Leading by doing.

Tips and pitfalls from a Company Owner

Not everyone is born to run a business. You have to be a certain kind of person to do this. You have to have a hard streak. You have to want to succeed above all else.

As a religious man, I genuinely believe that I was put on this Earth to help others and that can also be done commercially as well as through more social care means. Whatever your view on this running a business is a dance with the future, a tangle with the present and a history lesson from your own past. Six years on since I started my first business I would just like to take this opportunity to share some of the highs and lows as a series of thoughts and talking points in this article.

Passion

It is often cited that a business owner first starts with a great idea. This is often true, but sometimes it happens out of necessity. In my case, I took a 6-month project which I completed and although the option was there to stay on it would require a demotion from Curriculum Developer to a standard teaching role at a lower pay just at a time when I felt that I had little further to contribute. I decided to walk away and do something else. At the time I hated the decision, the situation and feared for my financial future. Necessity however is the mother of invention – I stopped, took stock, make a few calls, met new people and life moved on. The week I was due to leave my old job, I got work through a training agency. My first commercial ‘gig’ was in Oslo, Norway, working for Global Knowledge (a large global training agency). I played on my strengths having worked already for a large global organisation in which I learned to be and later became a Microsoft Certified Trainer. As a freelance trainer I was very much at home and when in the classroom was in control of the course, enjoyed working with the delegates and loved the fact that I was playing an important part in disseminating information, best practice and ensuring that my delegates could use these newly-discovered skills.

But does everyone who starts a business have such a passion? I had little choice but to proceed and run into the chaos that was the ‘big wide world’ without the cosseted confines of being part of a team, instructed by a manager and part of a larger ‘greater good’. My ‘greater good’ came through the imparting of knowledge and the fact that it was up to me to do my best and to live up to Microsoft’s standards. I realised early on that to be a good trainer I had to encourage my delegates to meet the same standards and to ensure that they (at least within the classroom) followed these.

But being freelance was never the intention.

Making a baby

One of the very first and most important decisions you will make as a company owner is whether or not to go Limited. If I set up a standard bank account I could operate as a self-employed person, however this has no brand and it may make it harder for you to find work other than through agencies where in effect you are reliant on the agencies’ brand. The tax implications are also higher as you will have to fill out your own self-employment tax return. However, there is less of a requirement for you to have an accountant initially. My experience has been that being self-employed would always be slightly more costly in terms of tax than if I was limited, so I chose to ‘go Limited’.

Starting a Limited company requires that you register the company with Companies House. The bank account you set up also must be for the company, rather than for you. You see, the Limited Company, upon its inception is a separate legal entity to you. You created it, but it exists legally separate to you. It is a little bit like the incorporation certificate is akin to a birth certificate and you are then employed by your ‘son’ (the company). You start off as a Director of the company with 100% of the shares of the company. To start a company you only need to invest ￡1, so you own ￡1 of the company (big deal), but this is important later on as the company grows.

faith

Notice that here I am referring to ‘faith’ (with a small ‘f’). I don’t naively ascribe to the view that ‘all will be well because God looks after me’. I think that would not be sensible, rather the more pragmatic view that ‘God gave me skills for me to use. If I don’t use them I won’t be doing my duty.’ Even without the ‘G’ word the maxim has value. I cannot expect work to come to me without hard work and effort to determine what needs to be done, what is missing in the system and how to remedy this. This requires a skill I acquired early on as a teacher – “read the room”. If you write a lesson plan and follow it to the letter but, have in front or you a disconnected and bored group of students you won’t be able to get your message across effectively and the aim of the lesson may be missed. By adapting the delivery and re-engaging students by using different approaches you can find common ground and get the lesson back on track. Equally a marketing strategy may reveal no results or interest, but awareness of the problem leads to investigation of how to remedy the problem before the problem has adverse effects.

