The top ten survival tips:
- Any idea for a business is only any good if there are customers who want to buy your product or service now (or in the near future). Without this you do not have a viable business proposition. It sounds obvious, but be very sure there is a big enough market.
- Only start if you are totally convinced of the financial vialibility of your product/service and are prepared to commit yourself totally to making it a success.
- Only enter a market where you, and/or your top team, have some experience and knowledge of the key market issues, e.g. how to obtain customers, pricing strategy, typical costs, etc.
- Always watch the cash, always have a contigency fund, always plan ahead and know how you could raise additional funds quickly if necessary.
- Never forgot your customers - continually check to ensure your product/service meets, if not surpasses, customer requirements, and is differentiated from the competition. Ask yourself everyday: who are the customers, what do they want, and why might they buy from me? Never be over-reliant on a single customer or supplier.
- Consider using a mentor, or appointing one or more non-executive directors, who can provide impartial advice together with industry knowledge and contacts.
- Plan for delays, e.g. in supplies, customer orders, recruiting staff, obtaining a loan, etc., by incorporating a contingency.
- If you plan to grow rapidly get the right team together as soon as appropriate. Note also that the top team will change with time, so do not assume any senior position is necessarily a job for life, escpecially if you are using other people’s money!
- Seek professional advice (i.e. legal, financial, etc.) whenever necessary and appropriate.
- When preparing your business plan recognize that entrepreneurs tend to be overly optimistic - so ensure your figures are realistic, and incorporate a sensitivity analysis.
The 5 Cs for Success:
Cash is essential to get started. It is essential to remain in business. Lack of it means the demise of the business. “No cash - no company”
Enterpreneurs are always over-optimistic, so as a rule of thumb you would be wise to consider the implications of assuming an extra 50% for costs, reducing your revenue forecasts by 50%. Doing this will indicate whether your business plan is truly viable.
Without them you will have no revenues! Ensure when you start that you know who your customers are likely to be, that they have expressed an interest in your product/service, will actually buy from you, and are prepared to pay your envisaged selling price. “No customers - no company”
If you are lucky there may not be any competition initially, but don’t count on that situation lasting for long because others will soon enter your market if they see you being successful. Learn from your competitors whenever possible; ensure you are doing all the good things that they are doing. Furthermore, ensure your offering is better than theirs by having a unique feature perhaps, or some form of major differentiation which will attract your prospective customers to your products/services.
‘Can do’ culture
Recruit people you know are a good cultural fit, you know can do the job and who won’t let you down. The company culture will then follow automatically without you even having to necessarily define it. A good positive company culture usually leads to a productive and successful company.
You would not believe how many problems are created within business as a result of poor (or no) communication. Suffice to say the best and most successful organizations are those which communicate to all levels of staff. For instance, in such companies, the lowest ranks are usually just as aware of the company’s mission, its products, etc., as senior staff. When management communicates with its workers there is less chance of misunderstandings, a sense of cohesion and belonging is created, and morale is generally improved by the mere fact that senior executives are taking time out to communicate with them about what is going on. Communication should always be a two-way mechanism and any communication events, be they a simple monthly meeting, or an annual sales conference or whatever, are a chance for management to obtain the views of staff at all levels. It is not uncommon for staff lower down in the company to actually have a better idea of what is going on within a company, and its problems, than more senior managers.
Key negotiation tactics:
- Work out what your ideal outcome might be.
- Work out, as best you can, what the other party’s ideal outcome might be. Determine, in particular, whether the other party has any particular desires or requirements apart from simple money (or whatever).
- Work out the worst acceptable terms which you could accept. When considering the terms bear in mind all the elements of a deal, not just price. For instance, maybe the other party just wants to shift goods quickly irrespective of price (because they have to pay their VAT bill perhaps).
- Do not rush into the deal or try to complete the deal quickly - some of the best negotiators are extermely patient.
- During the negotiation watch the body language of the other party - you can learn a lot from a sigh, scratching of the head, etc.
- Try to formulate the deal in such a way that the other party benefits from features which they regard as being important, but which you can provide at little or no cost or effort.
- Show respect and build rapport wherever possible. You may wish to buy or sell from the party again, and developing a relationship where there is respect between the parties is likely to prove of immense long-term benefit.
- Do not forget that there may be some restrictions on what the other party can offer/agree to, so it is important for you to determine what these are early on in the negotiations - but do not ask bluntly, ask in a circumspect manner. This way you can work out how far you can negotiate.
- Keep the negotiations businesslike and do not let emotion cloud your judgement.
- Remember to ‘close’ the deal by agreeing all the different aspects of the negotiation, for instance the money issues, delivery, quality, etc. (which you should have identified prior to the negotiation). Summarize any agreement to ensure clarity and full understanding on both sides before departing.
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