You may be convinced that you can sell your product or services at a huge mark-up and are prepared to wait until someone pays the right price. But this approach can be harmful to your cashflow.
By the end of your first year, you should have a good idea of your cash cycle, as well as the importance of cash in general to your business.
“If you run out of cash, that’s it for your business,” says Bickerstaff. “A lot of start-ups don’t have a way to get cash in quickly.”
“You may not want to sell a product that has cost you $100 for $101, but unless you get that cash in, you won’t be able to afford new stock. Do some advisory or coaching work on the side, or sell via eBay – whatever gets you cash to see you through.”
The best test of your concept is out in the harsh, real world. Don’t wait for your start-up to reach “perfection” until you get invaluable feedback from customers – your first year should be about learning, adapting and selling, rather than procrastination.
“Your business will never be perfect, you will never have the best logo in the world – you’ve just to get on with it and do it,” says Bickerstaff.
“No one knows who you are yet, so you have the time and space to refine what you do. Don’t wait until everything is perfect before you do anything.”
You shouldn’t enter your second year in business buried under paperwork that you have no idea, or no time, to deal with.
“Early on, you need to invest in good systems so that you are not always chasing your tail,” says Peskett. “Get an accountancy system that isn’t costly and get on top of the paperwork that keeps you awake at night.”
“You want to spend less time on administration and more time on your business.”
Working “on” rather than “in” your business is an age-old maxim, but one that you should attempt to achieve within your first 12 months.
To avoid getting tunnel vision over what your business is doing, talk to other start-ups to learn how they have coped with various issues.
As well as being a great source of advice, this will also ensure that you don’t undertake a full year thinking that you are completely on your own and on the wrong track.
Finally, but perhaps more importantly, are you enjoying yourself? Do you relish getting up each morning to work on your start-up? Or do you secretly hanker after the relative security and predictability of paid employment?
“If you’re not having fun, you need to think hard about whether to carry on,” says Peskett.
“Some people think they have bought themselves a job, rather than thinking entrepreneurially. It makes them a wage but they think that they are working double the time for the same money. It can eat away at you and make you negative and cynical.”
