According to the Entrepreneur web site, the four critical errors to avoid when launching and growing your business in the first year:
- Not choosing a well-defined niche
- Not seeking help and support
- Not collaborating with your competition
- Being busy but not productive
Choosing a well-defined niche
So, apparently, the first problem that a lot of first-year businesses encounter, is not choosing a well-defined niche. By creating a niche, the author suggests, you get better at selling your service because you’re repeatedly pitching the same thing. This allows you to build up reviews and testimonials faster for the service you’re known for and as each project is similar, you can create templates, standard operating procedures (SOPs) and streamline your processes so you can complete work in less time. He continues that the more you specialise, the more people that have a specific need will seek you out.
Fundamentally, however, I completely disagree that you need a niche to be successful for two reasons. Firstly, when I was looking for a business coach, I was approached by a number of potential candidates who specialise in coaching accountancy business owners. I spend my life on LinkedIn dodging them. Now there may be a bit of arrogance on my part, but I feel that I understand how to run an accountancy business; I did it in my previous life and I’m doing it now. Fundamentally, I didn’t want someone telling me to do the same thing I’d already done. I wanted an outside perspective; I want to know how things work in other businesses or sectors and how I can apply them to mine.
Secondly, when I started Cypher, a lot of people told me to niche, to become the accountant for estate agents or the accountant for recruiters and again, we purposely stayed away from that approach because one of the joys of my business is getting to work with so many different businesses, from different sectors, doing different things. It makes it more interesting but also as people find so many wonderful ways to make money, it allows us to learn from other businesses.
That said, I think we probably do niche a bit, but not on what someone does, rather on how they think. We only work with business owners that get it; that get what we want to deliver and want to join us on that journey. There’s plenty that don’t, and that’s great, but we only work with people that have a similar mindset. It’s quite a broad niche, but I think it’s enough to separate us from others.
We do work with businesses that niche, but if I was to highlight factors that sabotaged an early stage business, I don’t think niching would necessarily be in my top four.
Seeking help and support as a start-up business
The second point in the article, however, that business owners don’t seek help and support at the right time is definitely right up there. I found out myself that there are just so many things you don’t know when you start up.
Because I’d been helping small businesses for years, I thought I knew a lot about running a small business, but then in those first few weeks, as I sat at my own I realised I didn’t know very much at all. What has overwhelmed me in the two years we have been in business was how much support I got for free in those first few months. The small business community is overflowing with people willing to help other people out.
When you start a business, it’s because you’re generally very good at what you do; you’re a great plumber, or a great estate agent. But then suddenly you’re dealing with balance sheets and insurance and HR and marketing and Facebook profiles and it all comes at you on day one and you find you are very inexperienced in many of the aspects needed to run a business.
My advice was that I joined a networking group early on and generally in any group there is a bit of everything. If you want financial support, HR support, coaching or marketing, it’s all there and people are happy to offer one-to-ones and give you an hour’s free advice. Make sure you get advice from actual experts, but absolutely seek it out. People will offer it because it builds a relationship for down the line.
Collaborate with your competition
The third point in this list of problems for early stage businesses is not collaborating with your competition. We’ve talked about this on a few times on the Mind Your Business Podcast, but again, when I started Cypher, I was overwhelmed by how other accountancy businesses interacted with us in such a positive way. One of the most important things in businesses is relationships.
Now, I think day one might be a bit early to collaborate with the competition, unless – as we discussed in another podcast you are completing one of their products or services, and in general you should let your business grow a little bit before you start engaging the competition. A key element of being able to collaborate is having the utmost confidence in your business. Having belief in your products and services means you are more comfortable seeking others out, collaborating together and going after the bigger fish.
The sweet spot for collaborating with your competition is if you’re doing the same thing, but you’ve niched successfully to different marketplaces. For work that is slightly outside our comfort zone, we recommend other firms that, we know, will offer a great service and in return if they receive complex ‘Xero’ requests, they kick things over the fence to us. While we are competing in some areas there is enough to go around, making it a very lucrative co-opertition model.
Being busy but not productive
Finally, point four on the mistakes to avoid, is being busy, but not being productive. Busyness is often disguised as productivity, you feel good because you are doing something. It is vital that new business owners understand and appreciate the value of their own time. A trap that a lot of people fall into is not only do they not get the right support, but they also don’t outsource enough tasks at the right time.
You have something like a thousand minutes a day to do something with, so your mentality should be ‘what is the true value of my thousand minutes and how should I best spend them?’ Small business owners always have two or three jobs they won’t let go of and there are a number of ways we can all work smarter, not harder to give us back time and be more productive by doing the things that actually make a difference to our business.
On balance, the article on the Entrepreneur web site raised some valid points, highlighting some of the traps start up business owners fall into. First of all, not choosing a well-defined niche isn’t necessarily the death knell for your business, but having a niche can be a positive. Secondly, both Alan and I agree that not seeking help and support at the right time is definitely an issue that can be easily resolved. Thirdly, similarly to point two, seeking others out, even if you deem them competitors can be a good thing and collaboration is the way forward for so many businesses, and finally being busy, but not productive is 100% something that all business owners, not just early stages ones need to be aware and avoid.