With over 80% of small business failing within the first three years, it is amazing that people are still risking it all without business planning before starting up.

Our Risking It All entrepreneurs had plenty of passion (and debt) but they did not initially have systems and plans to sustain a business.

Dean from initial D had great talent and people skills but lacked financial acumen. His record keeping was poor. There was no customer database to measure the money being generated from hair-cuts made. There was no profit and loss statement. If you don’t know where you are spending your time and money, you can’t measure your success for effort.

Brad from Zone had borrowed more than $350,000 from his current girlfriend, his ex-wife and her new husband. He spent his time building premises and perfecting shop fittings (creating expenses) rather than marketing to bring members (income), losing thousands of dollars a week.

One reason why people start their own business is that they think they can do it better than their boss or they don’t like their current work environment. This creates great dinner conversation but it is not reason enough to start your own business.

A good reason to start a new business is because you have found a gap in the existing market or have a completely new idea. Take Nudie Juice, whose founder Tim Pethick delivered fruit juice in a fun and engaging way. Kelly Baker from Edible Blooms had the novel idea of creating edible bouquets made with chocolates or fruit.
People starting up a small business also need to do a lot of market research. Last year a small business owner started a fresh juice bar without realising that Boost Juice was opening up around the corner. This business is barely breaking even and it’s almost certain demise could have been avoided with some research.

Essentials for starting a new business:
1.Have the right reasons – because it is your passion, not because you think your boss is an idiot.
2.Do market research – internet and industry reports on trends.
3.Talk to successful business people. Ask them for their top 3 tips.
4.Create a business plan.
5.Take a leap of faith.

Case study from Risking It All episode 1: Creco
David and Julie wanted to create their own franchise with Creco –the crepe connection. Their aim was to have a number of stores within a few years. Entering a franchise model has many strengths and weaknesses and these need to be fully understood before entering them.

Some of the advantages of buying into a franchise include:
• that franchisees provide training
• they have an incentive to make you successful as the franchisor

The disadvantages include:
• you have to invest capital (buy) into the franchise
• the franchisee can become dependent on the franchisor rather than have their own drive

David and Julie wanted to set up their own brand of franchise but were already risking it all to set up the first one and did not have the capital for a franchise model until their first shop was extremely successful. Their idea was great but the plan to make it happen was nonexistent. They were also lacking a brand identity with dull signage and through the show we worked on this area.

What David and Julie did really well was that they worked together as a team. Julie’s positive energy created a positive environment for the clients and staff. David’s drive for perfection helped get the service to their customer’s right eventually and consistently.

Their positive attitude is a recipe for success!

Related links:
Shivani's website
Risking It All website