Alchemy: the ability to turn a base metal into gold. Is there such a chemical formula for a start-up business?
Step 1 – Take two enthusiastic people
You need two people minimum; an ideas person and an implementer. If you have both these skills then lucky you, but if there are two or more of you, don’t forget the all-important shareholders’ agreement.
Step 2 – Sprinkle with numerous ideas
One is never enough, it won’t work and it won’t work the first time. One per cent success is usually mitigated by 99 per cent failures, so if you want a great idea, you had better have lots of them.
Step 3 – Add a dash or twenty of funding
Businesses do not fail for lack of profits; they fail through lack of cash. You can run without profit for some time, but you can only run out of cash once.
Most businesses in the early stage are very undercapitalised. Yes, I know it’s not easy to find, but you must if you want more certainty of success. However much you think you need, add a large dollop of contingency.
Step 4 – Take a shed load of energy
If you think you are busy or tired working for someone else, that is nothing compared to being self-employed. Stamina sorts the women from the girls (and of course the men from the boys). You simply have to keep going.
Step 5 – Stir in a bunch of enthusiasm
You will have many a black day, month or even year, but you cannot afford to let this get you down. Get a mentor, as you will need someone to talk to and be there to support you, because when you are in the thick of it and things get hairy you need to stay positive and balanced.
Step 6 – Cook slowly in a warm oven
Only a very few businesses are instantly successful, most take years to come to maturity. You are unlikely to be an overnight success.
Step 7 – Enjoy the finalised article with care
Do you want a lifestyle business where you enjoy a healthy salary, or are you building something of capital value to sell for a large sum” CHOOSE, as these require very different strategies.
Step 8 – Pass on the recipe
If you are successful, the greatest gift you can give is to help others on their journey. For me, this has been the best thing I have ever done, more rewarding than anything else and, what’s more, it costs nothing.
Jo Haigh is head of FDS corporate finance services and the author of The Financial Times Guide to Finance for Non Financial Managers.