Act like you'll get paid

There are two keys to getting paid. First, invoice promptly. Second, act like you’ll get paid.

You aren’t asking for permission to get paid. You aren’t fitting in at their convenience. You aren’t giving them a 90 day interest free loan. You won’t be put further back in the queue than any other suppliers. You didn’t do all that work only for them to question it and make a generous  offer of 10%

You had a contract under law for a service or product and they have an obligation to pay. Act like they will pay on time and you’ll be surprised at how well it works.

If someone has a history of paying late then just ask for payment in part or whole upfront.

Administration Phobias

Of all the excuses I hear for not starting a business fear of administration tops the list. You know how to do your job but because you never had to win a job or invoice for it you suddenly think you can’t do business. Here are some tips.

Invoices/bills – check out your phone bill, internet bill, or any kind of bill. Copy key elements from the content and layout.

Contracts – Google terms and conditions from the industry you’re in. Find good examples, stitch them together and take it to a lawyer for comment. There are also industry standard contracts. Larger clients will have their own standard terms and conditions for purchase orders.

Collecting taxes (VAT, state tax, GST, etc.) – every other business out there does it, so there are a lot of easy to understand FAQ advice on the web. If in doubt- ask your accountant.

Bookkeeping – hire one part time to help you out .

Accounting – most of them are happy to provide ad hoc advice as well as filing your returns.

Logo – go hire a graphic designer. If you are braver then go and have a logo design competition on one of the many websites that enable this form of crowdsourcing.

Website – get a domain name or two (it’s cheap), go find a hosting company and then ask about their websites too.

Server – if you are database driven then a commercially hosted server will do you fine. The monthly fee seems a lot but when you look at all the admin and IT costs you are saving then it is a pretty good deal.

Office – try renting a serviced office to start. Sure the rent per square metre is high, but you can choose a small space to fix your total rent bill, and you also can use the administrative staff on an as needs basis which is a lot cheaper than hiring a PA.

You aren’t the first person to get into business so you don’t have to invent or reinvent anything. Just look around and go ask when in doubt.

Always bite off more than you can chew

Time to chase some big orders/contracts.

Go hire some staff from your meagre profits.

Launch a new product.

Go step on your competitors toes in public.

Take out a full page ad in the paper.

Get rid of tardy or difficult suppliers knowing the uncertainty that brings to your business.

All in all winning a big job when you don’t have all the resources to deliver is a nice problem to have. It’s how you deal with it that counts.

Let out your inner animal

Education is a great thing, however it trains us to be good employees, not good business people.

It takes time to build up a business. It takes time and effort to set up systems and processes. It takes discipline to keep costs down and improve quality. Your employees are your biggest investment and they can get up and leave at any time.

Time to get competitive, be jealous, get upset at things you should be upset by, throw a tantrum or two, enjoy your successes, be stubborn, be vindictive, be generous, be protective, be mercenary.

Treat your business like it is your child – a child with a great future. So let out your inner animal and let emotions enter your business.

Run one business at a time

Suppliers, manufacturers and subcontractors make or break our ability to deliver.

Ever been in the situation where you have promised a delivery date to your client and your suppliers let you down. My least favourite conversation when running tight deadlines is the “We can’t meet your deadline anymore” excuse. You then spend too much of your time helping your supplier meet their own obligations to you - Myriad phone calls, suggestions for improvement, legal and accounting issues sorted, temporary staffing, HR issues, family breakdowns, and the list goes on.

Do this too often and it can start to feel like you are helping run their businesses too. You can only afford to run your own business.

They may be a startup like you too but if they can’t deliver then stop giving them chances. So, after you’ve given them a chance or two, swap them out.

Own the territory

We buy big name brand products because we know their name. The reason we know their name is that they use mass market advertising to promote their brand and products. The reason they can mass market is because they are big and they have a big budget.

As a startup you don’t have the budget, you don’t have the brand name and not many people know who you are. Even if they do know who you are then they are not sure if they want to enter a long term customer relationship with a startup.

