Over the weekend, in The Week, I read these start-up tips by Luke Johnson which were originally published in the Wall Street Journal Europe. Luke Johnson, chairman of private equity house Risk Capital Partners, has made a success of businesses as varied as Pizza Express, bingo and dentistry.
Here are Luke’s tips if you are contemplating going into business for yourself:
Consider moonlighting or going part-time. A steady income to cover personal overheads can be a life-saver while you develop your concept.
Do what you know. Don’t plunge into a new sector without doing extensive homework. If you start up in an industry you know, you’ll benefit from contacts and credibility.
Always write a comprehensive plan. Even if you don’t need to raise cash, it’s worthwhile expressing your thoughts coherently. Include a timetable, product and customer descriptions and financial projections as a minimum.
Consider finding a partner. Teams are generally more likely to succeed than one-man bands – and are often seen as a better prospect by capital providers.
Never give a bank or landlord a personal guarantee. You risk being made bankrupt if the business fails. Too many first-timers agree to such demands.
It’s the execution, not the idea that counts. First be sure you’re willing to do the gritty essentials, like selling and book-keeping.