Tag Archives: failure

Trade secrets – you can start a business without money or time

What they don’t tell you about starting a business…

Tradition says that you need money to start a business and ‘friends, family and fools’ are the most common source of that funding. While some businesses need money to buy equipment, get premises and pay staff, many can get started and test-trade with limited cash.

Nor do you need to spend months getting all the bits of the jigsaw in place before you launch. ‘Fail early, fail fast’’ is sound advice for the bold (some would say irresponsible) risk-taking entrepreneur. The theory is that getting your product/ service out there as soon as possible means your relatively limited investment of time and money will mean you’re more willing to accommodate failure, learn, and change your plan accordingly.

Which leads us to the concepts of the ‘lean start-up’ and ‘minimum viable product’. Both are about saving money until you have evidence to justify expenditure (for short term benefit) and investment (for longer term benefit).

There are other ways to save time and money at the start-up stage. Make the most of an amazing range of free business support. For a selection of free support and advice see https://enterpriseessentials.wordpress.com/free-lunch-business-support

You can also create a minimalist business plan until you have more solid information on which to base your future business development. To quote Michael Fowle from the Newcastle Business School at Northumbria University “Full business plans are a distraction. Use the Business Model Canvas and post-it notes for a near instant plan that is more flexible and valuable than the back of the envelope. [Newcastle Business School] allow 77 days to develop the idea and get “traction”, and then 77 days to turn the proven idea into a properly resourced business.”

Finally, some advice from readers of the Guardian newspaper…

  • A 30-day MVP [Minimum Viable Product] works well for IT [techy] products, but is harder (though still a useful exercise) for bricks and mortar and services start-ups
  • Superniche [a very specialist and targeted product or service] is exactly right. The only person that really matters is the customer who will fund your business (try The Mom Test by Rob Fitzpatrick).
  • Know your customer. Get their commitment before you waste time and money.

Further reading:

Running on fumes https://enterpriseessentials.wordpress.com/2014/03/06/running-on-fumes-a-case-for-lean-business-start-up/

Lean thinking  https://www.squawkpoint.com/2012/07/lean-thinking

Prototyping: https://www.fastcodesign.com/1663968/wanna-create-a-great-product-fail-early-fail-fast-fail-often

The Lean Start-up http://theleanstartup.com

Minimum Viable Product https://blog.leanstack.com/minimum-viable-product-mvp-7e280b0b9418

How to start a business in 30 days www.theguardian.com/small-business-network/2016/aug/19/how-to-start-a-business-in-30-days

The Business Model Canvas https://strategyzer.com/canvas/business-model-canvas

For other Trade Secrets in this series, go to https://enterpriseessentials.wordpress.com/category/trade-secrets

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Risky business

They say that entrepreneurs are risk-takers and it’s fair to say that, like most things in life, it takes an element of personal and/or professional risk to make things happen. This is not to say you can only succeed in business by being reckless, but being willing to get outside your comfort zone is pretty much essential. So, what are the main risks for the entrepreneur starting a new business? Here are six ‘Cs’ to consider:

Can’t do – Much of the talk these days is about a ‘can-do’ attitude – as if positive thinking is enough to make things happen! In reality, self-awareness about what you can’t do is probably more important – so that you can work out how to overcome your shortcomings eg filling skills gaps by training or co-opting someone else.

Competition – With a new business one of the first considerations should be the competition (direct = others doing something similar, indirect = everything that’s going to stop your would-be customers buying your product or service). If there’s no competition, you might ask yourself why not, if there’s loads of competition you need to know why people should choose you. A serious assessment of the competition can reduce the risk of failure – try to learn from other people’s mistakes. That said, I’m a firm believer that you can gain more from cooperation/collaboration than competition.

Cash (flow) – The single biggest reason that businesses fail is running out of cash. There may be lots of money tied up in the business but none available in a liquid form – cash – to cover immediate costs such as salaries and daily expenses. Not for nothing do people like me repeat the quote Turnover is vanity, profit is sanity, but cash is reality.” Keeping a close eye on the money coming in and going out of your business bank account – your cashflow – will reduce the nasty surprises.

