How to avoid pitfalls in business

Imagine the scenario – you’ve spent hours upon creative hours making something beautiful for someone special and finally it’s finished.  You wrap it beautifully and present it to them at that special event filled with family and friends.  Everyone is ‘gobsmacked’ at how stunning your work is and tell you: ‘you’re a master, you should go into business and make a fortune!’

It sounds so tempting, so attractive, and when that message is repeated again and again over time, you ARE encouraged to give it a go.

This is a story that happens far more often than you can possibly imagine.   There could be a strong correlation between this scenario and the statistics that show some two-thirds of new businesses fail in the first 3 years. The problem IS of course that hobbyists go into business retaining their mindset of ‘hobby’ and therefore expect to enjoy it every bit as much.

In fact, the practicalities of running a business can take all the enjoyment out of a hobby even when you have business experience to draw on.  But if you’ve never been in business before and have limited business skills, then you’re on the fast train to Disappointment City.

Being armed in advance with knowledge and skill to turn your hobby into a business is critical.

The rewards when you get it right are very worthwhile. The upside of owning your own business includes:

• Job satisfaction
• Financial reward
• Work your own hours
• Be your own boss.

Going in unprepared can result in the downside:

• Work overload
• Financial pressure
• Loss of enjoyment in your hobby
• Stress-related health concerns.

The first step in avoiding the pitfalls is to get your head around the fact that being in business requires some mental adjustment.  Knowledge is power and How to Turn Your Hobby into a Business aims to empower you with the information you need to get started. Setting realistic and achievable goals, recognising that rewards don’t come without effort, is essential.

Don’t let the kind, well-meaning words of loved ones lull you into a false sense of inflated ego. Your work may indeed be beautiful, clever and innovative, but the world will not beat a path to your door until you’ve built the roadway and put up the signs to show it where to come and why it should come to you.

© Maureen O’Brien

How to set prices on your products or services

Knowing how to set your product prices is a challenging issue that most business operators wrestle with. Too high and people won’t buy because they can get it cheaper elsewhere. Too low and people won’t buy because they perceive poor quality. How do you pick the right price to encourage sales?

Know your target markets
Understanding who will buy your products or services can help to determine where to position yourself in the marketplace.

• Where are they positioned geographically?
• How much value do they place on your products or services?
• What socioeconomic band are they in?

All of these questions can help you identify how much they might be prepared to spend.

Competitor research
How much are others selling your products or services for? Compare against similar geographic, socioeconomic and subcultural factors.

How much do you need to earn?
What’s your breakeven? What exactly does it cost you to produce your product or deliver your service? Take time to work it out because it will show exactly what the minimum price is at which you can sell. This will prevent you from making a loss at least from the outset.

How much do you want to earn?
If nobody else is doing what you do, and after you’ve worked out the minimum you need to charge to cover your costs, what mark-up do you want to earn? What profit would you be satisfied with? Is that realistic against the factors that make up your target market?

Hope these tips help you to position your products or services well so you make money from the outset of your new business.

© Gina Gray, Managing Director Clarity Press corporate communications and editor for How To Turn Your Hobby into a Business.

Beg, borrow or steal (maybe not) when starting your new business

It’s important to conserve precious dollars when starting your small business and you’d be surprised at how easily you can do that. In simple terms: beg, borrow or steal as much as you can. OK, so you don’t want to steal and get locked up before you start your business, but there is a legalised kind of stealing that you can do from supportive friends and family who have too much stuff in their home already.

What to beg

Administrative services! Most of us start a business because we have a skill we want to turn a quid off or that we want to do full time because we love it. The ‘business’ side of the business is dang hard work, fiddly, boring, and something we put off until the last possible moment. Like the tax return. But that’s where we get ourselves into difficulty and it’s at that point we begin to question whether we really do want to run a business. Our exciting, shiny hopes for that new lifestyle and flexibility quickly fade away.

The reality is that there are precious few people who have every business skill required to successfully grow. It means most of us need administrative help somewhere along the line. The sooner the better. If you do your admin work properly from day one you’ll set yourself up for long term success.

Is there someone you know who would be happy to donate a couple of hours a week or month to help you build your customer database, do some promotions, set up your business systems and templates, manage your accounts?

It may be a clever high school aged person who wants to get some experience under their belt (and on their CV) for the workforce.

What about a friend who’s a stay-at-home parent in need of some ‘adult’ work to keep their brain active and their job skills fresh for when they’re ready to return to the workforce?

Or a family member who just wants to help you succeed?

Ask around; you might be surprised at the skill set available among your friends and family, or in their networks.

