to be in my personal library on this site because these guys have education, experience and most importantly, they start at the start.

In their usual ‘Dummies; style, Tyson & Schell assume nothing.  They do not credit the reader with any significant prior knowledge and they do not assume that the reader knows any of the common opportunities and pitfalls.

This book is a great guide for any novice to business.  It provides an introductory treatment across a wide range of business subject matter and would make a great reference book for the office..  Experienced business operators would probably prefer something a little more in depth.

The only drawback for Australians is that this is an American publication.  Therefore U.S. tax laws and other legal framework do not apply in Australia.  It is not an in-depth treatment and I would advise everyone to seek advice from an accountant and lawyer before starting up a business.

However, that does not detract much at all from the book.  Business basics and business principles remain constant the world over.  And what makes this book a ‘must have’ in your personal library is the easy writing style and easy to understand concepts.

For the budding entrepreneur with a great idea and no knowledge in starting up a business, this is a book to buy as one of your start up guides.  Find it in my personal library on the right hand side panel of this page → →

Until next time!

Gary

Also read the free download Aikido Secrets to Calm Success at http://www.aikido-secrets–to-calm-success.com

Starting up a business – the benefit of experience

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When starting a business, there are two distinctive traits that work strongly in the favour of the everyday entrepreneur.  These are:

  • Previous experience; and
  • Non-conformity

Previous experience builds useful context for making decisions, many of which have to be made under some pressure.  The great thing about previous experience is that it doesn’t have to be your own.  You just have to have access to it.  Hence, there arises the need for a coach, mentor or key employees.

Even though non-conformity is a key element of entrepreneurship, it is important to know what has gone before so that you can either ignore it or build on it.

I have been a practitioner of Aikido for many years.  (If you want to find out more visit my dojo’s website http://www.griffithaikido.com.au).  There is a huge syllabus to learn and there are many mistakes to make along the way.  Time on the mat with a good instructor and fellow practitioners builds experience and proficiency.

The same applies when it comes time to make business decisions.  Time in the decision maker’s chair, time in the industry, and regular practice with other people (i.e. customers, staff, suppliers, collaborators, professional advisers) helps build a mental inventory of solutions that have worked well in similar circumstances.

In the end, most people succeed because they are determined to, but access to knowledge and experience will certainly help you reach your goals sooner.  It also conserves money by not wasting so much of it by stumbling in the dark.

I will discuss the need for non-conformity in my next business planning blog.  Check out my other blog at http://www.aikido-secrets–to-calm-success.com

Until next time!

Gary

Starting up a business – The pitfall of over-optimism and poor research

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A big mistake in starting up a business is to get so carried away on a wave of beginner’s optimism that you are lulled into not doing sufficient homework.

You start to believe your own advertising to the point where you become convinced that people will come to you and buy your product or service, merely because you open the front door for business.

That is one of the great business myths and the downfall of many hopeful business starters.  Don’t let this happen to you!

It is really easy to rely on optimistic levels of sales and unrealistically low levels of expenses when you are formulating your first business plan and operating budget.  This is particularly dangerous when you have no sales and no history in your business to guide you.

Why? Because you are forced to rely on your own expectations!  Because you have everything riding on a successful outcome, you make unrealistic estimates.

In my experience, people who are desperate for their business to work tend to use over-optimism as the basis for those estimates.  The planning becomes a self fulfilling prophesy.

You subconsciously fudge the process to get the results you want.  Of course you can make anything look good on paper by simply fiddling with the underlying assumptions.

It doesn’t help though.  The reality check quickly comes when you open for business and you see how wrong you assumptions were.

Then the journey gets really difficult.  Early losses start to mount up and sales remain nothing more than a trickle.

I can’t emphasise strongly enough how important it is to do your homework thoroughly and work with realistic assumptions.  It is important to be conservative when you don’t have runs on the board.  If it turns out that you have been too conservative, then you will get a pleasant surprise when the reality check comes.

If you are thinking of starting up a business and you want to retain a happy Life Balance, go visit http://www.aikido-secrets-to-calm-success.com

Until next time!

The Coach

Starting up a business – Don’t let small thinking derail your great idea

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Another common flaw that I see among those starting up a business is to think in terms of survival only.  They measure their success in terms of still being in business in six month’s time.

This is a real mistake!  Doing things on a shoe-string budget invites shoe-string thinking.   Cutting corners and thinking small can cause you to adopt a defensive ‘small thinking’ attitude in the start up phase.  That is not good for business!

If you truly believe in your products and services, then you should look past the first few months and plan for a long and prosperous future.  What is required is an optimistic and assertive strategy.  Even though your resources may be scarce, it is a time for positive, expansive and innovative thinking.

Your business planning and your financial management should address the needs of a business destined to succeed.  That includes its ‘start up capital’ requirements.

“But I only have a very limited budget!” I hear you cry.

Everyone has limitations on their budget.  No one wants to spend more than they have to.  You must decide whether your limited budget is enough to achieve your goals or is it only enough to finance a slow and agonizing slide into oblivion.

