You’ve heard the saying: “you don’t know what you don’t know.” Most people are happy to accept that proposition because whilst ignorance isn’t always bliss, people tend to avoid risk and thus the danger won’t be immediate.
Launching a start-up means rushing into the high-end of the risk zone where even minor trip-ups can have a significant impact on your potential success. It can be especially humbling when you trip-up because your list of ‘don’t knows’ includes something that’s bleeding obvious.
As surely as every person has their own story, every start-up survivor has a tale to tell – and a list of what “I didn’t knows”. Leading a start-up to success is hard enough without all the ‘don’t knows’ waiting to catch you out. For instance, it’s easier to talk someone into buying in your business than it is to get them to move on when the relationships isn’t working. Furthermore, the 80% failure rate amongst start-ups will weigh on the minds of the people you’ll deal with: landlords may want up to one year’s rent in advance, trade suppliers will mark your account with “cash only’ and banks, while keen to lend money, are risk averse. In fact, it is always wise to have two banks accounts – one for your house mortgage and one for your business (best to keep bad business news away from skittish home mortgages lenders).
To help you bring you’re a-game next time you launch a start-up and avoid being caught out by ‘don’t knows’, I’ll shed some light on some of my past “didn’t knows”. Remember, you are no less smart that the other guy who may just think they know everything.
1. Entrepreneurs aren’t driven by money
Your fellow entrepreneurs will tell you this but once you start doing business with them, you’ll discover they can be a hard-nosed bunch who insist on being paid immediately!
I didn’t know… to avoid entrepreneurial suppliers. Look for big, slow, well-established suppliers who operate 30 day accounts.
2. Strangers make the best customers
Whilst most start-ups have some friendly clients lined up at the outset, these select few can often develop a sense of entitlement and become overly demanding. Consequently, they could become low profit, absorbing more time than their custom is worth, and rob you of time better spent on recruiting new, high margin clients.
I didn’t know… friendly customers are often lower margin.
3. Stay very close to your customers
Remember: a customer is never married to you or your business. Business will always be a series of independent experiences and each experience must be satisfying.
I didn’t know… you can be committed to your customers but they must always be treated as new customers. Customers old and new are always free agents.
4. A dollar in the hand is worth two tomorrow
Often the cost of recruiting a client can leave you fearful of missing out on a return on investment due to the risk of that client moving on. Consequently, the business arrangement can devolve into one where you’re playing servant to clients who feel entitled to seek ‘reward’ for their patronage by delaying payments. This high cost customer is now a debtor using your companies cash reserves to fund their business.
I didn’t know… that it’s best to recruit customers that are not ‘too big’ for your start-up.
5. Look after you and yours
Your start-up will consume all your energies, both psychical and emotional. Planning often consists of surviving from day to day. But start-ups either grow up or die whereas you’ll always be responsible for your own wellbeing and that of your family .
I didn’t know… that even successful start-ups can leave you near broke.
About the author
Sydney-based Alan Manly is an entrepreneur with extensive experience owning and managing SMEs. He is the author of the forthcoming book, ‘The Unlikely Entrepreneur’ and his website is www.alanmanly.com.au