Question Time with Mentor John
This article first appeared in Business Times on 14 April 2018
Question time with Mentor John
Entrepreneurship and innovation are the latest buzzwords in Singapore, and everyone wants to start a company or work for a start-up.
However, starting a company is not easy. Mentor John explains…
What do I need to start and run a successful business?
You need a lot of things. The six most important are:
• A clear purpose for your product or service
• A market willing to pay for it
• A cohesive team or partnership
• Capital to start and run the business (always more than you think)
• A reasonable level of intelligence to enable you to solve problems
• The ability to ask the right questions (in any situation), and astuteness to process the answers and act appropriately.
The market I am in is very competitive. How should I tackle this?
All markets are competitive unless you have a securely patented major invention. You need a unique selling proposition (USP) to make your product stand out from your competitors. You can probably find this if you can think creatively. Imagine yourself as a consumer. What will make you buy your product as opposed to others? What do you have to offer that they don’t? If the answer is nothing then you must be able to sell more cheaply or provide a better service. Nobody will buy your product unless you can offer an advantage over your competitors.
I have a high staff turnover. How can I reduce this?
Your workers don’t work primarily for money, although that is an important part of why they work. Check to see that your pay is reasonably competitive. If it is then your problem is likely to be the way they are treated and the prospects they see. Bosses today have to be very collegial to get the best from their workers. That means they must involve them in the business, take an interest in their lives, help them to solve problems – both at work and at home, and see that their jobs are made as interesting as possible. Give your staff a sense of pride in their work and help them achieve it and you will keep them much longer.
I can’t raise enough working capital to continue my business. What should I do?
That depends on where and how you have tried to raise working capital. If you have a good business plan, ask a business mentor to look at it for you. Get the mentor to sign a non-disclosure agreement (NDA) if there is proprietary and confidential information in your business plan. If the business is not viable you shouldn’t raise more capital because it will only be lost. If, however, the business is viable, there are many sources of seed money and working capital. I doubt you have tried them all.
If you are just getting started, a good first step is to write a one-page description of your idea. Next write an elevator pitch about your idea. Now draft a request to a venture capitalist describing your idea and asking for an interview. If you get those three right you will probably get a hearing. Then it is up to you. If you don’t know how to present your idea well, get a coach to help you.
I want to sell my business. How do I go about doing so?
First establish the value of your business and whether this is the best time to be selling it. Most people try to sell their businesses too soon. Second, ask yourself what you will do once you have sold it. Being at a loose end may appeal to you right now; after three days you will be bored to death. Third, sift through the people or companies that might be interested in buying your business. The better your work at this stage, the higher the price you will get for it. Fourth, be creative and see how you can get the potential buyer to approach you. You have a stronger negotiating position when they want your business than when they see that you want to sell it.
I need to find a partner to join me in my business. I have a friend who might do. How should I check him or her out?
This is probably the most difficult thing you have to do in business. DO NOT rush to get your friend to join you. Friends who become partners often soon become enemies. Start by listing your strengths and weaknesses. Then list your friend’s. Are they similar or are they complementary? If similar, you are storing up trouble if you bring him / her into the business. If complementary, look at how compatible you are. Similar is not the same as complementary. If you decide your friend could bring useful things to the business, draw up a partnership agreement. DO NOT get a lawyer to draft this yet. You two must agree it before it becomes a legal document. This agreement may be the most important of your life. Pay attention to it.