#15: Know your business skills: Part 2

Last time we looked at a group of people setting up a company and how they divided the key roles between themselves. Not everybody will be starting up with a group of people though. Most of us start out on our own, then grow into a team as time goes by and the business expands.

If you have no aspirations for the business to be anything other than you, it’s still valid because you are in the position that you have to do all of these jobs.

• Part of the time you could be out increasing the awareness
• Part of the time you are thinking about what your service or product should be
• Part of the time you are selling it
• Part of the time you are delivering it
• Part of the time you are watching the money coming in and out

If this is the case, you will have to be able to fulfil all five roles, or seek help from somebody else, otherwise you will find it hard to get the business off the ground.

So it’s equally valid in all circumstances – it’s just you have to wear all the hats. You can’t just do the bit that you like, or the bit you think you are good at; you have to ensure you deal with the other components yourself or courtesy of someone else. Hugely important!

David Mellor Mentoring is here to help you make these decisions about how much work you take on yourself, whether you need outside help, and to advise you on where to find it.

In next month’s article, we are going to start looking at the risk spectrum of start up businesses, including a case study for what I call a ‘low risk case’.

#14: Know your business skills – Part 1

Going back to my previous article on business inventory skills where you will have looked at your own strengths and knowledge, it is now time to turn to those in your team.

This business skills list is highly relevant, whether the business is going to be just you or more than you. I will reinforce the point by referencing “The Beermat Entrepreneur”, written by Mike Southon & Chris West. This is a great little book which starts with five guys setting up a company and dividing the roles up between them. The company they set up sees them each with 20% of the equity, so there is no argument over who earns what.

They divvy up the jobs between them based on what they are good at and what they enjoy doing. They are all capable of doing more than one thing but there are five of them, so how is it shared out?

• They start with a great networker, who can go out and be very ambassadorial, press the flesh, make people aware of the business, what makes it different, and generate leads. They are not necessarily the best salesperson but they are brilliant at getting out there and making the world at large aware that the business exists. This person is supported by what Mike and Chris call “Cornerstones”.
• The second is the creative member; he comes up with the first product or service based on market needs, and whilst that is being marketed he develops the next product or service.
• The third is a sales person who will go out, selling what the creative has come up with and capitalising on the awareness that the networker has created.
• Then you have the operations person who deals with everything post sale. So getting the right product to the right person, on the right day, in the right location and dealing with all the administration.
• The final one is the finance person who keeps a vice like grip on the cash in and out. So, that is the way they share out the roles and responsibilities.

A set-up like this is really important if you are intent on building a business that is scalable and capable of sustainable profitable growth.

So whether you are working on your own or in a team, it is very important to know your strengths and play to them. Make a list of who is best at what within your team, and who enjoys doing certain roles the most, and use this as the base of you business skills list.

In my next article we will continue to look at business skills, and what you need to do if you are running the business alone, rather than in a team.

#13: Business skills inventory

Now we know the key characteristics of a successful business, which we covered in my previous article, it is now a good time to take stock of our Business Skills Inventory; bearing in mind we have in all likelihood left a business world where we had developed specialised functional skills.

Now, this piece is very important. One of my famous lists is to be found below, one of many found in From Crew to Captain.  What I suggest you do is go through the list as an inventory and don’t cheat – be honest – and ask yourself; “is that something I can do?”

#12: Further characteristics of successful business

Following on my from my previous article on the Characteristics of a Successful Business, we are now going to look at the next three, which business owners need in order to run a business successfully.

The first was making sure that from the day the business starts, the owners have an exit strategy, and know what kind of a business they want to run, i.e. lifestyle or value.

The second characteristic is that the owners reach a stage where they are managing “on” the business rather than “in” it; they have an opportunity to see what is going on around them and can react accordingly.

The third characteristic is that they only spend money on what is in the budget. They have a vice-like grip on the cash both in and out.

The fourth characteristic is that they build the business around systems, not people. By that I don’t mean people are not important, but that people work much better if they know the process they are supposed to be following.

That applies in two areas:

• How you win clients in the first place, i.e. you need a sales process
• How you keep your clients happy, insuring that they will buy from you again and/or recommend others to use your product or service, i.e. you need a delivery process

I have learned the hard way that if you skip any of the stages in the sales process it will come back and bite you in the backside – you end up with either a timewaster or a potential bad debt.

Whether you are going to be selling a product or a service, think about what would be the right process for you, and then, even it is only going to be you, document the procedure and follow it. You needn’t slavishly follow what others have, but it is useful to look at existing sales processes just to give you an idea of the kind of process you might find useful, should you decide to go down a similar route.