Capacity – So your start-up is doing well and you want/ need to grow; the biggest limiting factors at this stage are time and space. You only have so many hours in the day and, if your business involves face-to-face customer services, you’ll need to be looking for people to bring in to help out (in effect, to increase the hours in the day). You may also need more space to accommodate the extra people knocking at your door. If you’re selling products, you’ll likely need extra space for production, storing stock and materials, and maybe for increased packing and distribution.

Contingency – They say that the best business people are not so bright that they keep asking ‘what if?’ all the time. But, it would be bright to do at least some contingency planning around you and your business along the lines of … What if I’m off sick for 4 weeks?  What if my mobile phone or laptop was stolen? What if a massive order comes in next week?

Coordination – Business seems so easy when you see it in terms of ‘selling the right products/services to the right people at the right price’ (whatever we mean by ‘right’). But the problems arise because real life rarely provides an easy route from A to B. Coordination – having a realistic map of your route to a clearly defined destination, and systems for coping if/when things go wrong (breakdown recovery etc), will help make the ride less bumpy.

Ultimately, the best entrepreneurs manage risk rather than letting it stifle progress – they take risks when they can afford to fail. David Robinson, former Chief Officer of Community Links in East London, makes the case for risk-taking. “If we don’t fail it means we’re not taking risks. If we’re not taking risks it means we’re not trying to do things differently, and if we’re not trying to do things differently, why are we here?”

Your Own Place – seeking security

Latest in the new ‘More Expert by Experience’ series

Rebecca croppedI am re-discovering a social enterprise and Community Interest Company – Your Own Place (YOP) in Norfolk – which works with young people aged 16-25. I first interviewed Rebecca White, YOP’s Director and Founder, in December 2013 when we were both at the School for Social Entrepreneurs in Ipswich. Two years on, I wanted to find out how Your Own Place had developed and, in particular, Rebecca’s experience of ‘going it alone’ as a social entrepreneur now working more-than-full-time on the enterprise.

To quote YOP’s own publicity ‘We aim to prevent youth homelessness through a number of interventions.  At the core of Your Own Place is our delivery of Tenancy and Independent Living Skills (TILS) training.  Our principle outcome is successfully sustained tenancies for first-time tenants who may need a bit of support along the way.’

Ultimately a social enterprise stands or falls by its income-generating capacity. YOP’s first year trading achieved an impressive 36% of total income; the year two figure is slightly down because of the need to focus on raising development funding.

Like all business start-ups, subsidies are important for social enterprises in the early years (unless you have the support of those traditional small business investors – friends, family and fools). I was interested to know about Rebecca’s success with a crowdfunding campaign.

Understandably, she was very happy with the outcome – £7,000 raised (I’d been advised to aim for £1500 – £2000 for a first campaign). Reflecting on the experience, Rebecca has some advice for others thinking about crowdfunding. “You need to prepare well and it’s a lot of hard work to maintain momentum during the campaign. Success depends on having access to [online] networks. I think we did well for a first effort with a fund-raising technique which is quite new to Norfolk.”   

YourOwnPlace logoMore recently YOP has been successful with an application to the Tudor Trust for £56,000. This development is significant for bringing stability and security to the organisation, helping planning and, importantly, taking some of the pressure off Rebecca who is now able to recruit a Peer Training Coordinator.

But how Rebecca would find ‘letting go’ a little, surrendering some control to another employee? Her response was typically honest. “Obviously this is ‘my baby’ and I’m a control freak. But on balance I’m excited more than fearful as I enjoy managing people; we had an employability support worker last year.”

