Top 10 New Year’s resolutions for start-ups
If you’ve recently started up a business, your New Year’s resolutions shouldn’t revolve entirely around losing a few chocolate-fuelled kilos or keeping cigarettes away from your yellowing fingers.
Start-up businesses, much like individuals, can fall into some pretty nasty habits. Patchy cashflow, a shoddy website and a casual approach to taxation are just a few of the common problems that entrepreneurs slide into.
We’ve compiled a top 10 New Year’s resolutions for your start-up to help you get back on track.
1. Don’t hire recklessly
Your start-up needs to hire its first member of staff to help you fulfil your ambitious growth plans. So you head to SEEK and aim to snare someone with a stellar background at large, successful businesses, right? Well, not quite.
“A person who accepts a job at a start-up is unlikely to have worked for a solo operator before – it can be a shock and I’ve seen people last a week,” says Ross Clennett, a leading recruitment consultant. “Look for someone who has worked for a soloist before, have the maturity to cope with the change or can work from home.”
“You’ll find that friends and family are a better avenue than the big recruitment sites for staff. Someone who trawls the job boards will usually want a traditional kind of job.”
“Make sure you have the cashflow to support the employee, be clear about what you’ll do and what they’ll do and take the time to train them – for a soloist, time is money and often they don’t want to take a day to explain the database and other systems. Finally, give them the resources to do their job.”
2. Get your cashflow into shape
Cashflow shortfalls are etched into many failed start-ups obituaries. Irregular gaps between payments can leave small businesses floundering, especially those that have committed significant resources into new staff or equipment.
Research published in December by Coface Australia found that one in six businesses are demanding up-front payment due to uncertain market conditions. This, and other measures such as clear contract terms and tenacious chasing of debts, can help curb the problem of late payment.
Poor cashflow impacts every aspect of your business. Investors won’t part with large amounts of cash for start-ups without proven sales and a steady income.
If you want to ‘bootstrap’ your business, cashflow becomes even more critical. Having your own house and funds on the line will focus your mind on getting the fundamentals right – negotiating favourable supplier terms, chasing late payments and building a loyal and regular customer base.
3. Become tax compliant
“Tax compliance is an area that some start-ups don’t have the time, interest or understanding to fully grasp,” says Greg Hayes, tax and business advisory expert at Hayes Knight.
Unfortunately, such an approach can lead to a very nasty encounter with the Australian Tax Office. The ATO has warned that it will be stricter in cracking down on tax avoidance in 2011, so it’s imperative that you ensure your start-up is compliant.
Hayes advises that start-ups make tax planning a year-round event, fully account for GST and tax withheld from employees and ensure they don’t take advice from uninformed sources.
4. Seek out a business partnership
One way of achieving the fast growth you’re looking for in 2011 is to team up with another company. Such partnerships can work in a variety of ways, but perhaps the most valuable is a sales agreement.
Consider approaching another business to set up a strategic sales partnership. This works by the partner selling your products, and vice versa of course, with the spoils of the bundled offering shared out between you.
To cover yourself, you’ll need to formalise this arrangement with the help of a lawyer. But a link-up of this kind could prove the fuel you need to propel your business forward this year.
5. Invest in the right technology
With a glut of tablet and smartphone devices set to come onto the market in 2011, along with countless other software and hardware IT options, start-ups will need to do their research to get the right technology for their business.
Renai LeMay, founder of tech blog Delimiter, says that start-ups shouldn’t invest in technology for the sake of it.
“Having said this, the big trends in small business technology in 2011 are going to be that everything should be as flexible as possible,” he says.
“This will often mean using cloud-based solutions such as Gmail, Skype, Saasu, Xero, Netsuite, Salesforce.com and so on, rather than fixed pieces of software that can only be accessed on one device such as a desk PC.”
“You need to make sure that your employees can do their work wherever they are and whenever they want. They will love you for it. And the above tools will let you do that.
“Beyond that, I would strongly recommend small businesses examine using Apple Macs rather than PCs in 2011. I have found the platform to be much easier to administer and keep secure than even a great operating system like Windows 7. It's squarely focused on just 'getting things done' and getting technology out of the way.”
“In addition, employees are going to increasingly be using iPads in 2011, and the Apple platform is much better integrated with the iPad than Windows is.”
“Technology for small businesses in 2011 is going to be all about empowering the employee to do their job, rather than constraining them.”