If you want to see an example, From Crew to Captain contains my own sales process.  I follow it, and am well aware that departing from it increases the risk of storing up a problem for myself.

One of the many advantages of a good sales process is that if anybody else joins you, be it as a new member of staff, a strategic partner, or an associate, you can show them it and say quite simply ”This is the way we do things”. You don’t need a 60-page operations manual, you just need something simple and clearly defined. I would encourage you to do this, even if it’s just you that is following it and nobody else.

The sales process is intrinsically link to the delivery process.  It helps you to weed out the time wasters and bad debts; with the delivery one, you increase the chance you have a satisfied client who comes back and refers other people to you.

And, by the way, it is much easier to build a business from quality referrals and recommendations than it is having to go out in the cold all the time trying to find new customers.

#11: Taking the pain out of exit

Happy New Year everyone! 2013 may have come and gone, and hopefully you have found my expert articles helpful in developing your skills and businesses. Now is the time to put these newfound skills into action.

In my last article, we touched on one of the key characteristics of running a successful business; having an exit strategy. It is important to know how you want to leave or end your business from the moment you start up, so you can plan your finances and game plan accordingly.

I recall one business owner whom I met when he was 52; his game plan was to retire at 57, sell the business, buy a property in the Mediterranean, fly south with the birds for the Winter, then come back in the Spring.

We were chatting away and he was asked what the required capital sum was for this retirement lifestyle, and he had no idea. What about pension? Well the business was his pension. Did he know what the business was worth? Again, no idea.

Would it not be a shame, I asked, if in five years’ time he found that the business could not be sold for the capital sum needed, or even worse couldn’t be sold at all, which would mean that he would have to keep working? So I offered to help him create a value business, and fortunately we had the timescale to do it.

There is a time bomb ticking in situations like this, where people sometimes live in a world of illusion, where they consider the business to be a retirement nest egg, when in fact it is worth little or nothing. Certainly it is often not worth what they think it is, and in many cases the value walks out with them!

Successful businesses have figured this out up front and plan accordingly.

There is nothing wrong with a lifestyle business, provided you take out the money wisely. There is not a right or wrong situation; you just have to understand the implications of the way you choose to run it.

#10: Planning: Characteristics of a successful business

Over the next few articles, we will be looking at the characteristics that successful business owners have adopted in order to allow their businesses to grow.

The first characteristic is that on the day the business starts, the owners know how they are going to end it, i.e. they have an exit strategy.

The other decision they need to make at the same time is whether they are going to be running a lifestyle business or a value business.

• If you set a business up in a way that you take out every penny it makes, and you use that to pay for what you and your family need today and maybe put some on one side for what you need tomorrow, then the likelihood is that on the day you decide to stop running it, the business stops as it is of no value to anybody else. There is nothing there of value that anyone can buy. It has funded your lifestyle.

• On the other hand, if you take out what you and your family need today, and maybe something that you can put towards what you and your family need tomorrow, but the rest you plough back into product development, research, acquiring other small businesses, geographic expansion, opening new offices, creating intellectual property or toolkits and methodologies, then the likelihood is that you are actually creating a value business, one that somebody else in the future may want to buy off you.

One of the reasons I have been so busy as a mentor, is that approximately 80% of people who set up their own business do not have an exit strategy. In addition, some of them believe they are a value business when in fact they are a lifestyle business. We will look at exit strategies and different types of business in more detail in my next post.

It does not matter which type of business you are, just as long as you know and plan your finances accordingly. Financial plans will be discussed later in this series and are covered in more detail in From Crew to Captain.

#9: A source of encouragement

This month I want tell you another story featured in From Crew to Captain about someone I have worked with, and who has become not just a business associate but a good friend.

Her name is Christine and if you need motivation or inspiration, her story is a great example; particularly if the thing that is worrying you is “Can I do it?”

In 2008 I met Christine Stedmann at Fairplace. Christine had worked for one of the major UK banks. Her parting from the bank had not been a particularly pleasant experience, so when I met her she was still recovering from the whole redundancy process, and her morale and self-esteem were pretty low. I describe her natural style as a bit like “Tigger on caffeine” – she is bright and bubbly, so this was not the real Christine I have come to know.

However, she had a vision; she wanted to set up a business. She had a vision of what she wanted her business to look like; she called it Zentime.

