Back in 2011, Shane Cann, an associate at Bush & Co Limited Chartered Accountants, decided to start a business with his wife, Marie. It wasn’t a difficult decision as he thought that he had a good background in the relevant skills. The only problem was that the business was in an industry neither of them had any direct experience of.
This is the second of a three part series on the subject of starting a business. This has been written by Shane following his experiences of owning and running a restaurant in Dawlish Warren, Devon. Although Shane is an accountant and tax advisor, the experiences he gained prove invaluable when advising on starting up a business or speaking to a potential entrepreneur.
Recently I spent some time looking back at the first year of running my own business after being asked what I had learnt.
Like most lessons learnt in life whether it be academic or by experience, you can rarely just list off all of the things that you have learnt without some sort of prompt. Having completed a business degree with a broad syllabus, I wondered what I had learnt at that stage however when you encounter situations where your learning is relevant, it soon becomes apparent the value of those lessons.
Similarly, just being able to list off the lessons from running a business is proving just as challenging, if not more so, as the lessons are not neatly arranged into syllabi.
I recently read an interesting article by Joel Gascoigne, founder of Buffer, about not having an idea about what he was doing when he started his business. I believe that is the case for the vast majority of fledgling business owners whether or not they’ve done it before.
From my own experience, I imagined that I did have the necessary experience to run a restaurant business having worked as an accountant and business adviser for leisure and hospitality businesses for most of my career.
It turned out I had pretty much no idea about what challenges lay ahead. In some ways being a business owner is similar to being a parent, not in the caring for your staff like children way (although sometimes it feels like this), I believe the similarity lies in that both are unrelenting and at no point can you just decide to not do the job.
In the early stages of a business, those tasks tend to be labour intensive especially for the owner. Most of the tasks need to be learnt from scratch and not just performed as a routine task.
An example being payroll, which as an accountant you take for granted that you can perform easily, is a tougher proposition when you’re the business owner. Not only do you need to perform the task but you need to deal with the new employees, take the relevant details, copies of identification and obtain proof of eligibility to work.
These tasks are not onerous in themselves however when added to an ever growing list of jobs and at the end of what invariably will be a long and tiring day, they become much more difficult.
This is part and parcel of being a business owner. Ultimately if you don’t do these tasks then the business fails, some tasks with more immediate consequences.
This is how most businesses start as there never enough hours in the day for the business owner and the start-up staff. The business will function when the tasks are being carried out like this.
Whilst this is what business survival initially seems like, there is little chance that the business will evolve and improve greatly by not changing from this. The reason being, the business management team are spending their time managing the business and not leading. By this I mean that no one is thinking “is there a better way to do this?” Instead they are thinking “I just need to get this task done so I can finally to bed”.
The bad news is that I don’t believe that this phase of business can be skipped with particularly good consequences. The reason being that if the business owner and the management team are not working longer hours then it could mean that the business is under a different pressure. That pressure being to generate sales to cover these staff costs.
In order for a business to have the best chance of prospering, it must balance committing to the lowest expenditure possible whilst ensuring the business can function and grow as required. When starting out, generally keeping costs low help the business reach profitability sooner.
Richard Branson often refers to “bootstrapping” as a key process in setting up a business. By this, he means to run the business by its “boot strap” in that no unnecessary costs should be committed to and that starting a business without vast funding can lead to a much more rounded business owner. The owner must roll their sleeves up and get their hands dirty, they must perform tasks which need to be done but over time will likely be given to staff or contractors, however if the owner doesn’t perform these tasks or at least remain close to them initially, how will they know whether they need to employ a member of staff or pay an agency? Of course, the owner could listen to their management team however the more successful business owners will be able to look at the business as a whole and identify and weigh up those options.
An example being, carrying on from our payroll example, in the future when there are 20 employees being paid monthly, this is unlikely to be a full time job for someone so a decision will need to be made between using a payroll bureau such Westcountry Payroll or employing a new staff member who can undertake other tasks as well.
As any business owner will know, when employing staff it is never a case of having a perfect fit. A staff member suitable to do the payroll may not be capable of doing the other tasks required. It is the experience from the earlier years which helps the business owner think laterally and consider their options carefully.
With the benefit of hindsight, the lesson I have learnt from my first year in business, is to have a clear plan of the steps required in order to progress the business. If I had my time again, I would have thought about financial targets as well as time limitations.
The financial targets are actually fairly straight forward to deal with, once I reach turnover of £500,000 I will buy that CRM software.
Whereas a time target may be something like, after 6 months if I am still spending 5 hours a week doing payroll then I will engage a payroll service.
Tips for Surviving the 1st year as a Business Owner
- Do as much research as you can about your business and about “business”.
- Speak to any friends or family who have business experience even in different industries.
- Make your plan as robust as possible, think about downsides and worst-case scenarios.
- Be clear about why you are starting your business, your resolve will most likely be tested a lot in the first few years but if you know what you are aiming for, that will see you through.
- Be realistic about your finances and what you can & can’t afford.
- Even if you can afford it, think “will this improve my business?”
- Be realistic about your own time, is your time best spent working all night or would it be better to accept the costs but be more productive with your time?
- Don’t worry if things keep appearing which you didn’t foresee, it’s bound to happen.
- Listen to advice such as this blog but most importantly make YOUR own decisions as you are the one in control.
- Finally, try to enjoy it (although it may be a case of looking back and laughing at those times in years to come)!
Image courtesy of https://www.flickr.com/photos/59632563@N04/
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