If it is the latter, then figure out how to get more money, or don’t start.  That is the whole point of business planning and financial management.  You must do your homework thoroughly and face the future with realistic assumptions.

For more reading on financial management and your path to financial wellbeing, visit http://www.aikido-secrets-to-calm-success.com

Until next time!

The Coach

Starting up a business – The pitfall of giving away equity

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When starting up a business, it is common to see inexperienced business starters with no financial management skills, prepared to barter away equity (ownership) in the early days in return for a much needed service.   For example:

They seek to establish a website as cheaply as possible, even to the extent of offering a e.g. website designer part ownership of the business in lieu of payment

Now I am not against website designers.  It’s just that new business owners think that a website is the first thing they need.  They often see a website as the answer to all their sales and marketing prayers.  Nothing could be further from the truth but that’s another story.

If this is you, consider this!  While giving away a slice of your business may seem to be a good idea at the time, you won’t think so in a couple of years time when you have a million dollar business and a business partner who bought a good slice of it for the price of a website (e.g. $1,000 – $2,000 or so), and now can do nothing else but e.g. design websites.

The first mistake you made was seriously undervaluing your business in the first place when you were starting up the business.  You took the pessimistic view and figured that you were giving away nothing in return for a website with a real dollar value.  What a great deal hey?

Silly ole you!  Deep down, you didn’t really think you would succeed did you?  You didn’t seek advice and you didn’t stop to think that a shareholder in your business is a permanent fixture; as permanent as a married spouse and potentially just as expensive to separate from.

Nothing deteriorates a business relationship faster than a person who doesn’t pull their weight.  After a year or two of having the website designer as a passenger in your business, you will be seriously regretting having this person as your partner.  Oh, a ‘silent partner’ you say?  Trust me, they are rarely silent.

Let’s say you gave the web designer 20% of your business in return for a $2,000 website when you mistakenly valued your business at zero.  When your business grows and is valued at $1M, that 20% share is going to be worth $200,000.   I hope it was a good website.

But wait, there’s more!  The shareholder may not want to sell.  By this time, you might be the best of enemies.  It may cost you a lot more than $200,000 to buy back your business.   And do you have that kind of money sitting in the bank for a moment like this?  The answer is usually ‘no’.

This is why it is so important to seek advice.  Any competent business coach or adviser will tell you that having a partner, with skills you may use only once, and who makes no other contribution except for a couple of thousand dollars of labour and expertise, is a bad investment and an even worse permanent relationship to get into.

For more reading on starting up a business and smart financial management, read my Life Balance series at http://www.aikido-secrets-to-calm-success.com

Until next time!

The Coach

Starting up a business – cutting corners can be a financial management killer!

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Gary Weigh – The Coach

Cutting corners on a lean start up budget is a very common ‘kill your business’ practice.  When starting up a business, it is done because of lack and necessity.  However, in terms of financial management, it could be something you regret later on.  One of the most common examples of corner-cutting that I see is….:

Seeking the cheapest quote for equipment and technology just to get started, even though it is unlikely to handle anything but the lowest levels of activity!

Second rate equipment and technology may be fine for low levels of business at the time of initial start up.  However, they may not be able to handle the increased volume of transactions and information that could multiply quickly as your business grows.

It could all be obsolete in a matter of weeks or months.

As customers hear of your leading edge offering and sales activity increases, expansion is a certainty.  If you cut corners however, expansion may prove fatal.  It may mean starting again with a complete scrapping of your low rate equipment and technology.

This means that you will have to invest money twice over in the first few months of trading.  Not only that!  Expansion may also mean hiring people and finding larger spaces.  Expansion is generally a time of tight cash flow.  It could spell the end of your business.

It seems ironic that your business could fail at a time when you have just weathered the storm and things never looked better.  But it happens a lot.  It is one of the common causes of business failure.

For more reading on starting up a business, financial management and your path to financial wellbeing, start reading from the library to your right!

Also visit http://www.aikido-secrets-to-calm-success.com

Until next time!

The Coach

…. And here are another seven (7) operational threats to think about!

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If you are already in business or seriously thinking of starting up a business, I would like to further highlight and emphasise the need for business planning.

If you thought the previous seven (7) threats to your business (read my previous post) were the only ones you need to consider, well here’s another seven (7) for you to think about.

  1. Management incompetence (lack of knowledge, experience or financial skills)
  2. Rogue staff member (with intent to damage reputation, sets up in competition)
  3. Breach of security (deliberate / accidental leaking, online hacking, viruses)
  4. Over-gearing (too much borrowed money, worsened by rising interest rates)
  5. Litigation (by customer, competitor, supplier, bank, Tax office)
  6. Market downturn (e.g. economic, monopolistic activity, lack of demand shift)
  7. Product obsolescence (failure to follow demand and/or keep up with technology)

And it doesn’t stop there!

Yes there are many more operational threats to think about, so if you haven’t done any planning lately, it’s never too late to start.

Business planning is not only for those starting up a business.  It is also for those who are already in business and who so far have led a charmed life.

The typical Aussie retort, “She’ll be right mate!” doesn’t cut it these days. Business is far too knowledge based and technology based.  ‘Not keeping up’ is a big risk.

