So – you’ve got a good idea have you?
That all day bank holiday drinking session at The Dog and Duck wasn’t a total waste of money after all it would seem. You and your mates may have put away enough booze to drown a blue whale, but unlike your bank account, you haven’t come away from the experience empty handed.
In between the non-sensical banter about who is going to win the premier league this year, who is the hottest bloke on TOWIE and which animal would win in a fight between a lion and a honey badger, you managed to somehow come up with an idea for a business start-up.
The only challenge now is to turn your idea into reality. You’ve seen some of the chancers that appear on Dragon’s Den and The Apprentice – how hard can it actually be?
Before you go running around the city looking for venture capital however, you might do well to read our guide to setting up your own business to help you become a squillionaire.
(Legal disclaimer: The W1nners’ Club in no way guarantees that you’ll make millions by taking our advice. In fact, we’re pretty sure that if you do, you won’t make a single penny so you’re better off speaking to someone who knows what they’re doing like Alan Sugar or Warren Buffett – maybe even Theo Paphitis).
1. Find a profitable niche
The first thing you have to consider objectively is whether or not there is a gap in the market for your hair-brained, ridiculous idea. If you really do plan on becoming the world’s leading manufacturer of tartan paint, ask yourself honestly if there’s a genuine need in the marketplace for the said item. To give you an example of what we mean, somebody once invented an amphibious car in the 1960s but it turned out there were only a handful of people that had the combined desire to drive on roads and rivers in a single journey who also had the means to buy one. What seemed like a good idea turned out to be a downright ridiculous one!
2. Study the competition and stand out in the market
Competition – grrrrrrrrr! The horrible people that you will be up against when vying for your customer’s time and money. It’s important to have a clear understanding of where your fledgling business can offer value that your competitors haven’t yet discovered so that you can differentiate yourself from them. If for example, your idea consists of taking a mince beef patty, sticking it in between two buns and creating a fast food restaurant chain with a Scottish sounding name, you may find that your competitive advantage is somewhat limited. It’s therefore important to offer customers something that your customers cannot or do not offer themselves – what’s known as a unique selling point or USP.
3. Manage the risks
Managing risk is the very cornerstone of business activity and on your trip to becoming the next Richard Branson, you’ll need to navigate your way through various obstacles and hurdles before you get to the top. Start-ups face risks in the form of too few customers so there’s often not enough cash available to keep the business afloat. Somebody else may decide that your moment of madness over the bank holiday weekend piss up was in fact a darn good idea and may try to copy it. If you borrow money from a bank to get the business off the ground, you face the risk that interest rates may rise and repayments become a burden. If you’re selling overseas, you’ll also be at the behest of exchange rates. We’re not trying to scare you – just keeping you aware of what might lie ahead!
4. Lady Luck
Never discount the influence of old lady luck in your forthcoming success story. Many a start-up idea has blossomed with a little help from the unknown and as elusive as lady luck may be at times, there are many that have benefitted from her presence. The important thing to note however, is that good fortune is often the result of good planning and analysis. Think of it like going to the races. You’re more likely to pick a winner if you study form and look at the factors at play that may influence the outcome of the race rather than simply choosing a horse randomly. “The harder I worked, the luckier I got,” is the famous saying that sums this up.
(Legal disclaimer: The W1nners’ Club in no way condones gambling as it’s a mug’s game and is also one of the quickest ways to lose money – unless of course you’re really lucky like the sales rep in our office who seems to be able to pick a winner every day…………now where did I put that betting slip?)
5. Start-up 2.0
After a while and as your business grows, you’ll reach a point where continued expansion requires a major gear change. This is the point where you might have to start hiring people you don’t know or you may require additional finance to scale the business up to the next level of development. Either way, if things weren’t serious before, they bloody well will be now and that little idea you had in the pub will require you to take on the risky next step. There is the risk of losing all your personal assets or worse, having an affair with your attractive new secretary!
6. How fast? How soon?
What goes up must come down, the bigger they are the harder they fall etc. In a business sense there is some truth in these sayings. It’s less about size or growth trajectory, but whether the business is growing in a sustainable fashion at a manageable rate. Consider your average intake of food on any given day for example, the amount you eat is evenly split between breakfast, lunch and dinner, thus allowing your digestive system the chance to process it efficiently and maintain a healthy body as a result. Now imagine what would happen if you tried to eat a full day’s calorie intake in a single meal. The food wouldn’t stay in your body for long and you’d still end up hungry later on. Businesses need to grow at a rate that doesn’t end up destroying them in the long term by over-reaching themselves – unless the business is like our I.T. bloke who can easily consume the equivalent of the average person’s daily food intake in a single meal!
7. From being the boss to becoming a leader
The bank holiday weekend spent in the pub where your business idea was first conceived is now a distant memory as your humble start-up continues to expand. The biggest problem you now face – is you! Fair enough, you had the initial spark of inspiration to get the business off the ground, you had the persistence and tenacity to turn it into a success, but do you have the skills required to take things up to a corporate level? At this point you might find that you need to hire managers or people who possess the skills required to run complex organisations. You’re no longer the boss, you’re now a leader whose job is to empower others to lead in their own right. Maybe it’s time to let go?!
8. Don’t get left behind
So, you’ve exceeded your wildest dreams! You holiday with Bill Gates and hold court with dignitaries from around the world as a result of your business success. The hard part now is to stay on top. The biggest threat you now face is complacency. The arrogant assumption that things will always be this way has seen off many a great enterprise. Take the video rental chain Blockbuster for example. At its peak in 2004, it employed 60,000 people across 9000 stores worldwide. By 2010, the company was bankrupt and had been usurped by the nimble and forward thinking Netflix who recognised the potential in harnessing the power of the internet as opposed to brick and mortar stores. Ironically, Netflix executives had actually offered their company to Blockbuster for $50million in 2000 but were laughed out of the office by the then omnipotent retail chain. Netflix is now valued at over $20billion whilst Blockbuster closed its last stores in 2011. In fact, if you look in some of the cupboards here at The W1nners’ Club, you might find a dusty old VHS copy of Electric Boogaloo that never got returned.