Julia Bickerstaff

Today we are talking to SmartCompany blogger and entrepreneur Julia Bickerstaff.

As founder and CEO of two successful, yet diverse companies, The Business Bakery and Butterfly Coaching, she knows a thing or two about starting a business. She is also the author of How to Bake a Business, a “how to” guide for kitchen table tycoons taking their business to the next level. Julia was also a partner at Deloitte for eight years before embarking on her own business venture in 2008, so she understands how to make the jump from corporate life to entrepreneurship.

Julia reveals the top mistakes first time entrepreneurs make when starting their business, why female entrepreneurs always set their prices too low and why she always puts on a pair of heels to conduct difficult business conversations from home.

Have you seen an increase in the number of people looking to start businesses, from people who might have had a career change either perhaps forced upon them or chosen to go a different way?

Not just in the last year but over the last few years. I think people think starting a business is more doable now and for a lot reasons, although not always people are prepared for it. We saw something quite interesting I think when the GFC was threatening to be much bigger in Australia than it was, and the interesting thing there were people actually starting businesses as second jobs. Literally thinking, let me do something else on a very small scale, but I’m going to actually start something.

I think a lot more people who are dissatisfied in corporate land and think they can actually go out and do something and make good money, although they might not make a fortune. For a lot of people it’s not about being an absolute enormous business and making billions of dollars. It’s about having a lot of personal satisfaction, building something and having a good life.

We seem to be seeing a rise in the part-time entrepreneur. It might be a consultant or someone who’s moved down from say five to three days and they’re just looking for something else to push into. Is that something we might see more of, the part-time entrepreneur?

I know a few people who’ve had the opportunity to actually cut down their days working in corporate life and experiment and do something in the other two days. And in fact, I was talking to a few businesses just recently employing people like that. It’s a lady who runs a business and first of all she said “I really wasn’t happy when my employee wanted to go down to three days and spends two days in their own business”. But she said as soon as they started doing their own business, they brought more ideas to her because they were out there thinking more widely. It’s been fantastic because there’s a whole lot of skills that have been brought back into her business. That’s a really interesting thing for bigger businesses to think about.

I think a lot more people look at the way something’s done and think “I could do this and I could do it better, so why don’t I go out there and give it a go because what’s the worst thing that could happen?” A lot of people believe that we will go back in the not too distant future back to the talent shortage again and people know they can go and get jobs again.

In fact, I think it’s quite marketable when people have tried to run a business go back as an employee because they bring with them so many different skills that makes them so marketable.

There is a great difference in deciding to take the plunge and actually being ready to do so. We saw a great survey come across our desk in the last little while showed just 10% of people actually went out on their own with a formal business plan. It seems crazy on the face of it, but is that the great mistake that people make at the start?

To be honest, I don’t necessarily believe that everyone should settle for the formal business plan, because when you’re starting out in a business, you actually can’t plan for a lot of the things because you just don’t know enough. But I think there is sort of a halfway house which is actually thinking about the business in terms of what you are bringing to the business.

Maybe I’m bringing my technical skills or maybe I’m a person who’s very good at selling or maybe I’m a person who’s very good on finance or maybe I’m a person who’s a very good manager. But what are all the other things that the business needs that I don’t bring to it? And I think that’s the number one thing that people don’t thing about.

Today I was actually at a business that implements software. They are very good technically but they really struggle to get sales because they don’t know how to sell.

The other part I think is actually the money model – how are we actually going to make money out of doing this? And I think that’s the big thing that people don’t do ahead of time.

So it’s less about the sort of formal business plan and big analysis. Because people who do big analysis of markets always go “wow, look the market is $20 million and we only need this tiny percentage of that so we’re going to be rich because we’re going to get $2 million straight away”. But they don’t think what’s the actual cost of marketing to those people, what’s the cost of producing, what’s the cost of distributing, what’s the cost of this and that and everything.

So they don’t actually put together what I call just a simple money model of how are we going to make money out of doing this and what’s the value that we’re adding?

One of my favourite sayings is from the cook Nigella Lawson. She always says a cake demands mathematical respect. And I think the same with starting a business. A business demands mathematical respect, you need to have a look at it from a numbers point of view and that’s the key thing that people don’t do. I’ve seen lots of businesses start up and they actually weren’t ever going to be able to make money out of it because there is a huge chunk which they’ve missed in the process.