Despite the internet making it easier than ever for small businesses to take on the big guys and win, the fact is that the first year of business can be difficult. Any successful entrepreneur is likely to have experienced failure more than once – myself included. I’ve succeeded a couple of times but I also have a nice back catalogue of flops.
But, as American inventor and businessman Thomas Edison said: “I have not failed 10,000 times. I have succeeded in proving that those 10,000 ways will not work.”
In the early noughties I saw an opportunity in starting a business that would allow anyone to take photos and make money from selling them online. We launched snapdaq.com, where anyone could store, rate, sell and buy photos. But it failed.
Having converted early adopters, our customer growth hit a wall. Looking back, the reasons why are pretty obvious. It was clunky and difficult to use. We lacked a marketing budget to foster a community. And then after a year or so some great looking competitors launched.
With the start of a new year I thought I’d share exactly what I’ve gained from failures like these and how I would do things differently in my first year of running a business.
1. Draw a list of the strengths and weaknesses of your business
Strategy is about understanding what your business does, what it’s good at, as well as where the problems lie. If you know these issues from the start, then you’re going to be prepared for a lot more things that come your way.
2. Have a one line answer to what your business does
The most common question I get is “what does your business do?”. If you’re still scratching your head after 30 seconds then I bet potential customers will be too. You should be able to sell the benefits of what you do better than anyone else around you. And there’ll be many times when summing up what you do in a sentence can make, or break, future business opportunities.
3. Don’t be blinded by day-to-day operations
From my experience most businesses have virtually no strategy at all. Instead they are focused on doing the day-to-day, which can bog you down. The danger is you then lose focus on where you want your business to be heading, and what you need to do to get there. If you’re caught in the eye of the storm you need to be able to step back from the firefighting and gain some perspective on reaching your business goals. Enlist others to help with this if needed.
4. Think about what you can bring the most value to
In a similar way, when you start and grow a small business, you have to think carefully about your time. Spend it on activities that deliver the highest measurable return. The biggest source of capital in your business is your time. It is your job to decide what’s important for you and resist doing what is urgent for other people. I find it incredibly helpful to completely ignore the temptation to work through my email inbox – as hard as it is to do.
5. Don’t prioritise new business over current customers
US research has shown that less than 1% of businesses deliver an excellent customer experience. I think this is because most businesses don’t put service front and centre. In the first year of business, looking after newly won customers should be the cornerstone of sustainable growth – they are your biggest advocates for new customers and the reason you have been able to kickstart your business.
6. Share feedback across the business
Send feedback surveys, understand what your customers like and what they don’t, especially if they have decided to leave. Make sure that everyone in your business reads the best and worst customer feedback and show the connection between what people do and what that means for the customer. Allowing employees to meet customers will help them understand their experience and how best to assist them.
7. Use your network to find freelancers
Freelancers can bring huge value to your business. My tip is to use your network and hire people you like, as well as those who are sharp. This will help you prioritise and focus on your business objectives and goals.
8. Use culture for profit
There is a direct link between the culture of a business and its profitability – a workplace that has the right mix of fun, dedication, ethics and creativity can add drive significant value, remove a gossip culture and prevent high staff turnover. You are responsible for the culture of your business. Create the right one.
Nick Leech is digital director at 123-reg, a small business domain registrar, and has launched a series of business ventures including an online advertising company, a directory of green businesses and a mobile app agency.