6. Set up a sales strategy
The tactics of selling – day-to-day special offers, prospecting and following up sales leads – are vital for every kind of business. But you should also be looking at creating a sales strategy for 2011 if you are to spark sustainable growth in your business.
The strategy of selling involves the planning of sales activities, working out the way you reach your customers and the competitive advantages you hold over your competitors. Formulating the right strategy can improve your conversion rate, increase customer loyalty and shorten the sales cycle.
Sales guru Debra Templar says: “The development of any type of plan begins with research. The insight gained for a competitive advantage comes from the marketplace, not from your mind.”
“One approach to use is the ‘three level sales strategy’. Look at your customers and the outside influences on their lives. Approach all three tiers to understand your customer.”
“Level 1: Groups: What type of groups does your target customer belong to? Contact membership directors and establish a relationship - not for selling but to understand their members’ needs. Their members are, after all, your customers.”
“Level 2: Suppliers: Identify non-competitive suppliers who sell to your customer. Learn their challenges and look for partnering solutions.”
“Level 3: Customer: Work directly with your customer and ask them what their needs are and if your business may offer a possible solution.”
7. Look to make the move
Home-based businesses are booming, thanks to the low overheads, an increasingly flexible workforce and the connectivity offered by eCommerce and social networking.
However, this could be the year that your start-up outgrows your spare bedroom or kitchen table. It’s a process that is in the backstory of countless successful Australian start-ups, including iiNet, RedBalloon and MyBudget.
Find premises that are cost-effective, allow you room for growth, have attractive lease terms and are situated conveniently for clients. You should also consider the opinions of your fledgling workforce, according to Jane Shelton, author of home-based business book ‘No Workplace Like Home’.
“While it may be economically convenient to convert the back room into the business centre of your life, it means that you are less able to separate your personal life from the staff traffic through your living room,” she says.
“Take the time to meet with your team and ask their assistance in finding room to grow. Get them to help find appropriate premises and feel part of the journey to freedom. That way they become more like a business partner and less like a home invasion force.”
8. Get your social media up and running
Several surveys came out last year on the topic of small businesses and social media. While the results were varied, the overall message was clear – start-ups aren’t embracing social networking and, if they are, they aren’t making the best use of it.
In 2011, make it a priority to weave the internet into every part of your business – not just as a shop front or as a token online marketing billboard. Engage with your customers via Twitter and Facebook, get involved constructively when your brand is mentioned online and make sure that you create interest with offers and blogs.
Christena Singh, author of the Sensis Business Index, says: “You have to look at online as part of your business strategy, but a lot of businesses aren’t doing this. They are spending a lot on hardware and software, but aren’t spending a lot of time on strategy.”
“I often hear that internet on the phone is the future, but it’s happening now. It’s something businesses should be looking at right now. Also, you should look at social media to see if it is right for your business.”
“You have to know where your customers are. If there are going onto social media networks, you should be there too.”
9. Don’t put off the hard decisions
As an entrepreneur, you will be required to make decision on a daily basis. Some of them are fairly straightforward and mundane, such as office furniture and business cards.
Some decisions will have a little more riding on them – when to launch, which candidate to hire, what marketing strategy to follow, which supplier to use and whether you should partner with a certain investor.
All of these questions shouldn’t be answered rashly without any forethought. However, procrastination can kill a business. You need to be a decisive, unambiguous leader of your business. If you are falling short, you need to work on this for 2011.
“If you are a procrastinator, try and figure out why,” says serial entrepreneur Phil Weinman. “Are you passionate about your idea? Are you really?”
“Think about teaming up with someone who doesn’t procrastinate. Pick someone who can counterbalance your weaknesses with their strengths and vice versa. Launching a start-up is one thing. Growing it takes patience, commitment and drive and if you’re procrastinating, you’re not ready.”
10. Set aside some time for yourself
A recent study by the University of Melbourne and VicHealth found that stress-related depression is costing the Australian economy $730 million a year.
Within small businesses, there isn’t much room for passengers. Everyone has to pitch in and work hard if the enterprise is to prosper. This is particularly true of the founder, who will usually have to put in long, thankless hours in order to get the venture off the ground.
However, your business won’t benefit from you burning out. ‘Work/life balance’ isn’t just a gimmicky phrase – it’s something that every entrepreneur should look to achieve. Take time out this year to recharge the batteries and find an interest outside your business to keep perspective on things.