Your first year of business is one of the hardest. Fact. You only have to glance at the hundreds of stats, surveys and studies out there to see the odds aren’t in your favour (and that’s to survive, let alone do well). I recently read one article that estimated 70 per cent of start-ups fail within their opening year. That’s a staggering figure. I know I certainly learnt a lot of valuable lessons during this period, and these three, in particular, are what I would class as the most important:
1. Don’t leave finances to the last minute
Keep an eye on every penny. That doesn’t mean be tight. You’ll have to spend to get things up and running. But make sure you can easily account for every in and outgoing (which could well be a minimal amount in the first 12 months), and have it to hand for when you need it. It might sound obvious, but I learnt the hard way that riffling around in various pockets, trying to find receipts is not fun. Nor does it make for good practice and one of the most frustrating things in the world is retrospectively organising finance; I wouldn’t wish it on my worst enemy. From day one, create a process around your finances and make it a habit. Buy it and file it. Your future self will thank you for it.
My sister Rachel and I had both run businesses before and had what we thought was a good idea of how to handle finances. How wrong we were. We were so focused on building the Moneypenny brand, hiring staff and looking after our clients, that our finances almost took a back seat. As a result we found ourselves scrabbling around to balance books, complete tax returns and the like at the end of the first year. We very quickly learnt from this, and can now pull out records from any point in the past 15 years up to today. Being forced to be strict with our finances changed the way we operate, and without doubt, for the better.
Remember: you can’t go back in time to figure your finances out. Think of it as your homework. And if you know you’re not very good with figures and keeping track of finances, get a bookkeeper. You can hire one for buttons, and if numbers aren’t your natural forte, a good accountant is worth their weight in gold.
2. Get to know your customers inside out
This time early on in your business is the perfect opportunity to get to know your customer. I mean, really know them. There will rarely be another time when you are so free to understand, ask questions and try new things. So take full advantage of it. What’s the best way to do this? Talk to them. It’s that simple. People are always flattered when you ask them for advice or their opinion, and they will undoubtedly enjoy the thought of helping you shape your business. I’ve never met one person who wasn’t open to giving me advice about the way our company is run or the level of service we give. Not one. If I hadn’t spoken to clients in the early days, we wouldn’t have introduced services such as converting clients’ messages from fax to email (yes, it was that long ago) or altered the way we present invoices to make them even more reader-friendly. These only happened through conversation.
If you’re honest with your customers, they will be honest with you. OK, it won’t always be what you want to hear, but that’s the point; it’s what you need to hear. They’ll most likely tell you why they chose to use you, for instance. And give you a valuable insight into how you’re faring against your competitors, be it price, what you could do better, or what you are already doing better. Quite often it’s the little things that they’ll pick up on. The things that you might not even see or cross your mind. But remember, there are no little things in business when it comes to customers. Everything matters.
Talk to the ones that got away too. They’ll arguably give you the best review of your company so pick up the phone and tap them for everything they can tell you. Knowing your customers brilliantly at the end of your first year will pave the way for attracting more in the upcoming years.
3. All in or all out
Finally, take a long look over your shoulder at your family, friends, cricket and anything else you might hold dear. Because if you’re serious about your business, you’ll have to say goodbye. Not completely of course, but if you really want to succeed you’ll have to dedicate yourself to it fully – mind, body and soul. It might sound harsh, but the secret to a work-life balance is this: there isn’t one. Not initially at least. If you start your own business, then there is only work, work and then more work.
I sacrificed all sorts of family events and outings during the first year of Moneypenny; I even forgot the name of the children’s rabbit at one point (something I still haven’t been forgiven for). But it was necessary to get the business through the difficult first year.
So, if you’re in the early days of your new business, prepare now for your life to completely change. No one succeeds without commitment. And if you’re not going to commit, then quit.
Ed Reeves is director and co-founder of Moneypenny.
Further reading on starting a business