The military term is that you need to own the territory. Sure battles are important, but you want your potential customers and your rivals to see you everywhere.

What word of mouth tactics are you using to promote your product? What alliances are you forming?  Do you have a referrals system? Do you advertise on the web through banner ads? Will radio ads work? Can you purchase competitors or access to their databases? Can you get promotional pieces through local journalists? Do you have keystone customers whose presence will make others consider you. Do you have a reputation for delivery, quality or price?

You need to be appearing front of mind to your customer base – go own the territory.

It’s lonely at the top

You are now responsible for key decisions.

You are now responsible for many small decisions too.

You try to delegate to suppliers and staff but they come back with dozens of questions asking for clarifications on parameters you don’t fully understand.

People are delaying work while waiting for your decision.

Your staff are reading your moods and looking to you to bolster their self-esteem.

If you don’t appear to be in control and in charge then things go wobbly.

You spend a lot of time just helping everyone else keep on track.

You are expected to provide a sense of purpose and vision – all while drowning in the struggle of day to day survival.

When you are running out of cash while waiting for that next big order to finalise paperwork – you can’t fully share the uncertainty with your people.

Your family and friends don’t understand your problems and don’t really want to hear about it.

Everyone’s looking for something from you, and half the time you are just giving gut calls and are left feeling like an imposter at times.

Welcome to the top. This is life as the founder of a startup. 

How much would you be happy to earn?

A couple of hundred thousand a year is a pretty nice goal for anyone – and for many business owners this is possible.

More than that and you are going to have to start taking a lot more risks. Basically you’ll need a great product and enough staff to sell and support it. You’ll probably refinance your house a few times, put your marriage/relationships at risk, and destroy your health. Work life balance is not an option if you really want to chase a 7 figure income.

For the majority of business owners out the business model doesn’t support a million dollar income, no matter how hard they try. On the other hand, once you set up a normal business and have a steady customer base then you are doing just fine.   There’s nothing wrong with not being the next Bill Gates after all.

Act like you have nothing to lose

Just like sportspeople can choke in a final, you  also can make dumb decisions or delay doing what you need to when under pressure.

When you were an employee the worst that could happen is that you lose your job.

Now you can lose your business, your house and years of effort, not to mention laying off all those who helped you. So even if you don’t realise it, the fear of losing it all in order to gain a great profit will affect your decisions.

Japanese Samurai warriors say to assume you are dead before going into battle.

Poker players say to play like you are not playing for money.

No matter how you look at it sometimes you need to act like you have nothing to lose in order to do the right thing by your business.

Minimize choice to maximize sales

Some choice is good, too much choice is bad.

Rather than take the time to choose the best outcome from all the choices they face people will mostly walk away (you lost the sale) or will avoid coming back (you lost even more sales).

Extra choice also means complicated procedures, more training requirements, extra inventory, extra administration, and so on. This means your costs are going up.

So simplify your offering to improve your business.

Avoid people who say they’re the best

A firm handshake, a calm persona, and direct eye contact – these are all warning signs. The biggest red flag is a statement by someone that they or their firm are the best.

People who say they are the best often exaggerate their own ability, even to themselves. When a whole organisation says it then you know they have no clue.

True experts talk about the uncertainties and risks. They recognise that every situation is subtly different. They recognise that one product doesn’t answer everyone’s situation.

Avoid the sales hype and save a few dollars – avoid the best.

Make an existing product more convenient

We are all more and more time poor. Between work, kids, pets, hobbies, work round the house, going to the shops, socialising, etc. it’s a surprise that we have time to buy anything.

So a big part of businesses of the future is to take businesses of the past and put them online.

If you  pre-date the web then you may remember book of the month clubs or mail order book catalogues. You got a good price, and you could order from a range of books which would be delivered to you at home, or at school. Amazon.com simply bought up a number of these services and put them online. They made it simple, they made it cheaper than their rivals through economies of scale, then they grew the business into other products.

How many other businesses out there are really an old business sold through a new channel?