Looking back over the past 12 months, Rebecca’s sees it as a reputation-building period for Your Own Place. “We’re building credibility with funders and commissioners, getting coverage on radio and in the press is easier, and people are coming to us for our expertise. It’s a slow pay-off for all the early work upfront. We’re gathering momentum, making useful contacts (after kissing a lot of frogs…) taking us in sometimes unexpected but exciting directions. 

YOP Peer researchers (4)It would be deceptive to pretend that the past 12 months has all been positive and Rebecca acknowledges that there have been some young people who haven’t benefited as much as she would have hoped. “We’re working with challenging, often hard to reach, young people so, despite our best efforts, some will fall by the way. But I remember some wise words from a supervisor when I worked in London. ‘Don’t take it personally as a failure – it doesn’t mean they haven’t taken something away from the experience. You’ve planted a seed and there may be a pay-off later.’ We had one trainee who ditched a summer course on day one, but later came back and asked for a meeting to find a mentor.”

Rebecca is clear that Your Own Place’s vision remains unchanged – that the destination is the same even if the route has changed a bit. The comment reflects her advice to others to take opportunities and make the most of all the pro-bono support that’s available. For Rebecca, this means returning to the School for Social Entrepreneurs for their ‘scale-up’ programme in London (which also means getting a mentor).

“Don’t be too proud to admit you need help – take all the support that’s going” advises Rebecca. Wise words from someone who oozes self-confidence and authority, but isn’t afraid to ask.

Further reading:

Close to homelessness https://enterpriseessentials.wordpress.com/2013/12/17/close-to-homelessness (December 2013)

Follow Rebecca and Your Own Place at www.yourownplace.org.uk http://www.facebook.com/yourownplacecic  www.twitter.com/yourownplace

An A – Z of social entrepreneurship: E – H

Efficiency and effectiveness

A useful distinction is that efficiency is the relationship between inputs and outputs [productivity], while effectiveness is the relationship between inputs and outcomes [impact]. Charles Handy, management writer and thinker, suggests “Efficiency seeks to minimise cost given a particular outcome, effectiveness is more concerned with improving the outcome, and so it will accept higher costs for higher outputs.”

Meeting social, financial and environmental objectives – the so-called ‘triple bottom line’ – complicates the picture. How do you balance efficiency and effectiveness?

Failure

Success is not final, failure is not fatal; it is the courage to continue that counts.” Winston Churchill.

To paraphrase David Robinson, founder of Community Links in London… If we don’t fail it means we’re not taking risks. If we’re not taking risks it means we’re not trying to do things differently. And if we’re not trying to do things differently, we should be!

But nor should we waste our time flogging dead horses – know when to give up and move on.

Growth

What is the ideal size for your organisation? It can be dangerous simply to assume that bigger means better – it can be a liability or an asset. Impact may be a better measure than size alone.

The strength of many social ventures comes from them being rooted in local communities, yet scaling up successfully brings benefit to more people (social impact). One way to reconcile this may be to replicate a proven model, adapting it to each local context under a franchise, licence or less formal arrangement.

Hierarchy

Management structures in not-for-private profit enterprises tend to be ‘flatter’ than in mainstream businesses, with relatively little distance between the administrative worker and the chair of the management committee. This can blur lines of authority and responsibility creating confusion, but ‘empowerment’ is more than a jargon word; it can harness additional staff resources – particularly important when times are hard

 

Learning about Earning: lessons 9 and 10 from a social enterprise start-up  

Working on the business vs working in the business

If you’re starting a social enterprise, how are you going to fund yourself over the first few years? Being employed in a part-time job running alongside your start-up is not without problems – conflicts of interest and time management (at work and home) being two of them. Are you disciplined enough to let others get on with the operational ‘fun parts’ (in my case – making, mending and learning) while you do the less creative form-filling, finance and legal aspects?  http://bit.ly/1An23gR

 Success vs failure

“Assume it will take twice as long as you think it will, cost twice as much, and generate half the income”

Passion, self-belief and eternal optimism are the hallmarks of someone setting up a social enterprise (otherwise why would anyone do it?) But it’s good to stir a little realism into the mix. Be open to advice from advisers and seek out the wisdom of the ‘experts by experience’ who’ve been, done it, and got the cardigan.

