Over the last few years, a lot of people have decided to stop working for others and try doing “their own thing” online. While there’s still a place for independent shops on High St., there are also many online opportunities for such adventuresome spirits, in affiliate marketing, consulting and ecommerce (not to mention the peripheral support services like website design and development).
If you find yourself looking enviously on, as others make the leap to independence, and have decided that you’re ready to embrace your entrepreneurial side, it’s important to set out on your journey as fully informed as possible.
The First Step
Just about anyone that has ever faced any sort of entrepreneurial undertaking knows that a lot of barriers can get in the way. Sometimes they’re even of our own making.
Some folks would have you believe that launching your own business is a simple by-the-numbers thing: get a product, make it known that you have a product, count your money. If only it were really that simple.
Maybe it can be, in some very rare instances (if you have the only water available in the desert, for instance), but in reality, it’s usually a lot more complex. Supply lines, manpower, logistics, regulation, competition, marketing (that lovely M-word), etc… the list can be imposing, particularly if you’re setting up an international operation with a tangible product.
A savvy business consultant will advise you to go through a comprehensive checklist, build a thorough business plan and objectively analyse your plan’s effectiveness when various stumbling blocks surface. The nature of the proposed business will determine which of those stumbling blocks can amount to a stubbed toe and which can effectively break your back.
Carefully analysing every possible contingency and its effect on your business, then formulating a solid “Plan B” for recovery from any exigencies that pop up is critical, in order to survive the inevitable problems that will occur as you develop your business.
Online is only slightly different from the brick & mortar world. The barrier to entry is lower, to be sure… but the barriers to success are much the same. And given the increased velocity of events, both negative and positive, finding the barriers that can get in our way and overcoming them can be just as critical… sometimes more so.
Identify those that you must break down
Whether you’re planning a one-person operation from your garage or intend to employ dozens in a leased property, there will always be unexpected issues that get in the way, right?
Wrong! Or at least, if you’ve done your homework, there shouldn’t be any. You should have anticipated everything during your planning stages. You should always expect the unexpected.
In a one-person business, your business can be dead-in-the-water if you’re taken out of circulation, if you or a family member is ill or injured, unexpected expenses pop up or that loan shark you skipped out on last year finally locates you. Having a fall-back position – someone to handle essential functions until you’re back in the driver’s seat – can make the difference between a little meddlesome catch-up work and losing everything.
So if you’re that one person, as many online entrepreneurs are, you need to plan for the worst. That may involve having someone that can carry on in your absence, or simply notifying your customers that you’re temporarily on a short hiatus.
Similarly, if you have staff, you need to ensure that you have enough cross-training in place to enable someone to cover the critical functions of each person. Losing key employees, even for a few days, can be difficult… losing the wrong staffer permanently can be devastating. People get sick, married, pregnant, bored or are offered better opportunities… protecting yourself from such eventualities can allow you to salvage your business.
I’m not suggesting that you should be able to predict a lightning strike from clear skies – but you can foresee potential effects of events that affect your business’s ability to function normally.
Most new businesses fail due to inadequate funding. Different consultants will suggest different financial cushions, from 30 days to 12 months, depending on a number of factors. I have never seen a business survive serious cash-flow impacts with a mere 30 day cushion, though. As a general rule, I usually recommend a minimum of 3 billing cycles, then double that, whenever possible.
Online start-ups often require significantly less cash to begin and sustain operations, but that doesn’t mean you can ignore this very important aspect of your business. Assuming the worst and being prepared for it can give you much greater survivability.
Obviously, all start-ups don’t have massive cash reserves, but some planning can mitigate the risks. A pre-approved line of credit to cover essential operating costs can do the trick. If you’re backed by an investor, they’ll likely have already taken contingency funding into consideration, but it’s definitely something that should be discussed and be part of your plan. Investors do not like surprises.
Battle plans begin to change as soon as the first shot is fired, so your plan should be a living document, with built-in flexibility. Competitor actions, the vagaries of your customer base, economic shifts, supplier errors… the list of things that can impact your business on the downstream side is seemingly endless. But if you mitigate risks, minimise impacts and learn to respond rapidly, you can often turn such shifts to your advantage. Plan for the worst case and you’ll never be surprised.
Monitor your market carefully, not just your own customers but your competitors’ actions, as well. Sadly, most businesses don’t predict market fluctuations… they react to them. The difference should be whether your reaction is planned or instinctive. Knee-jerk reactions seldom work out well.
Employee issues can plague a business into the ground, if not managed properly. Like an illness, an ounce of prevention will trump a pound of cure, every time. But even in the best-managed companies, human issues can still surface. If you have a staff, be aware of what’s going on with them and move swiftly to defuse conflict, resolve frustrations and facilitate solutions. It not only helps eliminate the issue at hand, it sets an atmosphere that’s more conducive to cooperation and productivity.
Reputation management falls into this category, as well. You need to be aware of what people are saying about your company. It’s quite a lot easier, online, to monitor your public reputation. Customer feedback and social media monitoring are two common ways of keeping abreast of the public perception of your business.
Quickly (and normally, publicly) resolve any negative issues. Most people recognise that every business stubs its toe now and then… perceptions will be most impacted by how you make things right. Turning a potential PR disaster into a reputation coup is often as easy as immediately “doing the right thing”. There are many instances where companies have actually emerged better than before, by quickly handling a major customer service issue the right way.
Just as quickly, exploit any positive opportunities that arise. Subtlety is often the key here. Blowing your own horn is generally seen in a poor light, but when others sing your praises, the effects are greatly amplified. Let your brand advocates do that for you – their efforts will be more credible.
Deal with your barriers
Everything that happens has the potential of affecting the profitability and long-term success of your business. Whether the effect is negative or positive is largely up to you. As Winston Churchill wisely said, “He who fails to plan is planning to fail”. The more comprehensive your plan is, the more agile your business will be and the more likely you’ll be able to turn a negative into a positive.
You’ll approach various barriers to impede your progress as you take your business forward. Some, you’ll be able to circumvent, others, you’ll be able to power through. Still others, you’ll have to climb over. If you’ve planned well, none of them will stop you!