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Episode #68
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There were a lot of things that I did do right when I set my business up (I’m a bit of a geek that way!) but there was also a lot I didn’t do. I’ve learnt a huge amount along the journey from working in my day job to launching my business, to leaving the rat race and beyond.
So I'm sharing with you a few ways how you can get it right before you launch your business if you plan ahead.
SPEND TIME CHOOSING THE RIGHT BUSINESS IDEA
The first way you can future-proof your business is to develop a strong, research-backed business idea and model. I guess this seems basic because of course you need a good idea for your business! But a lot of people don’t put in the work at the start to really test their business idea. I get it, you're so excited to go out there and bring your passion and talent to the world after coming up with the idea, you don’t want to pause and lose momentum by stopping to research and test.
You know that I believe passion and purpose have to be the foundation of your business, or you will find it really challenging to keep at it long term. I’m not suggesting your change your idea to something you don’t enjoy as much just to fill a gap in the market. Definitely stick with your passion, but how you actually bring that passion and talent to the world can be played around with to find the perfect mix in terms of setting your business up for the long term.
Ask yourself these questions to test your business idea..
- Is there already a demand for what you do? You can answer this by checking out if others are doing what you want to do. Is there already a market in place?
- Does it fill a need? If others are not doing it or only a few are, is there a gap in the market, is it what people need and are looking for?
- What problem are you solving or what desire are you fulfilling for your ideal customers? Have a look online on Google and in Facebook groups and see what questions people are asking in relation to your business idea to find this out
- Is your idea something that you can adapt and grow in the future to create the business you have envisioned? In other words, can you share your passion and talent in multiple ways, so you can always pivot to a different method if one isn’t working or not popular for a period of time.
If you are more on the risk-averse side, you could consider adapting your idea to be aligned with one of the business types that generally do well whatever the economy.
Commonly these sectors do well:
- Anything related to healthcare - let’s face it whatever our situation health comes first
- Groceries - we all need to eat!
- Freight and logistics - transport of goods will always be needed and you can do well particularly if you come up with something that’s going to save time and money in that world.
- DIY is another sector that does well because, especially in times of hardship, people want to take on tasks themselves that they normally would pay for.
- Home or car repairs - There are often things people can’t do themselves and so will pay for people to help them like plumbing and electrical work
- Children’s goods and services are something that is always in demand as we will always put children first
- The same with pet care, people often see pets as an extension of their family and don’t stint on paying for healthcare or grooming for them.
- Tech support- with the world becoming more and more online, people who understand it and can help others navigate issues or fix problems are important.
- Products or services related to financial advisory and accountancy stay popular in any market.
Finally, you can consider products or services that offer a bit of luxury at a reasonable price.
Because although people’s first reaction is to cut back on luxuries or non-essentials when there is a dip in the economy, as time goes on they need to have something that will give them some pleasure as they try to avoid the negativity.
So lower-cost non-essentials like chocolate, alcohol and fast food, or even things like candles or do-at-home spa experiences that offer some luxury without high expense are popular.
Estée Lauder chairman Leonard Lauder called this “The Lipstick Effect and said during troubled times, cosmetics sales tend to be the opposite of the health of the economy, as people seek out ways to pamper themselves, to escape the doom and gloom, without breaking the bank.
GET TO KNOW YOUR IDEAL CLIENT (& HOW THEY WILL REACT)
Another way to start your business from firm foundations as an aspiring entrepreneur is to really know your ideal client. Your ideal clients are the people you want to attract to your business. They are the people most likely to want your product or service and who you will be talking directly to in your marketing. Now as an inquisitive wannabe business owner, if you do any kind of research you will have come across this term because in terms of attracting people to your brand it is essential.
More importantly, if you want to set yourself up to battle in any market in the future, it's also really useful to have your ideal client profile to hand. When there is a dip in the economy or other change events you can immediately start to think about how they are likely to react. Will they likely be affected by a recession and if so how much? What will that look like for them? You should have an idea of what your ideal customer likes, their level of income and their likely spending habits.
If you’ve thought about this in advance you’ll know how to react when there are downturns in the economy. You don’t suddenly drop all your prices in a knee-jerk reaction, but instead work out what your customers would prefer, which may be a lot different to what you are hearing in the news about the feeling in the country or world. If you are clear about your ideal clients from the start you can prepare for all eventualities as you set up your business.
START LEAN
The next way is to start lean, A huge way to make a business recession-proof is by keeping expenses low. If you have low overheads you can keep going for longer on less income but also can be more agile and flexible to pivot to new ways of working.
The number one thing I did wrong when I started out was investing too much in my business upfront. I thought that if I had all the best systems, all the best tech and hired people to get stuff done I would be flying and that was not the case. Start lean, whether you are an online or bricks-and-mortar business (or a mix of both) start as low cost as you can. Do as much as you can yourself. Obviously, if you just don't have the skills or the time then you can hire freelancers to help but try and keep that to a minimum.