What to borrow

Equipment like:

• computers
• software (licensed to the loan computer, of course)
• printers
• the more expensive or larger tools and equipment required to produce your goods or deliver your services.

One start-up success story is a gift-giving business: Wrapped to You. When starting out she borrowed a shrink wrapping machine from a family member to secure her gift hampers and make them look professional. All she had to buy then was the plastic once the original supplies ran out. Her brother hadn’t used it for a while and he loved gaining some free space in his shed. In the end, a few years on, he gave it to her and she didn’t have to spend a cent on it. It’s still going strong, 12 years on, just like her business.

What to steal

Office furniture and accessories like folders, plastic sleeves, pens and staplers – incidentally, how many staplers are in your work drawer at the moment … and why is it that staplers and staples seem to breed while pens grow legs and walk?

Let’s face it: we all have excess stuff hanging around home or the office that we rarely use, but that we’re saving for ‘something’. Well, you’re that ‘something’. Time to help your friends and family offload and steal what you need to fit out your new office or work area. Ask them to let you mooch about their garage – most of us forget what’s stored in there and you can be sure of finding something useful.

Good luck finding those essential items and have fun putting together your new office!

© Gina Gray, Managing Director Clarity Press corporate communications and editor for How To Turn Your Hobby into a Business.

Business systems give you staying power

It’s very exciting when you start your own business. It brings a sense of freedom to your life―you can set your own pace and create your own space to work in.

One of the best things you can do for yourself is to establish your business systems right from the very start. It’s also the easiest time to start them because you can develop them bit by bit as your business develops.

I know of large international organisations who are completely dysfunctional and losing a lot of money because they didn’t establish their business systems from the start. Silos have developed between the teams with everyone operating their own way, using their own procedures, and their own technologies that don’t interface with each other, all because they failed to establish those foundational elements at the very start of their business. They could be focusing on profits and growth; instead, they’re wasting big bucks on fixing technology and people problems.

I’m telling you about this so you can avoid the same headache and loss of profits. Even if you don’t envisage being a big business, plan ahead because you could be surprised by the success of your venture. At the very least you will benefit from having systems in place for the busy periods because they save you a lot of time.

So what kind of systems should a new business operator have?

Branding

• How you present your business brand to the world―include font choice, size and colour―for each document or piece of communication you use. This means your letterheads, memo slips, envelopes and templates―such as email, MS PowerPoint, media kit, prospecting/information pack and so on―all match.
• It also means determining some consistent key messages that you’ll use in your promotional literature about your business ‘personality’ and products/service.

Communications

• How you answer the phone.
• How you approach prospective clients, including making a cold call about your product/service. Include the phone scripts you’ll use.
• What customer communication pieces and procedures you use. You may have a phone call, email and e-newsletter as part of your communication suite. Examples of procedures: after an initial enquiry you send them a letter and information pack that contains XYZ information, one week later you make a follow-up call to answer any questions or overcome any obstacles they may have so you can progress the sales process. Document all the steps you will take to establish rapport with a prospect and progress them through to a sales conversion. Even if they don’t buy from you straight away, include a step to follow-up with a courtesy call in 1-2 months time. This will keep you in the forefront of their mind and convey that you care; note, however, that if you contact them too often then they’ll think you’re doing the hard-sell on them, so pace the follow-up and be sincere when you do.

Operations

• How you package/present each product/service, including the prices you are charging for them.
• How you deliver each product/service.
• How you record and store client information.
• How you manage your accounts receivable and payable.
• How you manage your petty cash.
• Your business continuity plan: an important document that describes what measures you’re taking to ensure your business will continue if there’s a fire, theft or other disaster that interrupts your usual routine.

Document all of these processes and procedures, and any others that are relevant to your unique venture, in your Business Systems manual. Print it out and store it handy in a folder so you―and eventually your team―can easily access it. Make updates as your business develops so you don’t find yourself inundated with a big job and inefficient operations in a few years time.

All the best with your business venture!
© Gina Gray, Managing Director Clarity Press corporate communications and editor for How To Turn Your Hobby into a Business.

Never take your clients for granted

Recently, during a routine courtesy call to a client to see how they were travelling for communications services, he mentioned that 100% of his business is now retained contracts. Awesome, right? Of course! I celebrated with him; that’s a wonderful achievement for someone who’s only been in business for 3 years.

We’d all love a few of those types of clients, wouldn’t we? It means regular income and an assurance of work for the long term.

However, alarm bells began to ring when during the course of discussion it came out that he doesn’t service those clients with any add-ons. No e-newsletter or regular communications to inform them of the state of the industry, new developments they might benefit from, business opportunities/leads or anything relevant to let them know he genuinely values them and wants to give them the best service he can.

