Blooming Marvellous is a company formed by two young mothers, who, while attending an enterprise programme, developed the following mission statement:
Arising out of our experiences, we intend to design, make and market a range of clothes for mothers-to-be that will make them feel they can still be fashionably dressed. We aim to serve a niche missed out by Mothercare, Marks & Spencer, etc, and so become a significant force in the mail order fashion for the mothers-to-be market.
We are aiming for a 5 per cent share of this market in the
Southeast, and a 25 per cent return on assets employed within three years of starting up. We believe we will need about £25,000 start- up capital to finance stock, a mail order catalogue and an advertising campaign. Some two decades later Mothercare paid some £3m for the brand. www.mothercare.com/maternity
Armed with a mission you can now talk succinctly about your business to anyone and hopefully galvanize them with your
enthusiasm and commitment and perhaps even win over some potential customers. Three tasks remain before you can commit to the venture. Two are the subject of this chapter and they both concern you, the business founder. The third is to do with the financial viability of your business, which will be covered when you prepare your business plan and make your financial projections.
Do you have what it takes?
To launch a new home-based business successfully, you have to be the right sort of person. The typical business founder is frequently seen as someone who is always bursting with new ideas, highly enthusiastic, hyperactive and insatiably curious.
But the more you try to create a picture of the typical entrepreneur, the more elusive he or she becomes.
That said, there are certain characteristics that successful newcomers to running their own business do have in common:
Self-confident all-rounder. Entrepreneurs are rarely geniuses.
There are nearly always people in their business who have more competence, in one field, than they could ever aspire to. But they have a wide range of ability and a willingness to turn their hands to anything that has to be done to make the venture succeed. They can usually make the product, market it and count the money, but above all they have self-
confidence that lets them move comfortably through uncharted waters.
Resilient. Rising from the ashes of former disasters is also a common feature of many successful entrepreneurs. Henry Ford had been bankrupted twice before founding the Ford Motor Corporation with a loan of $28,000 in his fortieth year.
Innovative. Almost by definition, entrepreneurs are
innovators who either tackle the unknown or do old things in new ways. It is this inventive streak that allows them to carve out a new niche, often invisible to others.
Results orientated. Successful people set themselves goals and get pleasure out of trying to achieve them. Once a goal has been reached, they have to get the next target in view as quickly as possible. This restlessness is very characteristic.
Sir James Goldsmith was a classic example, moving the base of his business empire from the UK to France, then the
United States – and finally into pure cash, ahead of a stock market crash.
Careful risk taker. The high failure rate shows that small businesses are faced with many dangers. An essential
characteristic of someone starting a business is a willingness to make decisions and to take risks. This does not mean
gambling on hunches. It means carefully calculating the odds and deciding which risks to take and when to take them.
Total commitment. You will need complete faith in your idea.
How else will you convince all the doubters you are bound to meet that it is a worthwhile venture? You will also need
single-mindedness, energy and a lot of hard work to get things started; working 18-hour days is not uncommon. This can put a strain on relationships, particularly within your family, so they too have to become involved and committed if you are to succeed.
CASE STUDY
At the age of 18, when his contemporaries were going off to university, Darren Saunders chose the route of the inventor. In pursuit of his ‘mad idea’ of the Cyberquin – a highly realistic, moving mannequin for
display in shop windows and exhibitions – he spent six months in a fruitless search for development cash. ‘I must have spoken to 150 people’, he says. ‘They all thought I was trying to achieve the
impossible.’ Finally, he clinched a government innovation grant; his father agreed to an overdraft with his bank to secure the remainder.
Saunders got help with the patents from a local patent agent, and took a short course in exporting at the Cardiff Chamber of Commerce.
After three long years of development, he succeeded in creating a mannequin that would work 24 hours a day without a hitch, needed no maintenance, and could be easily shipped and effortlessly set up
anywhere in the world. It took another 18 months of hard graft to get the product accepted, and it was all funded on a shoestring.
‘Everyone advised me to stick to the UK’, says Saunders, ‘but, I thought, the British never try anything new.’
He was right to follow his instincts. His budding company concentrated on visiting big shop-fittings exhibitions, including Euroshop in Düsseldorf, the biggest of them all. Here, the sight of a dynamic, lifelike mannequin attracted the crowds. The orders – despite a £5,000 price tag – came flooding in.
The Cyberquin, now re-branded more descriptively as Moving Mannequins (www.movingmannequins.co.uk), has been exported to some fifty countries and used by companies as diverse as Harrods, Mitsubishi, Disney, Puma and Lego.
Remaining self-sufficient
Working from home means that you will have minimum contact with other people. If you have until now worked in a large organization and enjoyed the collegiate atmosphere that goes with it, then being alone may be something of a challenge – it will certainly be a change. Some people can only thrive when they have others to bounce ideas off, and all business owners complain that loneliness, the lack of someone to share problems with and the absence of external stimuli are serious worries. Of course if you plan to start a business as an events organizer or masseur, for example, then you will constantly be working with people and may well be more productive working for yourself than as part of a big business.
If you are happier curled up with a book than at a party then chances are that you have a strong streak of self-sufficiency and will be comfortable running your business from home. Look on the positive – no office gossip!