Whilst the customer is still King (or Queen), there is so much to know and do these days away from the cash register, that one could be forgiven for thinking that the customer is a mere hindrance.

It only takes one of these threats to obliterate or seriously damage your business – not all of them!    So take my advice and get professional advice!

Check my other blog site http://www.aikido-secrets-to-calm-success.com and learn how the secrets of Aikido can be applied to your business.

If you want to learn the secrets of Aikido for yourself visit http://www.griffithaikido.com.au

Until next time!

Gary

Threats that can wipe out your business!

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The recent floods in Brisbane and along the east coast of Australia have highlighted that fact that rising water and a host of other natural threats can obliterate years of hard work for business owners.

If rising or rushing water can wipe out your business, what else is out there that could do the same thing?  People tend not to think about the threats or plan for them, when starting up a business.

Here are seven (7) threats of nature that have the potential to put you out of business if you don’t plan for them.

  1. Flooding of business premises and connective infrastructure
  2. Destructive wind & rain events (e.g. cyclones, hurricanes & tornadoes)
  3. Fire (localized or bush fire)
  4. Drought & resultant water shortages
  5. Earth quakes & tremors
  6. Volcanic activity (lava, ash, gas, tsunami)
  7. Environmental disasters (e.g. ocean spills, pollution, toxic soil).  Although man-made, have the potential to affect natural resources and do wide scale damage.

We are at the mercy of nature always, no matter what we do or where we go.  We are also 100% dependent on a wide variety of technology that creates the environment in which we can live and work together in an orderly manner.

So it is not surprising that there are so many ways in which nature can interrupt our lives and our businesses.  It can be achieved by destruction of premises, equipment, machinery and stock, or simply by wreaking damage on the connective technology we depend on 24/7.  A prime risk to business is a power outage.  It can effectively halts life as we know it and if it goes on long enough, it will directly affect fuel and water supply.

When starting up a business, your business planning should involve more than simply assessing your opportunities and forecasting your profit.  You need to include an assessment of those risks most likely to affect your business, and formulating appropriate action.

Insurance will provide the financial protection and the means to repair or rebuild, but other strategies might include:

  • Avoidance – simply don’t set up shop where the risks are greatest
  • Backup – maintain offsite storage, equipment to generate power & stored water
  • Retreat – the means in advance to transfer to a higher or safer location

Check my other blog site http://www.aikido-secrets-to-calm-success.com and learn how Aikido could make a life changing difference to the way you run your business.

Until next time!

Gary

‘Where ideas come from’ by Steven Johnson

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This is a great 4 minute video for anyone starting a new business. It shows you in simple terms how good ideas are generated.
Every entrepreneur goes through the sometimes frustrating process of innovative thinking. You sit there and sit there … and nothing happens.
So if you are starting business or innovating / renovating your existing business, watching Steven Johnson’s video for the next 4 minutes will put you on the right track and save you a lot of time. Highly recommended viewing.
Enjoy!

Starting up your own business – identifying opportunity

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Looking for business opportunities is fun.  It is an exciting and empowering process.  Opportunities, when converted, ultimately lead to business growth by adding new clients, new products and additional sales from existing clients.  There is nothing quite so self satisfying!

Don’t wait for opportunities to come to you – make them happen.  Opportunism is a business practice that doesn’t receive enough emphasis in business training.  It is the creation of everything.

So where is opportunity found?  The broad answer is ‘outside your business!’   There are far more revenue opportunities outside you business than inside it.  Opportunities inside your business are usually related to technology, cost reduction and productivity.

Opportunity seeking is a mindset, not a specific location.  Actively seeking opportunities for unfulfilled demand is central to the entrepreneurial spirit, but only a positive and optimistic mind will find them.

The opportunistic mindset is one of abundance, not of lack and scarcity.  If you think there is opportunity awaiting you, there is.  Alternatively, if you think there is no opportunity, there isn’t.

Your opportunity could be local, industry wide or global.  It all depends what you are looking for and how expansively you choose to think.  History is often a good teacher, so look to the past to find clues to future opportunity.  In looking for trends, consider the following questions in relation to the past 3-5 years.

  • Who has disappeared from your industry and why?
  • How has the internet changed your industry?
  • What new technology has been developed in your industry?
  • Do you see any product or service parallels between you industry and another industry?
  • Are your clients and their demands the same today as they were then?
  • Has government legislation banned, allowed or changed anything?

Expand your thinking outside of what you are currently doing.  Don’t allow your future to be determined only by your existing clients.  There is nothing more exciting than creating your own future by proactively identifying opportunities.  The future does not belong to procrastinators, but to brave business explorers.

When you find opportunity, don’t sit on it.  Most opportunities have a use-by date.  In other words, if you don’t act, someone else will sooner or later find it and act on it.  And where does that leave you? ….. Usually out in the cold thinking “Oh what could have been!”

If you are starting up your own business or want to boost your existing business read my latest book Recession Riches and Wealth at:

http://www.garyweigh.com/recession-riches-and-wealth

Until next time!

Gary