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Starting Up in Business
Contributor: Mike de Sousa, Director, AbleStable


For those working in the creative sector, starting up a business is a common occurrence. This may take the form of going freelance as an independent creative, or starting a company that delivers creative services and products. This guide aims to provide some essential guidance.

The Creative Startup

Creative companies must provide what customers want. More usually than not, this means delivering a service or product that helps sell other services or products. That's especially the case for creative areas like graphic design and illustration. This can be a frustration to some as they hope to enjoy creative freedom as well as economic stability when they form their company. Unfortunately being a commercial creative often means compromising creative instincts, and that's a lot different than being an artist whose primary purpose is not to make money, but to create works that are enriching and stimulating.

For some, making money from their creativity saps their energy and feels like selling out, for others it's the perfect context for their work to make a practical impact. Make sure you're happy with the context in which your creativity is exploited, as without a 110% commitment to your new business venture, it's sure to fail.

Basic Ingredients

Whatever your company does, doing your best is your starting point.

The fundamental ingredient you'll need as a startup business is the ability to provide a service or product people want. You can have a stack of money and talented people around you, but these will count for naught if the core products of your business are not needed, wanted, or attractive.

The first and most important asset you'll need when setting out in the commercial sector is to gather good people around you. Every person in your new company needs to be hungry for making your venture a success.

As a founding director you'll need to ensure as best you can that the people around you aren't going to have a 9 to 5 mentality. In every startup people have to muck in and often go far beyond what's expected in an established company setting. Make that very clear to anyone whose considering joining your venture. There's no room for those in a startup business who don't want to go that extra mile. Those around you need to be flexible, be able to use initiative, and above all be smart, not arrogant.

Initially form your company with two or three founders. Any more and the speed of making decisions can slow down considerably. This can seriously affect the critical first phase of development where you're laying down the foundations of the company like registering the company, opening a bank account, and organizing business premises etc. A single founder rarely has the stamina or enjoys the feedback that's crucial in making a success in business.

The most significant operating principle you'll need to observe is to be as frugal with handing out money as possible. New companies always spend too much, and this is often the cause of their downfall in the short term.

The Marketplace

It is very unlikely you'll provide a truly original service or product. Whether you're a designer, illustrator, author, or photographer, no matter what your creative area, you're going to have competitors offering the same kind of service or product. One advantage however of being in the creative sector, is that each individual or company can assert their own style, and that's likely to be your 'unique selling point'.

You're most probably doing the same as almost every startup business, and that's doing something that others do, only better. Acknowledging this at the beginning is an important step on the road to success as it will encourage you in keeping up to speed with what your competitors are offering.

Hard Graft

After you've had the idea and the rush of excitement and enthusiasm that goes along with the idea of starting up your own business, the hard work begins. Good preparation is a crucial factor in making a success of whatever you're doing. AbleStable for example took fourteen months to develop before it was eventually launched. 2BrightSparks (my commercial work) released a freeware product that generated interest and loyalty in the brand 'SyncBack' well over a year before the release of a greatly improved commercial version SyncBackSE [opens new window].

Be very clear about what it is you want to achieve, but also be ready to change direction. Many businesses completely alter the focus of their services and/or products along the way as new opportunities and the force of the marketplace influence their offerings. Commitment, professionalism, and flexibility are the watchwords that should stay at the forefront of your business implementation.

What The Customer Wants

No matter what kind of startup you're involved in, its far more difficult to understand what users want than you might anticipate. Try to stimulate as much feedback about what you do as possible.

We achieved this at 2BrightSparks by releasing SyncBack, although when this freeware product was first produced before the formation of our company, we had no intention of creating a commercial version. We wanted to produce the very best freeware backup program available, and by listening to what users of the program experienced and wanted, we constantly improved it and achieved top ratings in numerous freeware review sites. Gradually, over a year, we developed a far deeper understanding of user needs. The great success of SyncBack inevitably led to the establishment of a company, and the release of a more powerful commercial program that couldn't be developed without the structure and resources of a commercial business.

Our focus as a company has always been to listen to users. Many of these users are now also our customers, and we continue to value their feedback and suggestions above our own ideas in the area of product improvements.

Essential Strategies

All startups need money. This might come from your own pocket, or someone else's. Your aim is to maximize the company's chances of succeeding. Focus on two things: 1. making what you offer, better, and 2. the customer.

The most critical aspect of any startup is good financial management. Most startups fail because they run out of money. Be very careful how you spend it, and don't start taking a full salary as soon as the business is operational. Everyone in the company should be drawing as much as they need to get by, and no more as the company becomes financially secure. The biggest mistake is to start hiring a whole bunch of people when fewer can cope in the early stages.

Beware of getting distracted too much by the politics of company business. You must trust those on your team, if you don't, they shouldn't be there, no matter how good they seem at their job. Trust and loyalty for a startup are crucial. The last thing you want to do as the business starts to sell, is to be sidelined by internal divisions. Your team needs to work as one in making your venture a success.

Another major issue you're going to have to be crystal clear about at the outset is who owns the IPR (Intellectual Property Rights). Problems with IPR issues can very easily break a company. Ensure that everyone in the company knows who owns what. If you've shareholders, there needs to be a contract that clearly states the distribution of shares. This requires the valuation of your company which is a difficult task and comes down to a guesstimate based on the assets your company has.

The Right Price


Pricing your product or service is one of the most difficult things to get right. Price low, and you'll be king of the hill, match your competitors pricing, and you've set yourself up as a target to bat against. Price high, and your sales may dry out. I'd suggest you look around at what your competitors are charging, and at first charge less for a better job. You can then incrementally increase your pricing as you establish a customer base. Decreasing your pricing for long periods of time sends the wrong message. Offering constant discounts not only looks cheap, but may be against your country's trading laws.

Most marketing and business gurus will advise that startups tend to undercharge for their products or services. They'll come back with a story that goes something like this:

I know of companies that charged $20 for a great product and everybody either said 'this product must stink, just look at the price - you get what you pay for', or 'this is such a bargain'.

After talking with me (a marketing expert) they raised the price five fold to $100. Now everybody says 'what a great product', and doesn't mention the price. The volume of sales are the same, yet the income is five times as much.

Sounds great, but I'm very skeptical about stories like that. It's easy to say you could be earning a lot more simply by pricing your product or service a lot higher, but keep your feet on the ground, and be realistic about how high your customers will pay. Slow but sure incremental price increases are always a lot safer.

Customer Support

Discover what makes for an effective support policy, how support is as much what you sell as the creative service or product itself, and what tools can help in the delivery of great support by reading a related article at AbleStable: Good Support Strategies.


Conclusion

Starting up a business is a tremendous challenge and requires complete commitment. Your life will be dominated by your business at the early stages, and for some that's not what they want. Be very sure you've the right temperament, the right team, and the right product or service, before you begin.

One last thing, don't forget your dream along the way. Be focused about why you work as hard as you do. For me it's about achieving balance in my life. I'm deeply committed to my public and creative work, but on a practical basis I also need a commercial company to provide me with financial stability. Starting up a business may well be your best way of achieving your goal, but be certain it is.

     
       
 
Authors background

Mike de Sousa is the Director of AbleStable. Mike has worked in the creative sector for twenty five years in a broad range of roles and has been commissioned as an artist, music composer, photographer, print and web site designer, and author. AbleStable, Mike's public work, is not run as a commercial company as its aims are not to make money, but to stimulate and encourage creativity. His commercial work is as a Director of 2BrightSparks Pte Ltd [opens new window], a company that produces backup and synchronization software.

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