Schizophrenia

To be a good Director you need to adopt to contrasting personalities – the ‘Manager’ who plans actions and tasks, ensuring that they are done on time and schedules are stuck to, also the ‘Worker’ who keeps to task, works as hard as they can to achieve the best result within the time possible. This is a skill that not everyone can possess. In fact, my experience from talking with other business owners is that if your background is one where you have been somewhat institutionalised (a small cog in a larger machine, trained to undertake set tasks within your remit, but not to think ‘outside of the box’) then you may not be best suited for this type of work unless you are able to ‘break the mould’. I instead not only recognise but embrace the fact that every day is different. I plan my day at the very start of each day just with a simple list of 3-5 tasks in Notepad. I then have breakfast, take my son to school and spend an hour on Fallout 4 on the Xbox before starting my day (I love that game ?? )

I don’t plan to get rich…

That’s true. The main objective is to survive. I recognised early on that I am running a business with a team of one, plus outsourced people and a virtual office. This means that the amount of work I can undertake (both teaching and also marketing, sales, technical support and maintenance of our portfolio of websites) is also equally limited. I have averaged a turnover of approx. ￡60,000 for the past 3 years and unless the business model is adapted (which it can be) then the current level of industry is the maximum throughput to generate this turnover without involving business partners, or a wider team.

Trust yourself – you are niche.

The nature of the business is that it is a highly skilled technical IT training company focusing on products from Enterprise solutions providers (notably Microsoft, CompTIA and Oracle). Our clients often choose our training solutions for one of several reasons:

1.      We are cheaper than the competition

2.      We can deliver on-site training. The competition might not be able to at the price we are offering.

3.      We are offering the same quality of service as our competition and also hold awards and solutions partnerships that much larger companies also hold.

4.      We have built up a good reputation and our reviews / testimonials attest to that.

5.      Our competitors are also our friends. A lot of our competitors in fact work with us either jointly or us on a subcontract basis to them to provide services where there are gaps in their model.

It is this last fact – our view that our competitors are an opportunity to engage with like-minded people I found the most interesting to work with. In the first year I was constantly afraid that our competitor would not like what we are doing and try to do something to undermine us. What I found was the opposite – we were proving that we were capable, competent and positive. We engaged with customers and as the customer profile grew so did the calibre of our customers.

Rich Dad Poor Dad

I fought both socially and mentally with the dichotomy of how one should engage with the notion of business. I sadly missed economics A-level when at school but made up for it with a PgDip in Management Studies which was a superb course. I enjoyed the course so much I felt energised to the extent that I could take on the world. Only a few years later, I did just that and the lessons learned in the course have proven to be vital for my mindset on how to operate in the business world.

It was only recently that I discovered author and notable economist Robert Kiyosaki's YouTube videos and excerpts from his book ‘Rich Dad, Poor Dad’. His words spoke to me as they completely upturned everything I had learned about business and the concept of money. I learned about the concept of debt and how middle-income people or people with money already can cushion the financial blows that otherwise could hit poorer people more. I learned that money can work for you rather than just being a ‘bean counter’ of your success, or failure. As events ensued, I also learned that your turnover will not be the same each month as you would expect in a paid role, but instead your income as tied to the success of the business.

Business partner

I friend of mine did me a favour back in 2001. He stopped being my friend.

“What?” I hear you cry. “How is that a good thing?”

Well, back in 2000 I started a web business focusing on Rich Media (Shockwave, Macromedia / Adobe Flash, Director). As the business grew and took shape my business partner (informally, no contract) started to get very good at marketing. However he was given an offer to join another growing business and took this instead. As a result of this I was suddenly without anyone to do the marketing for me.

And there is the lesson: ‘-for me’. One learns that when running a business you must understand all aspects of the business fully before you can decide which aspects you want to focus on and which you are prepared to outsource.

Outsourcing for growth

The problem with outsourcing is:

·        Can you trust the person to do the work to your standard, speed, level of quality, or even at all?

·        Can you trust that what is said is what will be delivered?

·        Are you being sold a lie?

·        Can you afford regular payments to this person?

·        Can you afford to invest several months into this person’s work if you do not see a tangible result?

Good questions, but think of it from the opposite angle:

·        As a Director shouldn’t you be concentrating on other parts of the business?

·        Can you afford not to be doing work that is of a higher value to the business?

·        If you were to do the work yourself, will this impact on your time to do other work in the business?

·        Are you the expert in this field? As a Director do you have the appropriate level of skills to do this correctly or to a professional standard?

Developing a team

This is the hardest part for me to do. Six years on and I have still not mastered this.

