Archive for Entrepreneurship

Mind the gap

One of the surveys I have conducted revealed that the top three motivators for people starting their own business were flexibility, fulfilment and exploiting a gap in the market. Having looked at the first two motivators before, I thought I’d turn my attention to the third.

Exploiting a gap in the market is a top motivator for people who have seen an opportunity. However, it is an important factor even if you have different motives.

For some it’s a starting point – they’ve seen a gap and want to build a business which fills it. Others are motivated to start their own business by a desire for freedom, flexibility and more control over their future – they know they want to start out on their own but need to find a gap for them.

For those in the second group, patience is required as genuine gaps don’t arise often. For those in the first group, urgency is the order of the day – the need to act on the gap you’ve identified may well dictate the timing of your transition.

It is worth remembering that a gap in the market is exactly that – an opportunity in a current market, usually doing something existing either better or differently. Rarely is an entirely new market created.

Innovation is a word that gets banded around frequently these days, but not many businesses are truly innovative. That being so, research is key. Though you have seen a gap, the more research into potential competitors (the people doing what you intend to do better or differently) the more you can exploit it.

You’re not looking to mimic or copy other businesses, but to investigate their systems and processes. You’re looking to see what they do well and, if appropriate, to adopt it but also to fill gaps they have left. Can you take their starting point, improve on their patterns and create better systems?

You also need to have one eye on the future. The market moves and some gaps can be fleeting. The best way to ensure that you’re still doing things better or differently is to invest in people and training as your business grows.

New knowledge and skills plug gaps in your own company, prevent others capitalising on your shortcomings the way you may have on those of others. Finding and hiring the right people allows you to continue to move in the right direction, alert to new gaps when and where they appear.

With initial inspiration, thorough research and analysis, sufficient confidence to do things differently, and a willingness to continue seeking out the gaps and opportunities, exploiting a gap in the market can not only be a motivator for starting a business but an achievable reality.

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What’s your driver?

There are many different reasons for starting your own business. No two individuals are going to be driven by precisely the same combination of factors. Of the many motivators out there, I believe that some are more positive and certainly more achievable than others.

If your primary motivation for starting up your own business is to make more money, stop and think for a while. The idea that you can generate a larger income for yourself by being self-employed is not a total myth or an outright lie, but it is not a certainty either.

Most people underestimate their start-up costs. This can lead to personal financial sacrifice and even debt. To surpass what you earned whilst working for someone else will likely take time, effort and accomplished money-management skills. Most small businesses fail in their infancy and most because they run out of cash. If financial success is your main motivator, be prepared to play a long game.

That said, for those that do pass through the baptism of fire, the sky can be the limit. You are no longer limited by a predetermined wage scale and your earnings will be directly tied to your efforts. This can be a blessing or a curse depending on your work ethic, but it goes to show that the opportunity is there.

Improving your financial situation is possible, but is never going to be a given, which is why I believe that personal motivators are far more important. These are many, varied and interconnected but largely revolve around being in control of your own destiny.

Starting your own business puts you in control of your own fate. You are no longer tied to pleasing your boss but running the business as you see fit. As with the correlation between finances and effort, this can be a double-edged sword – you are now responsible for all the aspects of management that your boss would previously have dealt with. However, unlike financial gain, this freedom is a certainty.

With this freedom comes flexibility and an opportunity to improve your quality of life. To be able to dictate when you take time off and, as in my case, ensure that you’re working mostly in the UK is something that you can’t put a price on.

Another great motivator is a desire to do what you want and what you’re good at. Unless you’re in a completely mismatched job role – doing work you detest that you’ve no aptitude for – you probably find that you spend some of your time working in areas that you enjoy, have a particular gift for, or both.

Being in control allows you to actively build your work life around these areas. Instead of experiencing the occasional positive feeling when your role, skills and interests align, you have the opportunity to create a job role for yourself centred around what you’re best at and what you enjoy doing. It’s a powerful reason for starting your own business and sits at the very heart of self-employment.

A few people start their own businesses and get rich. Fewer may even get rich quick. It does happen, but if worldly riches are your primary motivator for working for yourself you may be disappointed. If you are motivated by a desire for a more flexible life, a chance to utilise your skills and experiences in a specific role and to be in control of your own destiny you are much more likely to find satisfaction and the potential financial rewards could be a nice little bonus.

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Riding the financial rollercoaster

The grass seems very green over there…

If you’re working for a large company, you may read stories in the press about teenage whizz kids and young entrepreneurs who set up their own businesses through crowd funding, achieve rapid success and sell their businesses for a crazy amount of money.

Having read about them making more than they need to comfortably retire by their mid-twenties, you then think about what you could achieve, how much you could make and how much easier it would be for you – given your experience and contacts.

If that’s you, don’t be surprised if you discover entrepreneurs and sole practitioners looking back in your direction, envious of your position within a large organisation. They see a regular paycheque, regular working hours, paid leave, gym memberships and all the other perks that come with working for an institution.

Of course, neither scenario is entirely accurate or usual. The grass is always greener on the other side. Life within a large company can be tough, with many people working a 70-hour week as opposed to the 40-hour week they’re paid for. Add to that the lack of control and the daily game of company politics and it’s anything but an easy life.

Working for yourself is no guaranteed picnic either – especially to begin with. If you’re setting up your own business you have to ask yourself the question ‘am I prepared to give up a regular, predictable salary and live off a survival budget until business takes off?’

If you are, then you have to figure out what a real survival budget looks like. We’re supposed to live to a budget at all times but a real survival budget is a seriously bare bones affair – with no spending (or savings for that matter) except on what will keep you and your family alive.

No car, no phone contract, no credit cards, no TV package, no new purchases (save food – which is now economy packs of rice and pasta). You might not imagine things being so severe and hopefully they wouldn’t be but the point is: are you prepared to live this way if that’s what it’s going to take?

It’s a useful exercise for anyone to do. Working out your bare bones survival budget doesn’t necessarily mean you have to adjust straight into it. Once you’ve worked out what your minimum expenditure is, it gives you an indication of how long you can survive for without any income. Useful even if you decide against starting your own business, but if financial disaster was to come at you from some other angle.

We all know the grass isn’t as green as it looks. Imagining that the whole area is a wasteland devoid of any grass is not an attempt to depress you, it is an exercise to prepare you. Backs-to-the-wall survival may not materialise, but if you’re not prepared for the toughest of journeys it may not be wise to set out. If you’re mentally prepared to make grass grow in the most arid of deserts then it may be time to step over the fence.

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