Sound like your mother? Yeah, mine too – although I have to admit, I’ve heard myself say it more than once recently.
My excuse is not age – absolutely not! I’m talking about business.
Many of us start out with a good idea (or what we hope is a good idea),some knowledge, skills and experience which may or may not relate to it – and an awful lot to learn about how to turn concept into reality – and more importantly, reality into cash. Some lessons come quickly, others sink in only after years of taking the wrong road, possibly going around in circles – and losing, instead of making, money in the process!
It’s as true in business as it is for parents and children – you can’t make someone else’s mistakes for them. The only way most of us really learn anything is by our own errors; but that doesn’t mean we shouldn’t be armed with good information from the beginning. More and more parents these days warn their kids about the dangers of alcohol, tobacco or harder drugs. Ok, so plenty of those kids still go off and try one or the other – or all three – but they don’t do it in ignorance.
In a business context, there are lots of courses, books and organisations designed to forewarn and forearm new entreprenneurs – to make sure they don’t start climbing the business mountain without at least some of the right survival gear in their kitbag. Yet still, people set off without the basics. I was talking to someone this morning who said that a workshop she recently heard about, dealt with sales by saying, ‘Go back to your office, write a plan and start calling people’. Hmm… yeah, well, that’s a start – but only just – and it does nothing to allay the concerns of the new would-be business person who’s thinking, ‘But I don’t know how to sell!’
A couple of weeks ago, I heard myself say: ’One thing I’ve learnt, which I wish I’d known from the beginning, is…’ – and it got me thinking: each and every one of us who ever set up any kind of enterprise must be able to point to at least one thing they’ve learnt from the process which, if we’d known it from the get-go, would have made our climb up the mountain a whole lot easier, less draining (financially and otherwise) – and more productive.
My ’one thing’ relates to how money is made. When I started out, I always said, very firmly, ’I don’t do numbers. I do words – but figures, forget it!’ I won’t bore you with the origins of that belief – but I will say it turned out to be one of those shadows on the wall that I was talking about last Wednesday. I eventually discovered that not only was I perfectly capable of doing the maths, if I didn‘t, I wasn’t running the show – whoever had a handle on the pound signs was doing that for me – or maybe in spite of me.
So that’s one thing I wish I’d known when I started – but the main one is the very simple fact that to make money on low-cost products or services, you need high volumes of sales, and to make money on high added value, high cost products etc, which aren’t going to fly off the shelves at the same rate as the cheap stuff, you need a healthy profit margin. Yes, I know – it’s really straightforward – but no-one told me – I had to work it out by exhausting trial and expensive error. My O- and A-level economics teachers would both be appalled to hear me say that – but there it is.
When I started out, I tried to sell what were effectively premium services (because they were very time- and labour-intensive) to people with shoestring budgets. I made sales by trimming back my financial costs as far as possible and passing those savings on to the customer. That meant cutting back my margins until they squeaked – or was it my bank manager squeaking…? Customers loved it – well, who wouldn’t enjoy getting five-star service for one-star prices?! The only person who wasn’t quids in was me!
A week or so ago, I put the question out on Twitter – ’If you’re in business, what’s the one thing you know now that you wish you’d known when you started?‘ I had some really interesting responses – and now I’m asking you…?
I’m thinking of pulling the answers together for a radio show called ’The business jigsaw’ – so there could be a bit of free publicity in it for you!