Be realistic about time and costs (however painful). The three CRI-supported social enterprises in Hertfordshire have been given a couple of years to break even. Olive Quinton of Lofty Heights in Ipswich (www.lofty-heights.org) wisely observed ‘Your timetable is not other people’s timetable – you’ll need to be patient and do a lot of chasing and waiting’.

As well as having someone with entrepreneurial tendencies leading, is the rest of the enterprise (assuming it’s not just one person operating in isolation) also entrepreneurial? Do you have at least some of these characteristics? http://bit.ly/1w4E7kD

And if all else fails… and your start-up doesn’t take off – probably for very good, unavoidable, reasons – console yourself with the insights of David Robinson founder of (and now senior advisor to) Community Links in east London. He is a man with a declared passion for failure. He says

“If we don’t fail, it means we’re not taking risks. If we’re not taking risks, it means we’re not trying to do things differently. And if we’re not trying to do things differently, why are we here?”

And maybe learn a lesson or two by reading this blog post http://bit.ly/1rVPVTp?

If you’re interested in exploring ways to turn ideas into action, join Chris Lee for a day-long workshop on December 4 in Chelmsford Details at www.voluntarysectortraining.org.uk/courses/event/70/Ideas-Into-Action

Taking people with you

We will gather 1

Social media makes community action so much easier

“If you want to get something done, ask a busy person”

Recently I’ve been grappling with a problem which, I’m sure, is quite common.  This makes it all the more frustrating that, after 35 years of trying to mobilise people to take action of one sort of another (ie throughout my career in not-for-profit marketing) I’ve hit this brick wall now.

I’m working on two projects are the moment (I’ll save the blushes of those involved by excluding details) where people who have previously expressed interest, do not now seem to want to be involved with those projects. I know they’re active, committed and yes – busy – individuals; that’s why I asked them in the first place!

Over the last few months, I think I’ve given them both ample opportunity to get involved and the chance to say directly if they want out. But, despite my best efforts, they’re pretty much voting with their feet and staying away without explanation. A couple of people have said they’ll get involved when the projects are up and running, but I need help now!

As I write this, lots of questions fill my head…

Are they interested but just too busy? Someone suggested summer is a bad time to start things because of holidays and competition from fair-weather activities. But these people first declared their interest at the start of 2014.

Maybe they’re no longer interested and don’t want to offend me by saying so? Granted I regard many of them as friends, and sensitive friends at that, but I regard being upfront as hallmarks of a healthy relationship. Indeed one of those people has been both helpful and honest by telling me they’re bowing out from further involvement.

Another question is whether I or they are being reasonable / unreasonable? I admit I sort of co-opted them to get involved, but a mild bit of bullying is sometimes needed to persuade and, after all, they’re grown-ups. Surely it shouldn’t come down to me chasing them all the time?

Revisiting basic marketing principles, I suppose one way for me to get answers to these questions is to ask the people concerned, individually, how they feel about being involved. The fact that so many are staying away suggests I’m doing something fundamentally wrong (painful to acknowledge) or maybe their reasons are all different, all equally valid and/or could be addressed with a bit of effort on both our parts. If I don’t ask them I’ll probably never know.

In the meantime it would be great to get insights and advice from readers of this blog. As I said at the start, I’m sure I’m not alone in having trouble drumming up support for a new initiative. How did you get to take people with you when you needed them?

Enterprise essential – Embrace risk and failure

The best entrepreneurs manage risk rather than letting it stifle progress – they take risks when they can afford to fail. David Robinson, former Chief Officer of Community Links in East London, makes the case for risk-taking. “If we don’t fail it means we’re not taking risks. If we’re not taking risks it means we’re not trying to do things differently, and if we’re not trying to do things differently, why are we here?”