I worked with her over the summer, helping her to write her business plan, and she launched in September 2008. She had as much drive and determination as anyone I have ever met. Where she was struggling was the third component; where she needed rock-solid belief. She had self-doubt and thought to herself; “can I actually do this”?

She launched on the 1st September and the first month was a disaster. She had no hits on her website. No calls; nothing happened. In October 2008 it all changed and there was one development that tripped the whole process. She was featured in The Guardian as someone going through the “reinvention” process.

The article told her story, and how she got through the difficult period. From thereon she has not looked back, and is well and truly back to being “Tigger on caffeine”. She now has the belief, the vision and the determination she already had, but the belief was the missing thing. It took the article to help her get the belief back, it was there but somewhat buried.

She has now gone from strength to strength, and is a living example of why these three leadership attributes are so important. That is not to say that you need coverage in a national newspaper to give yourself that vital belief. Whether it is positive feedback, support from friends, or some other input; external sources of encouragement from trusted parties should help you to believe that you really can do this.

#8: Personal qualities part two: Passion

In my last start-up expert article we looked at the first of the traits that I consider to be particularly important in business – Integrity.

Next comes passion. If you can’t be passionate about what it is you are going to be doing, then don’t expect anyone else to be.

One of the things that you have to do is make the passion for what you do and what you represent contagious. That should be one of your overriding objectives. You should also know where you draw the line so that you do not step over it and become overbearing.

I used to encounter a certain business owner on the networking circuit who regularly abused the privilege of having a relatively “captive” audience. As a result people would go out of their way not to talk to her as she just did not know when to stop.

She did not know when the passion turned into her being an irritant. You need to know where the boundary is.

• Do you have a vision for your business i.e. can you picture what success is going to look like for you?
• Do you have the belief you can make it happen?
• Are you determined to give it your best shot?

You need passion for your work, but you still need to know your limitations. The challenge is the same for me, and for all of you.

Kate Blandford is a great example of someone who can make her passion for her business contagious – take a look at www.kateblandfordconsulting.com. You never knew packaging could be so emotional.

#7: Personal qualities part one: Integrity

There is a full list of suggested qualities in From Crew to Captain, but there are some traits that I consider to be particularly important.

The first of these is Integrity. Irrespective of what you call your business, you and it are joined at the hip from day one. And as in all walks of life, it takes a long time to build a positive reputation, but you can lose it in a heartbeat.

My dear old dad use to say “treat others like you expect to be treated” and that really rings true in running your own business.

Corporations talk about values and principles, and that should hold good for you; it is important that you live out your personal code of conduct in your business, and build a reputation based around trust and reliability. You do not want to have a reputation for:

• Promising something then failing to follow up or deliver
• Turning up late for meetings, or not turning up at all
• Being a difficult (as opposed to tough) negotiator
• Being a bad payer

So integrity is vital in my work and it will be in yours.

If you are interested in the question of integrity, why not take a ‘moral DNA test’ at www.moraldna.org

#6: Motivators

Let’s take stock for a minute. Why would you want to do this? Are we all individually or collectively mad even thinking of setting up our own businesses?

Do you really want to give up the security of a regular, predictable salary? How do you feel about having to work to a survival budget until your business is fully functional?

It might help you to reflect on some of the reasons. Let’s consider a couple of these in more detail.

• Firstly fulfilment; something I have seen over the last eight years is that people get a massive buzz and a sense of fulfilment out of having an idea, getting it onto paper, and then proving to themselves that they can actually go and do it.

The money is almost secondary; I stress almost secondary! Proving to yourself that you don’t need a big organisation and that you can do it on your own is hugely fulfilling.

• Secondly, flexibility. This one is very important to me. My daughter, who is now 22, was 13 when I started my own business. She is a very talented athlete. At the age of 12 she was playing senior ladies hockey; put a stick in her hand and she is frightening!

She went on to captain club, school and county; she also played at university, both at Durham and at the University of California. A number of her matches were during the week, when I could be in Singapore, or New York, but certainly not in downtown Reigate.

All of a sudden now, if I could organise my diary, I could take the afternoon off. If that meant I had to work in the evening or part of the weekend, that was my call – I was the boss!

There is no better feeling as a parent than watching one of your kids doing something that they really enjoy and excel at. It is something you can’t put a price on financially, so this benefit became really important to me.

• Thirdly, exploiting a gap. Now most people going down this route will probably either be doing something differently or better than current providers. Occasionally you will find someone who will be exploiting a gap. From Crew to Captain includes a detailed case study of one such individual.

 Our interviews showed that these were the three most common motivators