Starting your own business can be a risky, time consuming and often costly labor of love. There are many traps that budding entrepreneurs can fall into. So knowing about what to look out for, and what to avoid can be the difference between your business flourishing and collapsing.
For Gareth Williams, co-founder and Chief Executive of Skyscanner, the vacation price comparison website, placing emphasis on who you hire – especially when your business is in its infancy – is of paramount importance.
“Make hiring your top priority and not a side job,” he told CNBC.com. “Normally, you’re so busy that you try to fit interviewing and hiring around the edges of your job, but actually the success of what you do will be guided by your success in hiring.”
Choosing the right medium for your message to potential clients and investors is another issue.
“Avoid communicating important or complicated messages by email,” Williams added.
“When you’re an entrepreneur, a lot seems obvious: you’re thinking about your concept and its context all the time. If you try to take a short cut and explain something by email then you’re probably going to find that only 10 per cent of the message is understood. You’ve got to do it in person, got to spend time explaining your message and taking feedback.”
Clarity of vision and facing facts is also key, according to William Chase, a potato farmer and entrepreneur who founded the luxury crisp company Tyrells, and now runs the Chase Distillery in Herefordshire, England, which produces one of the world’s best vodkas.
“People don’t react to things that aren’t working,” he told CNBC.com. “If you’re trying to sell something to people and they don’t want it, you have to act. You mustn’t keep going, you’ve got to stop, find out what it is they do want, and then turn around and sell it.”
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Reining in your ambitions – at least initially – can also be beneficial. “Rather than start something that’s too big, start small so you have time to move the business in the direction you want it to go,” Chase added.
Starting small should not, however, limit your business. “If you set modest goals for the company, it’s unlikely that you will exceed them,” Williams, of Skyscanner, said. “Absolutely start small, but if you’re not aware of the larger opportunity, then you will never exploit it.”
Rekha Mehr started Pistachio Rose, a boutique bakery specializing in luxury Anglo-Indian cakes and biscuits, last year. This March, she was chosen to be an ‘entrepreneur in residence’ at the Department for Business, Innovation and Skills, where she is aiding the UK government in its efforts to connect with small to medium-sized enterprises.
“Not finding a mentor early enough into the journey,” is a key error that many fledgling businesses make, she told CNBC.com. “This was certainly the case with me. I didn’t appreciate the difference that having a lack of structure and nobody to bounce ideas off of would have on me.”
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Realizing the toll starting a business will have on your emotions is also vital, Mehr added. “I didn’t appreciate that, actually, it’s incredibly emotional,” she said. “The downs are the biggest I’ve ever had in my life. Working alone, in an unstructured environment and not having a mentor in place, you have self-doubt.”
Eighteen months into running her own profitable business, what else would Mehr advise others avoid? “Applying for finance too early, or believing that everyone needs a loan to start a business. There is something to be said for going back to the old school principle of starting small, generating cash and just building up organically,” she added. “Anybody who thinks that they can’t do it because they don’t have money, that’s not accurate. You can get by on very little.”
Perhaps though, the best piece of advice – simple, to the point and obvious – comes from Chase. “If you’re in a hole, stop digging.”