Look at the things you do or would like to do and then imaging how it could be improved or made more convenient.

E.g. print based services like phone directories are now online and updated daily. Office supplies online, Ikea online, groceries online - you name it, it's there.

Focus on making the everyday more convenient and then you can improve it and reimagine it from there.

Go where the action is thickest

The biggest mistake a new business can make is to try and corner a niche market or to invent a new market. While there are exceptional businesses that do make money doing this, for every success story there are many thousands who fail miserably.

There is a reason why all you competitors are piling into one part of the market – that’s what customers are buying. Always listen to your customer’s money (as opposed to your customer’s opinion).

Taking out a small part of a large market is good business.

If you are worried that segment of the market might not last too long then set up your inventory/staffing so you can switch rapidly.

The other great thing about a crowded market is that you can check out what is and isn’t working in terms of attracting customer’s attention.

Remember, never be the pioneer in a new market and go where the action is thickest.

Good products sell themselves

Getting knock backs and rejections in sales is just part of life. I’ve had days with meeting results ranging from a signature on the line to indifference to outright hostility. One minute you’re on top of the world, then next you feel like you’ve just been punched in the guts -but you keep on going.

What if you’re doing this day in and day out and you just aren’t getting sales.

First, the usual checks – are you seeing companies with a budget to spend, are you seeing the right people in the company, do they buy your product, etc.  If you tick all those boxes then the second level of checks revolve around examining how you look to a buyer – have you been in business for long, do you have other customers, do you have testimonials, etc.

Still not selling – then sorry, but it is probably your product.

I’ve helped a number of startups through their initial sales and it is mostly a slow road – building sales incrementally. However, over the last year I finally started helping one that had a product that customers wanted and couldn’t find anywhere else. Instead of initial meetings ending in the usual platitudes the cheque book was pulled out and we were asked for firm pricing on a complicated web based service on the spot. It was a revelation.

We’ve all heard that good products sell themselves and having experienced it first-hand I can tell it’s true. So next time you are butting your head against slow sales have a look at your product it may be the problem, not you.

Hire humans

You hear it everywhere – everyone says it – “Always hire stars”.

This wonderful piece of advice is offered by just about everyone, and it is totally wrong.

I see companies all the time advertising for people all across the country and even internationally for quite mundane roles.

Let’s go through the basic reasons

1) Get a grip – there are only so many truly talented people out there, the rest are ordinary humans.

2)      What makes your company attractive to a highly talented individual? Salary, opportunity, equity? If they are truly any good then why aren’t they working in a highly paid job.

3)      Are you or your business “stars”?  (sorry, but I genuinely doubt it)    

4) A business doesn’t run on its stars – it runs on normal people with normal intelligence  and skills performing their normal job – following normal procedures. If you require superhumans to make your business work then your business model is broken.

I’m a big advocate of hiring good people locally and promoting good people from within (if you have them.) It’s amazing what giving a bit of authority and encouragement to a person will do.

If the position description would require a star to perform it, then try looking at the core duties and breaking it into 2 or 3 separate roles that would only require a normal person.

If your business model requires superhumans or stars to work, then its time to change your business model.

Don’t believe the hype, believe in people instead.

Don’t sell the best – sell what they want

I don’t know about you, but when I’m at the supermarket buying everyday things I will choose quality depending on how I use the product. For example, if I am buying vegetables or meat I want fresh and hopefully tasty food. If I am buying flour or sugar I go for generic products – they are commodity products for most uses after all.

As consumers we all have a strong sense of where quality makes a difference and where you are willing to pay extra for the quality.

Now flip this on its head and look at what you are selling.

Will anybody care if you sell the highest quality product? Are people willing to pay for it? Can they see the difference in outcomes that make it worth paying extra for?  Are you obsessing about differences that your customers simply do not care about?

If your product or service doesn’t break through this threshold of indifference then you have two main choices.

For the mass market you should sell what the consumers want  (i.e. what they are already buying. )

The other alternative is to focus only on those who are willing to pay for the better service – in other words make the difference in quality so big that richer customers are willing to buy. 

