Starting a business after retrenchment - the internal challenges!
by Ian Harris and Dr. Vesna Grubacevic
Ian Sets the Scene
Usually, as a business advisor, I find that I have to assist clients to mentally prepare for the challenging road ahead. Often there can be many mental and financial challenges in starting a business, especially after being retrenched.
Recently a younger fellow was referred to me as someone who wanted to start his own business. Let’s call him Tony. Tony had taken a redundancy package from his existing employer and believed this was the perfect time to ‘go out on his own’. Although he had perceived the retrenchment as positive I could see that there were some residual issues associated with self-esteem which lingered. The last 12 months had not been easy. Tony has never been in business for himself. He sought my advice about his start-up.
Clarification of the business model
Initially I clarified his thinking using the Business Model Canvas and narrowed down the nature of the customer segments he was focussing on. As well we worked through his value proposition and how he would telegraph this to the customer segments. He began some serious networking to bring in customers.
But his wife was nervous! She was used to the security of two salaries and this was her first pregnancy. She needed substantial reassurance at a time when he was mentally stretched getting the start-up underway.
Developing a cash flow scenario
There is a need to bring all stakeholders on board and ensure that they understand the challenging pathway ahead - for both the entrepreneur and the partner!
With Tony’s assistance I developed a cash flow scenario for him and his partner. This involved taking stock of the Tony’s cash and borrowing resources and matching it against their living commitments. We were wishing to gauge how long Tony has to realistically generate income from the new venture.
It appeared that the couple could sustain themselves for nearly 12 months. This was reassuring to both parties and gave them some mental space.
Developing mental resilience
Having a good idea about the financial challenges is one thing however it is also critical to bolster the mental resilience of the entrepreneur. Mostly business advisors have no training in this highly important area.
Tony definitely needs mental support and some practical techniques to assist him traverse the challenges of the situation he finds himself in. I have spoken to him about getting his mind in order for the pathway ahead and to seek Vesna’s assistance.
If you are like Tony, starting your own business, below are some tips from Vesna to assist you on your journey.
Shift Your Thinking
Having being through the journey of transitioning from employment to self employment myself, I understand the significant change in thinking that is required to succeed in your own business.
The biggest risk in business is not backing yourself enough, not having enough self belief, not taking action that will lead to your success. It is only fear and self doubt that increases the risk because then we second guess our decisions, question everything and delay action – this is where the real risk to sabotaging our success lies.
Retrenchment can add additional emotional and mental issues to the journey. Any ill feelings (eg. anger, resentment, rejection, betrayal, grief, hurt, etc) around retrenchment need to be addressed and fully let go so that they stop hindering the mental resilience that is required to be a successful business owner.
In addition to shifting your thinking you will also need to acquire people skills to succeed in your own business. Regardless of the industry you are in, when people like each other, they do business together. As a business owner, you will need to know what makes other people tick, how to successfully interact with prospects, convert them into customers and nurture that relationship. People skills are also important when leading, motivating and inspiring your employees, suppliers, business partners, referrers, alliance partners and investors.
Many business owners are poor at promoting themselves and their business, so they keep themselves busy in their office working on plans, administration, systems, etc rather than getting out and talking to prospects and customers. One of the major reasons why only around 5% of new businesses succeed after 5 years in business is lack of enough cash flow ie. lack of enough sales and enough customers. If you fear rejection or getting a “no”, it is critical that you address these fears as this is the major reason preventing business owners from turning leads and prospects into clients.
Surround Yourself with Fans
If other people are negative about your business, check if you have any doubts about yourself and your ability to succeed. Other people, especially those closest to you, will pick up on any doubts you have. If you question yourself, others will question you more. When you have the mental resilience and a strong self belief, other people will question you less; and if they do, you will be more easily able to deflect their negativity because of your strong self belief. Are you your biggest fan?
Create a 5 year business vision and make it so compelling that it drives you to succeed. This will keep you focused and will help you overcome any worry and obstacles that arise. Also have a business, cash flow and a marketing plan. These will give you certainty, focus and also ensure that you have done your homework to increase your chances of success. Ensure you seek good financial and business advice from Ian so that he can assist you to develop financial peace of mind. This is critical to cutting the mustard in the market place.
Imagine how quickly you could have your own successful business by actioning the above steps!
Ian Harris is a chartered accountant and director of B+I Lockwood Accountants Pty Ltd (see www.bila.com.au ) with over 35 years’ experience advising small businesses. He is particularly interested in start-ups and eCommerce. Ian is a devotee of the Business Model Canvas ( www.businessmodelgeneration.com ) and has recently started a Melbourne Business Model User Group ( http://www.meetup.com/Melbourne-Business-Model-User-Group/ ) to facilitate entrepreneurs developing robust business models. He is also interested in, and respectful of, the inner challenges faced by business owners.
Dr. Vesna Grubacevic is the Founding Director and Performance Transformation Expert® with award-winning company, Qt. She is an author, speaker, the creator of breakthrough behavioural change techniques, holds a PhD, a BEc and has over 30 years’ business experience, including working directly with CEOs, senior executives and their teams to assist them to create exceptional results. For more techniques on starting your own business, dealing with retrenchment and for your FREE gifts, visit www.qttransformation.com today or simply enter your details in the panel to your right.