You can always add better systems and take on employees or contractors later when you have made enough income to justify it.
Pro tip: If you are going to invest in anything else, invest in your knowledge and skills! That is one thing I never regretted. Learning as much as I could at the start through taking courses, listening to podcasts and reading as much as I could, enabled me to do a lot myself which in the long run saved me money and still does.
MULTIPLE STREAMS OF INCOME
I think having multiple streams of income is essential in the modern age. It means that you always have some part of your business income to fall back on if one stream is struggling or no longer viable.
Multiple streams of income are exactly how they sound, different ways to make money in your business. So rather than just relying on one type of product or service you look at lots of different ways of using your passion, talents and know-how.
Examples of these are 1:1 or group coaching, online or in-person courses to teach what you know, e-books, printed books, set up an online shop, podcasts, blogs or Youtube channels, retreats, online or in-person events, affiliate marketing…the list goes on.
Now of course you would not do all of these! You can pick which would work the best for your type of business, what kind of work-life balance you want and which your talents and skills would align best with.
Another tip here is, don’t start everything at once. Create your main business based on your passion-filled idea focussing first on one stream of income and then once you have that up and running you can add another stream and then another and then another.
As you start out, you should plan to have at least one extra stream of income in the future and set your business up to allow for that potential.
BUILD STRONG BUSINESS FOUNDATIONS
That is, making sure you create good habits, structures and systems from the beginning. Even though you may be a one or two-man business at the start you should set your company up with the end in mind, and by that I mean think about what kind of size would you like it to grow to. How many people will work there, even if just as contractors? What kind of turnover in the future are you envisioning? Even if you want it to stay just you, there are still good practices to put in place.
Think of it like the company you work in now, you will have different departments Compliance, Legal, HR, Marketing, Finance, Operations, etc etc
When you are a small business owner, you are head of all of those departments as well as the business side, and if you don’t get a handle on them at the start, it will be far harder in the future when you are (hopefully) busy with clients and building your empire.
Knowledge as they say is power and this is never as true as it is in having your own business. Use your time while you are still in your day job to learn as much as you can about entrepreneurship, business and what you can expect in the first few years. But also get clear on the legalities and financial requirements of being a business owner. Too many people take the plunge into their own business and either rely on others to tell them what they need to do, or go blindly and think they will pick it up along the way. It can take some time to get up to the point when you are ready financially and practically to leave your job, so don’t waste it. Prepare yourself and your business.
Get the help of coaches and other consultants and guides such as lawyers and accountants to advise you if you need it, but don’t let that be a substitute for your own knowledge. You will be or already are the CEO of your own company or freelancing enterprise and you are responsible for it. So saying “I didn’t know I had to do that” is not really going to work. It’s fantastic having your own business, but having the freedom to do your own thing, means you also have responsibility.
Start simply, it does not need to be elaborate. I’m all about taking things step-by-step and not overcomplicating them. Learn about what you need to know one thing at a time. Then take action and put in place whatever you need to. Learn and do. Learn and do.
WARNING! Building a good foundation is not an excuse for you to procrastinate! You don’t have to have all your ducks in a row to get started (although you do need them to have their feet on solid ground!). Don’t spend months or years doing this, use whatever time you have alongside your job to get the basics done and then get going. Only by taking action can you start your new entrepreneurial life sooner rather than later.
THE BOTTOM LINE IS…
I know what it’s like to want to escape the day job and go out on your own. It can be frustrating and you feel resentful having to do your job when you really want to be working on your business. It can be tediously slow having to fit in your business building in between work and your other commitments. I know how tempting it can be to just say to yourself "I’m getting out" and hand in your notice.
But don’t let that make you reckless and decide to leave before you are ready and have the basics in place. Getting off the ground with a new business can take time and although there are some overnight successes, most will take a bit longer.
The best way to set yourself up for success and future-proof your business to be able to get through the ups and downs is to take your time and set things up for the business you want. This is your new future, your way of achieving what you want for yourself and your family. You are not going to go back to the 9 to 5 once you leave. Believe me, you won’t want to! So take the time now to build your foundation, and before you know it sitting at that desk living the employee life will be a distant memory.
Source information for this post
Recession beating sectors
https://www.trendscoutuk.com/blog/top-10-industries-that-can-thrive-during-a-recession/
https://www.tonyrobbins.com/business/businesses-that-thrive-in-recession/
The Lipstick Effect
The Pleasure / Pain Principle
https://en.wikipedia.org/wiki/Pleasure_principle_(psychology)
https://www.verywellmind.com/what-is-the-pleasure-principle-2795472
