Mike has mentored over 1000 entrepreneurs personally – and often the same sorts of problems crop up. Hence “Ask Mike” – your business, entrepreneurship and growth questions answered! Email your question to firstname.lastname@example.org
I have been made redundant – more than once in fact. What’s more, so have many of my associates and business partners: people whom I like, trust and respect. Many have gone on to be very successful entrepreneurs. Clearly, redundancy does not mean you are automatically incapable of business acumen.
Those success stories all share one trait: not the bitter memory of clearing their desks, but the ability not to take the experience personally. You must draw a line underneath it as soon as possible. No one is begrudging you a brief wallow; in fact a short holiday to reflect, recharge the batteries and try some new and different experiences is often just the tonic. On your return, talk to friends, family or even a counsellor if you feel it will help; gaining others’ perspectives will help you see things more objectively.
With your head clear, you are now in a position to think about what to do next. Starting a business in the recession can seem like a risky proposition. Entrepreneurs, though, are generally optimists, and should see in the recession an exciting opportunity to take advantage of cheap resources and labour. If you have some cash – which, coming straight from a redundancy, may very well be the case – that can add up to a perfect recipe.
I mentioned optimism there. This sort of market is often seen as the preserve of the extrovert; the confident, talkative charismatic type who can charm their way around the pitfalls. It is a valid observation; indeed, I would place myself in this group along with the majority of client-facing entrepreneurs I have met. However, introverts are not excluded. I have been asked countless times whether there is a “right sort of person” to start a business. There is certainly a typical person, but never a right one. Being shy can be a very positive thing; you are probably very good at following procedures and getting the job done, in much the same way extroverts enjoy making sales. A strong partnership will harness both of these strengths whilst compensating for each individual’s weaknesses. Whichever category you fall into, be sure to seek out the opposite for a commercial marriage made in heaven.
Whether introvert or extrovert, a positive frame of mind is vital when starting a business off the back of a redundancy. Redundancy is not your fault, but you need to remember that what you make of it is completely down to you. Take the time to reflect upon events, because business is a mighty challenge, not for the faint-hearted, and you will need all your reserves of strength and focus to triumph.
Still with us? Good. It is time to decide what your new business is going to do. You may want to use your expertise to set up in the area with which you are familiar; others use redundancy as an opportunity to pursue a passion in another – usually diametrically opposed – area. Redundancy may be painful but it sure does focus the mind. Ask yourself:
- What do I do (i.e. very generally what am I good at)?
- What am I interested in?
- What else could I do with the skills I have?
Now to my most important piece of advice. Once you have identified what you are going to do,the almost universal error is to leap straight into thinking abouthowyou will do it: will you need a van, what hours to work, the colour of your letterhead etc.
Instead, the question that matters is ‘who?’ Who might be your customers, and who might be able to lend a hand or give you a leg up. You are still on the drawing board, you need to make sure there is a market for your nascent business, and the people you already know are the most valuable resource at your disposal in these early stages.
Dig out your address book, get on LinkedIn, contact ex-colleagues you got on with and speak to friends and family. Your personal network is a rich seam of professional people with whom you already have a good relationship and who could therefore be people you can sell to, buy from, work with or simply speak to for advice.
In particular, speak to potential customers who you already know – or ex-customers at your previous job (even if you are contractually unable to poach them). Ask them for their advice in your new start-up, and, if appropriate, whether they are happy to become your first clients. If they are brimming with experience and goodwill, turn them into mentors. As regular readers will know, I am a huge advocate of mentors; but customer mentors are even better as they are evangelists, sounding boards, mentors and customers all rolled into one.
I cannot over-stress this: these people with whom you surround yourself may be the difference between success and struggling.
Once these ‘who’ questions have been answered, you can finally concern yourself with ‘how’ you will provide your product or service. If your business is still viable after cursory examination from real people, then, trust me, you will find a way to answer to this one.
Incidentally, do not rush to set your business up ‘officially’. At some point, you will be required by Companies House, HMRC and the rest to jump through hoops backwards whilst signing forms but there is no need to put yourself through this any sooner than you have to. Test the waters first and make sure your service is workable and profitable. You have around three months’ grace from your first transaction before officialdom starts knocking on your door, so get going first and worry about the admin later.
Similarly, do not get into debt (which requires negotiation with the bank) if you can help it during these tentative transitional weeks. If appropriate, for example (this is often the case with services), ask for 50% upfront and the rest on completion. That may well mean you do not have to hock yourself to get going. Again, it’s a learning process: if you can’t make it work with a generous upfront payment, then you don’t have a business and you should go back to the drawing board. If it does all work out, then it looks like you might already be in business!