starting and running a small business

by Adrian Davies Email


I have been asked several times by friends and friends of friends what advice I can give about starting and running a business.  This is typical of my response ...

1. know where you’re going

Vision is an often misunderstood concept, so put aside the theory.  For me, when I was starting a business, vision was always about knowing where “I” wanted to be.  What did starting a business mean for me? At some point, you may need to agree a collective vision for your business - to satisfy the needs of your partners or shareholders, but never lose sight of what it means for you.  And, visions can be personal things - don’t be forced into sharing them, but equally don’t be embarrassed by them.  My fellow partners in Winning Moves know exactly what my personal vision is (and me theirs) and how it fits into our collective vision of the company.

2. ask yourself, “why?”

Why are you doing this?  Why are you running your own business?  There really isn’t any right answer, but try and be clear why you are doing it.  I read a piece of research by the Kaufman foundation which revealed that most entrepreneurs  are in business to create value (wealth) - nearly 75%.  Perfect!  From my economic A-level studies I remember that the purpose of any business is to make a profit; so if you can create a business that persistently makes a profit, you’re building value.  But, there has to be more to it than that, doesn’t there?  Wealth creation is one of the goals for you and your business - maybe even your vision - but there has to be more.  If there isn’t, then you could be doing anything from criminal activity to being a thrifty employee.  There has to be some reason why your are doing this particular business.  Whatever the reason, if it doesn’t put a spring in your step and a smile on your face, think about doing something else - otherwise, you may end up being rich and miserable. I know 1 or 2 people like that!

3. let ends drive means

I am privileged that Winning Moves has worked with literally many thousands of businesses.  What is fascinating for me is how people set objectives and targets.  Most businesses plan with reference to the past; they set targets that reflect current ways of working; that are grounded in current possibilities.  What this does is maintains status quo.  It isn’t disruptive.  This is why Skype was created by 2 people who didn’t work in the telecoms industry - they weren’t constrained by the past - see later.  So set yourself and your businesses goals that will stretch you; that will make you feel uncomfortable; and that will make you have to make some changes in order to achieve them.  Unless, of course, status quo is good enough - and for many it is.

When I started my software business, I knew very little about software - I saw an opportunity presented by the emergence of Web technologies and knew I wanted to be a part of it.  I had no idea how it was going to happen; I just knew it would.  So I set some goals that stretched me and that would have been impossible to achieve if I limited my thinking to current possibilities.  In fact, I never would have gotten started.  The first thing I did, though, was a Masters Degree in IT and Software Engineering, as I believie you have to understand the business you are in ....

One of the best definitions of entrepreneurship I have seen is:

"Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled." Howard Stevenson, Harvard University

This really underscores the point.  If you define your visions and goals in the context of current resources and capabilities, you are are not being entreprenuerial.

4. make sure you understand the business you are in

Unless you are an investor and you have identified a business that has a great product or idea, with an exceptional management team and with a large and growing market for what the product or service is, under no circumstances get involved unless you understand the business 100%.  Now, let me repeat this, because this is a really important point: don’t get involved unless you understand your product and market really well. This is why the failure rate is so high for start-up restaurants; the owners started them because they can cook!  What they fail to recognise are all of the other important aspects of running a succesful restaurant and the market in which will they will operate.

5. Just do it

How many times do you hear somebody tell you that they had the business idea behind some current day success story but didn’t do anything with it!  I hear this all the time.  In fact, if I’m honest, I’ve actually said this a number of times myself.  My attitude tends to be, if you have an idea that you believe in, follow the Nike mantra and “Just do it!”  I’m not suggesting recklessness, but I am saying don’t procrastinate.  My own mantra and one that we use at Winning Moves is “fail fast.”  Don’t over analyse things; you sometime just know things will work but if you try and rationalise your feelings, you’ll end up talking yourself out of it (take a look at Malcolm Gladwell’s Blink).  So instead, we just do it. You will end up with some failures, but as long as you recognise them quickly, you are one-step closer to the big one; the idea that is going to change your life.

6. trust yourself

In almost every venture I have started, I have chosen to partner with someone.  Not because they had the great idea, or the finance, but because they were a friend or colleague that I valued.  The thought of going into business on my own always scared me; and so having somebody to share my dreams with, mull over the difficulties with, and contemplate the various options with, was very appealing.  On almost every occasion, though, this has failed.  More often than not, people can’t run at your pace - they slow you down. This is largely due to the fact that my partners were adding not a great deal more than I could have bought in as hired labour, but I had sacrificed control and given up equity.  Also, I was usually taking most of the risk, but was sharing the reward.  This breeds resentment and as soon as you start to feel this way, there is only one direction things are going to go.  So unless you fully understand your respective roles and each of you believes that you can bring something more than your labour, go it alone.

7. be tenacious

The number of times I’ve nearly given up.  In fact, on some of my earlier ventures, I did give up.  There was nothing fundamentally wrong with those early businesses, things just weren’t happening fast enough and I gave up on them.  I’ve since seen others doing the thingss that I gave up on with incredible results.  They had stuck it out and through their own tenacity, hard work and favourable changes in market conditions have made great successes of their business.  My current business is only where it is because I have become tenacious.  Even when things have been really tough, we have kept going.  It would have been easy on a number of occasions to give up and this is why so many fail, they give up too soon.

8. work out the next bounce of the ball

You will have maybe come across the terms “foresight” or “horizon scanning.”  Basically, these terms allude to the competitive benefit that can be gained from anticipating trends in your market.  In fact, if you are really clever, you can create these trends!!  The second bounce is a metaphor for this.  The first bounce is obvious to all; it is the second bounce that’s harder to predict.  Those that predict it accurately stand to gain significantly.  Again, in my current business, we are investing heavily in anticipation of the next bounce ... let’s hope we get it right.  Ronald Cohen has written a great book on this subject.

