Setting up a business
20 questions – can you run a successful business?
The more ‘yes’ answers you have (and be honest!) the more likely you will be a successful entrepreneur like
Virgin's founder, Richard Branson.
1. Are you passionate about achieving things in your life, and do you keep this enthusiasm through
2. Do you energetically pursue your goals and thrive on long hours?
3. Are you self-confident and determined when things go wrong?
4. Do you have skills and knowledge that could be sold to customers?
5. Can you control stress and make decisions when the going gets tough?
6. Are you good at selling yourself?
7. Do you know the difference between cash and profit?
8. Are you a good negotiator?
9. Are you prepared to take calculated risks?
10. Do you learn from other people and accept their good advice?
11. Will your family and friends totally support you in a new business venture?
12. Are you physically fit?
13. Have you the money to get started on your own?
14. Are you prepared to risk your house and possessions and suffer low pay for the sake of a new business?
15. Are you willing to give up your leisure time for your business?
16. Are you prepared to learn new skills for your business?
17. Do you think before you act?
18. Can you face the possibility of making decisions on your own?
19. Are you well organized, so that you do things in the quickest possible time?
20. Do you keep going until a task is as well done as it can be?
How to run your own business
1. Be sure you can do it
Ask yourself the 20 questions above - in particular make sure you:
- Can do something unique that customers will want.
- Want to be an entrepreneur for the right reasons.
- Have the self-motivation, energy and self-confidence, driven by a visionary purpose for your business (e.g.
Walt Disney’s, pictured right, aim to ‘bring happiness to millions’).
- Get as much help and advice as you can e.g. from banks and government bodies.
2. Prepare a business plan
A business plan is essential not only for the successful running of a business but also for banks, if you want
to borrow money.
It shows why the business will be successful now and in the future (see how to write a business plan and the points discussed
3. Delight your customers
Customer satisfaction is the key to
making your business successful. So you must get these things right:
How much are people prepared to pay?
This is dependent on your competition (see point 4).
Does it give customers what they want better than competitors?
- where your business is located (in business premises or at home)
- how your product is distributed to customers (e.g. via retailers or the Internet).
Where you should advertise or promote your product (e.g. newspapers and personal selling).
Success in these 4 P’s depends on knowing who your present and future customers are.
So market research is essential.
4. Know and beat your competitors (and plan ahead)
Avoid your competitors’ strengths and exploit their weaknesses.
Try to anticipate what they might do and plan accordingly.
Business success also depends on innovation and change, continually finding customer solutions
better and quicker than competitors.
5. Have enough resources of the right quality
The 4 M’s remind you of the resources you will need in your business:
• Men (and women!) - recruit and train the best people (if you can’t run the business on
• Materials – get the best possible deal from your suppliers.
• Machinery (and property) – use them to maximize customer satisfaction.
• Money – see point 6.
6. Manage your money well
a) know your balance sheet and income statement (or profit and loss account)
(see financial accounting).
b) make sure you have enough cash
– a cash flow forecast is vital, because it predicts your cash incomes and expenditures
(and so potential cash shortages)
(see cash flow management).
c) control your costs
Use budgets to control your spending
– see budgeting and cost control.
d) measure the performance of your business – key indicators are:
- the percentage change in sales revenue (or turnover).
- liquidity (your ability to pay off your debts with cash)
Also see analysing accounts.
e) know about book-keeping
You will have to decide whether or not you are going to do your own books, or employ an accountant.
A book-keeping course will save you a lot of money.
You will need to complete documents that record vital financial information (in brackets):
- cash book (all items of cash income and expenditure).
- sales daybook (credit sales where customers don’t pay immediately).
- purchases daybook (credit purchases where you don’t pay your suppliers
- VAT return (listing sales and payments to suppliers, if you pay VAT, the EU’s sales
Key quotes explained
“About half of what separates the successful entrepreneurs from the
non-successful ones is pure perseverance”
Jobs , Apple’s co-founder (pictured right)
Any successful business has to survive failure and difficulty. Remind yourself that anything worthwhile is worth
You must be tough but flexible enough to adapt to changing circumstances and customer requirements.
“A man should endeavour to be as pliant as a reed, yet hard as cedar wood”, the
Talmud, the Jewish holy book, says.
“Potential entrepreneurs...are people who imagine things as they might be,
not as they are, and have the drive to change the world around them”
- Anita Roddick
, founder of the Body Shop (pictured right)
This emphasis on creativity and change is confirmed by the management writers, Gary Hamel and C.K. Prahalad, who defined business success
as “the ability to imagine what could be”.
“Commit to your business. Believe in it more than anybody
- Sam Walton (founder of Wal-Mart stores, pictured right)
Be inspired by a vision for your business
Sam Walton wanted to satisfy customers with quality and low prices and work as hard as possible to make it
Make your own luck. The Greek philosopher, Seneca,
said: “Luck is what happens when preparation meets opportunity”.
“My interest in life comes from setting myself huge, apparently
unachievable, challenges and trying to rise above them”
- Richard Branson , founder of Virgin
Push yourself to achieve great things, and never doubt your ability to do them.
“Hitch your wagon to a star”, Ralph
Waldo Emerson, the American philosopher , said.
Read an autobiography/ biography of a successful entrepreneur. For example:
Richard Branson, Losing My Virginity
This explains the reasons for his successful business – continuous innovation customer satisfaction, employee
motivation, risk taking and challenging aims.
(pictured right), The E Myth
Small business owners are successful because of their:
- passionate pursuit of their life and business aims
- hunger for more knowledge.
- attention to business detail.
- character, capabilities and attitudes - taking responsibility to succeed, improve and
change (to change your business you must first change yourself).
- excellent strategy, structure and systems - particularly relating to employee
motivation and customer satisfaction.