Retaining focus
You will be surrounded by distractions when based at home.
Family pressures, noise and above all the people around you are not at work. That’s quite different from going out to an office or to business premises where everyone, theoretically at least, is there for a common purpose – work.
So you will need to be able to focus on the task in hand, despite continuous distractions and without generating too much ill will. You will need an armoury of strategies to ensure you can ring-fence the critical time you have to devote exclusively to working on your business.
Scoring your home business ability
All too often, budding entrepreneurs believe themselves to be the right sort of people to set up a business. Unfortunately, the capacity for self-deception is enormous. When a random sample of male adults were asked recently to rank themselves on leadership ability, 70 per cent rated themselves in the top 25 per cent; only 2 per cent felt they were below average as leaders. In an area in which self-deception ought to be difficult, 60 per cent said they were well above average in athletic ability and only 6 per cent said they were below.
A common mistake made in assessing entrepreneurial talent is to assume that success in big business management will automatically guarantee success in a small business.
Rate yourself against the characteristics in Table 2.1 and see how you stack up as a potential home business starter. A score of over 30 suggests you have what it takes, and less than 20 should be treated as a warning signal. Get a couple of people who know you well to rate you too, so you get an unbiased opinion.
TABLE 2.1 Home business starter attribute check
Attribute score (0–5, where 0 indicates having none of the attribute and 5 rating highly)
Self-confident all- rounder
Ability to bounce back
Innovative skills Results orientated Professional risk taker
Total commitment Self-sufficient Self-disciplined Total
You can find out more about your likely strengths and weaknesses as an entrepreneur by taking one or more of the many online entrepreneurial IQ-type tests. A couple of sources are listed below, but an entry in Google will produce a small torrent!
Psychometric Tests: A collaborative open resource run by Warwick, Durham and Southampton Universities
(www.psychometrictest.org.uk/entrepreneur-test)
Entrepreneurial Aptitude Test (EAT): A tool drawing on hundreds of surveys and interviews with business-builders
around the globe (www.hsgl.com).
Is the business right for you?
If you started reading this book with a business idea in mind, the first couple of chapters should have helped you get a clearer idea of how your concepts can be brought to fruition. If you are still casting around for an idea, then you will find a directory of home business opportunities in Appendix 2. In any event you should have at least a couple of prospective ventures in mind, as the process of comparison helps to reveal the strengths and weaknesses of a proposition that might otherwise lie dormant.
Deciding what you want
The first step in the process is to decide exactly what you are looking for in a business proposition. This is not too much different from looking for a new home. You rarely start with a completely blank sheet of paper. Rather you start with a budget of how much you are able or prepared to spend, a geographic area or radius around a town, the number of bedrooms required, proximity to public transport, local shopping and garage/parking arrangements. To these essentials you will then add some desirable features such as garden space, a patio and a conservatory. You need to do something similar with your business idea. Table 2.2 shows how you can do this for your ideas. First, decide what the important criteria for you are. In the example in Table 2.2, six are listed. Then give each of those criteria a weighting from 1 to 3 to reflect their relative importance. In the example, ‘Low investment’, ‘Flexible hours’
and ‘Small space needed’ are all very important and so are given the top rating of 3. The next two criteria, ‘Use all my skills’
and ‘Need no new skills’, being less important are given a weighting of 2. Finally, ‘No travel required’ being relatively unimportant is weighted only 1.
TABLE 2.2 Rating your business idea
Criteria Weighting
Idea 1 Idea 2
Score Weighted
score Score Weighted score Low
investment
3 3 9 1 3
Flexible hours 3 2 6 2 6
Small space needed
3 3 9 1 3
Use all my skills
2 3 6 2 4
Need no new skills
2 3 6 1 2
No travel required
1 1 1 3 3
Total weighted
score 37 21
Ranking your options
Now each business idea can be assigned a score between 0 and 3. If the idea meets the criterion perfectly, score it 3, and if it fails completely score it 0. In the example in Table 2.2 you can see that Idea 1 scores 3 for ‘Low investment’ as it needs little cash, whilst Idea 2, which needs more upfront money, scores only 1. Next the scores are multiplied by the weighting factor to produce a weighted score. As ‘Low investment’ is an important
criterion it is given a higher weighting than ‘No travel required’. You can see that, although Idea 1 scores 3 for ‘Low investment’ and Idea 2 scores 3 for ‘No travel required’, the weighted scores are 9 and 3 respectively to allow for the difference in their importance.
The weighted scores for each idea are totalled and show in this example that Idea 1, with a score of 37, is well ahead of Idea 2, scoring just 21.
You will of course have different criteria with different levels of importance, but the basic method will work even with many more criteria and a weighting system that gives a wider spread than just 0 to 3. Having said that, adding to the number of criteria greatly may only confuse matters. As with buying a house, in the end it all comes down to a handful of critical factors.
Key jobs to do
Take the home business start-up attribute check and see if this seems a good career choice for you.
Cross-check that outcome by taking at least one other similar test.
Weigh up the alternative business ideas you are considering and rank them using the weighting scheme in Table 2.2. Make any modifications to the criteria you consider relevant to you and your needs.