9. surround yourself with good people that you can trust

People make the difference!  They also make the job much more fun.  Having the right people means that you don’t have to micro manage; that you can trust things to be done when you’re not there; but, most importantly, that you are going to achieve your intended results.  If you have the right people, they will demand more from you than a job.  And it’s only right that they should share in the success ... after all they are sharing the risk.  Working for a small business is very risky - not because of its size or financial position - but because if you are ambitious, the opportunity cost in terms of a career elsewhere can be enormous.

10. look in the mirror

Mahatma Gandhi summed this up for me when he said, “be the change you want to see in the World.”  It’s the same in the office; be the person you want others to be - be your ideal employee. If you want energy levels to be high, be energetic yourself; if you want people to work long hours, don’t be the first to leave the office every day; don’t drive a big car and penny pinch over someone else’s mileage claim; don’t refuse flexibility around child arrangements, and leave the office early to collect the kids; don’t bang on about punctuality and arrive late for meetings.  I’ve seen all of these things done.  And I know there is another school of thought; one that says, “it’s my business, I’ve earned the right ...”  There is some logic to this argument, but equally I’ve seen the effects it has on people.  If you can’t be consistent between your own behaviour and that which you expect, have good reason for it - “It’s my business” isn’t good enough!!

11. be careful about the advice you seek

This has bit me on the arse several times, but most notably in respect of property.  Back in the mid 90’s, I came across an investment opportunity - to buy cheap houses and rent them out.  It was phenomenal - I could get a terraced house for as little as £15,000 and rent it out for £2,500.  What a return!  On my minimal deposit of £1,500, after all debt servicing and maintenance, I would clear up to a £1,000 - that’s right up to 75% on my investment.  It was, as they say, a no brainer and I quickly developed a small portfolio.  Except, a surveyor friend told me I was being foolish; that the houses I was buying were “sub-market.”  This was a term he used to describe houses that were below the value that a first time buyer could afford on an average salary, using mortgage lenders income multipliers of 3.5 times combined salary.  In fact, so much below market value were they, that he convinced me I would get my fingers burned; he didn’t just advise me, he urged me to stop in my madness.  I did!  He was a fellow of the Chartered Institute of Surveyors and I knew little about property cycles.  I couldn’t go against his warnings, could I?  Within a year, the term ‘buy-to-let’ was coined and lot’s of people made lots of money.  I made some, but not as much as I would have done if I had followed my own counsel

12. there are no shortcuts

The very clever boys that created Skype, sold it to eBay for over $4bn within 2-years of it’s creation.  How staggering is that!?  It is staggering not just in the value that was created in a short space of time, but also how such a disruptive technology emerged and took hold so quickly.  Nobody could have predicted that - not even the clever boys at Skype.  For most of us, that’s not going to happen; you’re going to have to be patient.  And, if I’m honest, it’s going to be a lot of hard work.  It isn’t all rock ‘n roll, as they say.  Just as glamour models have made us all feel fat, the current obsession with entrepreneurs is in danger of making us businessmen and woman feel inadequate in a different way. Don’t!!  We are just not all destined to be super models, but that’s not to say that we are not going to do some great things, have a great deal of fun and make some money along the way.

13. never forget who the customer is

I interviewed someone for a job recently and she had a personal mission of, “leaving a positive impression on everyone she meets.”  Wow!  I loved that.  And ... she did.  I will remember that little expression, and that interview and this person forever.  There are not many people who come into our lives that can do that!  And it wasn’t just the words; you knew she meant it.  I think the reason it connected with me so much was that is how I have always felt about my customers: I want to leave a positive impression on all of them.  Even if they will never do business with me again, I want them to have had a positive experience.  This relates to not only the products and services we sell; but also the Winning Moves gang; our office; our philosophy; in fact, everything - absolutely everything.  And let me tell you, despite almost every organisation claiming that customer service is important to them, very few have this as their mission.  Make this your mission today; it is possibly the only USP you will ever need.

14. don’t try and create markets (unless you have tons of money)

I’ve fallen into this trap so many times, I can’t believe it still happens to me.  Picture the scene: we have a great idea for a product; there is no other product like it in the market; it is within our wit to design, build and market it; and only a fraction of the market needs to take it for it to change all of our lives.  Now you’d have to to a fool not to go ahead ... wouldn’t you?  The problem is the market doesn’t know that it needs it; it hasn’t yet identified the problem our product solves.  The Sinclair C5 is a great example of this; a product created by a genius in my opinion.  What problem was the C5 solving for people?  It was a product trying to find a market!!  In some cases, you can create the market; as Apple have done with the iPod, but you need lots of money, time and a killer product.  What most of us should look for is a market that needs a product or a problem that needs a solution.

15. have outside interests

This is really important, but I didn’t realise just how much until I got a little older.  I used to be totally focused on my career; to the exclusion of almost everything else.  I didn’t play sports, I didn’t socialise that much, I didn’t have any hobbies, I didn’t even watch TV.  So I worked, studied, read and watched a bit of TV (usually factual).  All this work and no play, you could have called me Jack!  I think things changed with the arrival of my daughter, as it forced a little balance; but it also made me realise that time away from work, made it all that more enjoyable.  A bit like dieting makes food more enjoyable, so too does getting a bit of balance in your life.  And, it will make you a a more interesting person too.

16. don’t take things too seriously

Enjoy the journey.  Enough said.

And remember being an entrepreneur is cool.  Steve Jobs was one of the coolest guys on the planet and will be forever an icon.