This experience prompted today’s lesson: never take your clients for granted.

It seems like he’s sitting pretty with his ongoing contracts but he shouldn’t rest on his laurels. Without some form of ongoing engagement activities he risks them being swayed by a competitor approach, and if that competitor offers a service that conveys his clients aren’t being serviced as well as they could be with this new provider then it won’t take a lot for the client to vote with their feet. It’s easy to walk – too easy – when you have no ongoing personal connection.

After the global financial crisis (GFC) and the kick in the guts most businesses experienced, it astounds me that business operators still don’t ‘get’ the need to communicate well with their clients/customers. When it costs so much to win a new customer, and when the unexpected could turn up (like the GFC) can we really afford to provide average service?

Remember to look after your clients because you never know what or who is around the corner to cause their feet to wander.

Copyright Gina Gray.

Workplace bullying is common and costly

We’ve become more conscious of the issue of schoolyard bullying and the ramifications it can have – both for individuals and for the institution.  The fact that people are now suing – successfully – their old schools for failing to support them as victims of schoolyard bullying, should be enough to spark fear into the hearts of some business organisations as well.

The thing is that some people never grow up and the habits they got away with in childhood can manifest in the workplace too.  The perpetrators simply develop a more sophisticated approach.  When it’s brought down to its simplest and ugliest truth, bullying is a misuse of power.

And it’s not restricted to gender. Both male AND female workers can demonstrate bullying behaviour.  Some blatantly overt, others well-disguised.   Some of the more obvious examples are:

• The boss who openly ridicules or belittles a member of staff for their dress sense, taste in music, political/religious beliefs, professional opinion.
• A manager who makes her point by shouting at staff down a phone line.
• Verbal abuse towards a junior employee using statements such as “you’re bloody hopeless” or “you’re a waste of space.”
• More physical bullying like the co-worker who regularly plays childish practical jokes on a fellow employee or throws things at them.

But there are less obvious examples too, such as:

• The boss who deliberately loads a staff member down with additional/excess work for the purpose of putting pressure on them for some hidden agenda like causing them to resign.
• Subtle ostracising of an individual, like not inviting them to participate in social gatherings that other staff members are invited to, ceasing/changing conversations when they enter a room, undermining their knowledge or skills to colleagues behind their back.

Think back to your own school days.  Can you remember the characteristics of the bullies?  Perhaps the footy star who liked to throw his weight around off the field as well as in the game?   Or the stunningly gorgeous “Miss It” who was too good to do her own homework?  Perhaps the class genius who was “teacher’s pet” and knew how to play it up at others’ expense.

And you.  Were you a bully or a victim?  How did it feel then? How does it feel remembering those days?  And can you recognise any of those characteristics in your own workplace?

Just as the school organisation now has to implement a policy on bullying to protect its students and prevent expensive litigation, the business organisation would be wise to take a similar approach.

Every business is aware of Australia’s Unfair Dismissal laws and takes steps to avoid being drawn into such a legal nightmare.   But the business that doesn’t address the issue of workplace bullying, that fails to implement suitable policies and strategies, is setting itself up for significant business risk.

The hidden costs of workplace bullying are also considerable.

For example:

• Replacing staff that have been forced to leave – the cost of hiring and training replacements can mount up.
• The additional cost of substitute staff where the affected employee is forced to take sick leave due to stress.
• Lower productivity costs where the person being bullied is distracted from concentrating on their work, and where the bully is spending work time planning their next attack.
• The intangible cost of the damage done to staff morale.

All in all, it can be a lot more costly than you think to turn a blind eye to bullying in the workplace.

Copyright Gina Gray.

Hello business world!

Ever dreamed about getting paid for what you love doing? Well you’re not alone and millions are doing it.

Taking that step from dreaming to making it happen is a big, brave one and with the right help and a few smarts you can do it well from the outset.  You too can join those successful others who’ve worked their way out of oblivion and into a bright new world of enjoying what they get out of bed for. In fact, some are so successful that they’ve reduced their work hours to a minimum.

The exciting thing is that you don’t need a degree to get started. You DO need some know-how, help, good networks and a passion to succeed.

Maureen O’Brien is one such success story who started out in business because she was tired of working for The Man and as a single mum whose children had started going to school  she needed  something that worked in for her family, her priority. So began a long career running two businesses concurrently: a licensed financial planning service and a small business support service.

She wanted more mums to enjoy the same results for their families so she harnessed her 25 years in business into an e-book: How To Turn Your Hobby into a Business. Check out our About page for more information if you’re ready to say bye to The Man and Hello Business World!