Don’t create a new market

The common business mythology is that we should create a new product to tap a new market.  Then somehow that all translates into becoming a multi-millionaire overnight. Bollocks.

Don’t do it.

Ignore any advisor who tells you to create a new market. Ignore almost all books on how to set up and grow a business.

The reasons are simple. First, you can’t sell something to a market that doesn’t exist – despite the potential. Second, new markets are unpredictable and organise themselves in ways that may not reward you and your efforts. Third, trying to convince your customers of the need for a new product or service is plain hard.

The old business saying is “Pioneers end up with arrows in their backs, the second generation break even and the third generation make a profit.”   The moral of that is to not be the pioneer.

Seasoned entrepreneurs let others spend all their time, energy and capital creating a new market and then swoop in and reap the benefits.

If you want to make steady cash flow sell an existing product into an existing market – just compete with one of price, quality or service.

Own the business – own the outcomes

Most of us are used to working in companies where other people take care of a lot of the day to day issues like accounts payable/receivable, procurement, marketing, HR, health, safety, environment, etc.

Guess what – you are it now.

If you don’t get it done then no-one else will.

Even worse, when you first start out you probably can’t afford any more than occasional advice from experts, and if you work it right, free advice from people you know.

The one given is that you won’t have enough time to do everything, but remember you have no-one else left to blame but yourself.

So, keep reminding yourself to stop thinking like an employee and start owning the business and the outcomes.

When you grow a bit and get on people in those functions – the next trick is to relax your control.

Attitude is nine-tenths of what it takes

There are millions of great business ideas out there. So why do so many of them end up splattered in failure like bugs on a windscreen?

The problem isn't the ideas - the problem is the attitudes of the people.

Number one stupid excuse- "I don't have time" - bollocks - if you want to make it happen you'll find a way to make time. Just stop doing some other things. Break your habits and stop making excuses.

Number two stupid excuse - "Nobody will fund me." - Yep, that's for sure. Investors (including family and friends) have saved their money the hard way, so they are going to put you through the ringer before they hand over their money. The hard cold fact is that you are going to have to spend a lot of your money to get something up before people will invest. If you can shortcut this, then great. Otherwise you have to understand just how badly you will be viewed if you put up your good idea to someone and clearly haven't put any of your own money at risk, haven't done any research on the industry, and especially if you are an MBA graduate with only theoretical business experience.

Number three excuse - "Nobody supports me" - Sadly you are now on your own. Your friends don't understand the issues you are facing. Your family probably think you are nuts. Most people politely avoid talking about your issues and focus on weighty topics such as the weather or real estate prices. Get used to this and keep going. It would be great for our confidence if our family and friends did support us, but get used to silence and indifference at best- with the occasional "so when are you going to get a job" thrown in for good measure.

Face it – you’re weird

Normal people don’t quit their jobs to follow their dreams.

Normal people don’t take on huge debt to start up a business that they don’t know will work or not.

Normal people don’t  talk to everyone like they could be a potential customer or investor.

Normal people don’t work 10 to 12 hours a day for most of the year.

Normal people consider weekends a time for family and relaxation – you don’t.

So face it – you’re weird – but so what, all the great things in our lives come from people like you. Keep it up.

Only bad things happen quickly

Heart attacks, car accidents, tornadoes, earthquakes – these things happen quickly.

Businesses take years to build. Success comes in steps – some bigger, some smaller. You are building a lot of relationships with customers, suppliers, clients, employees, investors and so on. Relationships take time to build and need maintenance.

It is important to understand this in your heart, in your bones and not just in your head. You can tell your friends and family that ‘It’s all good’, but you need to forgive yourself for not being able to grow the business faster. If you can’t then you will spend all your days stressed out about things beyond your control

Always test the boundaries of how fast you can grow, but be realistic in your expectations. It normally takes 3 years to have a solid cash flow with repeat customers. If you can do it faster –  well done.