I have interviewed for team members, even taken on one person only to then cancel when I realised the additional fees that would be paid to the agency, also that the person being hired was getting barely more than minimum wage. As a result I relied on outsourcing as this could be tracked differently. The problem with outsourcing to another company (e.g. telephone answering service, or call-minders) is that they have their own set product and you need to buy into that. What they won’t do is operate your plan or series of tasks if it does not fit neatly to their package.

The other problem is one of the ‘heart and the head’. Other people are not you. They don’t share your passion, your knowledge, your love of the subject or even your raison d’etre. They will never be you and they should not as they have their own skillset, ideas and experiences to bring to the table. As a Director you need to find out how you can use their skills rather than imposing your wants onto them otherwise you might not find who you are looking for other than if you stand in front of the mirror, and you don’t own a cloning machine (thank goodness!).

Marketing

This is jigsaw with many pieces. Marketing is such a broad concept and particularly when we think about web marketing there is so much to do. For example a website:

·        Should have keywords within each page based on a focus phrase

·        Should contain inbound and outbound links

·        Should contain the focus phrase in the main H1 header and the introductory paragraph

·        Should have the focus phrase in the URL slug and the META title, also the META description.

Well, that’s great but if you haven’t correctly set up your SEO to search engines then your site content will not be found at all:

·        You need to register the domain name with the search engine

·        You need to add the sitemap(s) to the search engine

·        You need to regularly check the health of the sitemap – were all of the links found? If not you may need to do more work to rectify this.

Now that your content is being found, you may find that you are still not ranking highly on Google (for example). To correct this painstaking research of popular trending keywords, your competitor’s keywords and analysis of where your current keywords fare. This can take months of regular updating. My company has a portfolio of 4 websites with over 1000 pages and 3000 links. As you can imagine, this is a full-time job in itself. Is this something that should be done by the company owner when you have a business to run?

Meeting people

One of the hardest jobs for me is to meet other people. If you do attend a network event, what guarantee is there that other people present want services you provide, when you are selling a niche product or service? LinkedIn often works better for us due to the fact that we can target a specific audience, so in the case of our Dynamics 365 blended learning courses we get a lot of interest from software developers based in other countries where there are a large portion of large Enterprise companies. We tend to get direct emails from developers asking for access to specific courses, rather than the more traditional approach of selling to, or contacting Business Decision Makers (BDMs) or HR managers. This is due to the highly technical nature of our products. For us, web channels work best, rather than local channels. That said I do accept the need to keep engaged with our local business network (for example I am attending a Cyber Security event at The Kiln this evening) – who knows what will be discussed and how you could work with them?

I would urge caution before anyone takes the ‘leap of faith’ that is opening your own business without researching the market and knowing what your expected returns are. If you have little to lose and a financial safety net then it becomes an easier decision, but for people who are skills-rich but economically poor the risk may stop you from taking the leap.

Business investing

My advice is not to investigate loans or business investors. That is a rather sweeping statement but let us consider it from this perspective – if you have a weak month but you know that over time things will improve, diminishing your outgoing spend and breaking even would be better than using an overdraft, taking out a loan or hitting the credit cards. The reason for this is that you still have to pay back the money owed and in the case of a loan, if turnover is steady but flat, this could take a long time to pay off meaning that you have worsened your financial cashflow, even if by taking out cards and loans your credit rating might increase.

If you take on an investor, you are selling a share of the business. If you sell 25% for example of a ￡60000 turnover, this means that the company will see only ￡45000 from which you will have to pay all bills and salary (which is 80% of your outgoing cost). The investor will top-slice ￡25000 and usually not have to be concerned with the operating costs. This is why I would urge caution and for you to get sound legal advice before taking on an investor. Investors however can and invariably will inject money into the business. This in the short-term may be useful when for example taking on premises, but there will be conditions attached.

So in conclusion, I am not trying to scare you from starting a business. I just want you to think about what is involved and with the information I have given here tried to walk you through some of my thoughts as I stepped through my own journey.

Matthew Bennett is the owner of MBIT Training Ltd and MB Design Solutions. He is based in Worcester and operates as a Microsoft corporate trainer across the UK and Europe.