Five Fundamental Principles to help get your first business off the ground

Five Fundamental Principles to help get your first business off the ground

So, you’ve decided to do it, to take the leap and finally have a crack at starting your own company. You’ve dreamt of the benefits of being your own boss and living life on your own terms and it's finally time to make your dreams a reality. Whether it's financial freedom you are seeking or simply working on something you feel passionate about every day, you, like most people will be aware that starting your own business is not the easiest thing in the world. While small businesses actually account for 97% of all businesses in Australia, over 60% of them end up shutting their doors before the end of their third year in trading. It's a pretty demoralising figure and it goes to show how competitive the world is out there, but do not let this discourage you. And remember, to quote John Maxwell, "The fruit of everything worth having in life is challenge".

When I started my business, Maid to Clean, back in 2014, I actually had pretty low expectations and saw it as a bit of a side-project to my full-time job at the time. The low-barrier to entry meant that the worst-case scenario was I dropped a few thousand dollars but, in the process, learnt about developing a website, online marketing and the general steps required to start a company. The best-case scenario was probably similar to the one that unfolded – the business is now turning over in excess of $4 million annually and consists of a fantastic team of 7 office-staff in Melbourne, 2 overseas virtual assistants and just over 140 cleaners across Melbourne.

The first few years in business are absolutely critical, not only as they are often the hardest, but because they are when you lay the foundations for the future of the business. Looking back on our first few years in operation, here are five fundamental principles that will help you get your first business off the ground.

Don't try to re-invent the wheel

Starting a business is hard for a very large number of reasons – you need to start from scratch and build an entity that provides an attractive value proposition to customers to encourage them to part with their hard-earned cash. To achieve this, there are so many unknown requirements and levels of work that I can guarantee almost every single person who is trying to start their first business will not even know what they don't know and will only discover this on the long and winding road to success. If you are trying to start your first business with a completely unique offering to the public then this journey is going to be even harder because you don't even know one of the most fundamentally important parts about any business - is there even a profitable market for your idea?

With this in mind I've always been a fan of the concept of studying an existing market, finding a point of difference or an area you can add value and launching into this space. People seem to think that to be successful in business you need to have a magnificent new idea, or you need to find something unique that nobody else is doing. The reality is, an incredibly small number of people do this and sure, sometimes these businesses pay off massively (think Facebook, Snapchat or other revolutionary start-ups), buts it's a huge gamble especially for your first attempt. The reason I recommend not to re-invent the wheel comes down to the simple fact that if you do try to do something completely unique, the rewards are high, but so is the risk. If you succeed, sure, you will most likely be more successful than you could dream, but realistically the chances of this happening are incredibly low and if you do fail, you do not have much to fall back on. On the other hand if you tackle an industry that has a proven market, not only are you going to increase your chances of creating a successful business, you will also learn what it takes to start and run a business, in turn giving yourself both the knowledge and the financial freedom to pursue something slightly more unique and glamorous down the line.

Let's look at the cleaning market for example. There is nothing flashy about cleaning and there's hundreds of existing cleaning companies. It's a given that there is a large amount of competition, but this can be viewed in two ways. Yes – there are lots of companies competing for the next new customer and that extra slice of revenue, but what this also tells you is that there is a very large market. For you to become successful, you only need to acquire a tiny percentage of this existing market. If you combine this with the fact that a huge number of businesses in mature and existing markets are often operating in old-fashioned and more traditional ways, there is a huge opportunity to steal market share. When we started in 2014 for example, no cleaning company in Melbourne offered a high-tech online booking platform. It's hard to imagine this considering it was only five years ago, but that was enough of a niche (at that time) for us to start differentiating ourselves from the competition. The cleaning industry in Australia is in excess of $4 billion annually so even if you were to attempt to acquire 0.025% of that, you would have yourself a million-dollar company. Now just think – if you started up a business, fresh with passion and a drive for hard work, don't you think you could operate better than 10%, 20% or even 50%+ of the existing market? If so, over time you will be able to acquire market-share and build your revenues. I never dreamed of owning a cleaning business, but what I did dream of is becoming financially independent and even though I would never have predicted it, having a business like this has allowed me to take great steps towards this goal.

Transparency and Trust

It goes without saying that for a business to be successful, it needs to build the trust of its prospective customers and instill confidence that it will provide the level of value that the customer demands. A great way to get started on the right foot with your target market is to approach them with absolute transparency. While in the past, when information was in general far harder to come by, businesses could benefit by building a relationship with a prospective customer and essentially capitalise on the theory of sunk cost – once a customer has spent a period of time engaging with a business (e.g. receiving a quote or having an extensive conversation with a salesperson about their products) they become more and more likely to engage with that business due to the amount of time invested and the natural human desire not to waste time or to have spent that time unproductively. In the digital world that we live in nowadays, if a customer wants to find information about a product or service, it wont take much Googling to find a pretty exact answer, regardless of if it's sensitive information about pricing and/or costing that many businesses like to keep private. So rather than operate on these more traditional business practices, approach your target market with ultimate transparency. Provide them with as much information as possible, as easily as possible and hide nothing. Upcoming generations are becoming more and more accustomed to having everything instantly at their fingertips, so don't fight this but embrace it.

With Maid to Clean, we noticed the majority of other cleaning companies were still keeping their pricing relatively private and the selling line for most companies was – call now for an obligation free quote. We countered this by simply providing upfront, flat rate pricing in as clear and accessible way to our customers as possible. If they wanted to engage with us they could, or if they found our pricing or services unsuitable, they could exit our site as quickly as they had entered.

Not only does being transparent create a more fluent, user-friendly experience, it shows your customers that you have nothing to hide. You are being as open and honest with them as possible, which will naturally build the ever so important trust that you need to encourage a customer to begin a transaction.

Compete on value, not on price

While everybody likes a good underdog story like David and Goliath, unfortunately life isn't always that simple. One of the biggest mistakes small businesses tend to make is that they try to compete against the big players in their market and on their terms. But let's give that some thought - If you wanted to start a burger-joint there's one thing that's for sure – you won't be able to make your systems and consequently your burgers as efficiently and cost-effectively as McDonalds, so why even consider trying? Larger companies are always going to have larger volumes, economies of scale, and therefore be able to operate on lower margins. One of the biggest drivers for small-business failure is linked to issues around their pricing. They try to match, or even beat the larger corporations and as the business develops, they realise there is not enough profit for the ever increasing costs of doing business. Remember those unknowns we spoke about earlier – well one of them is just quite how many costs and expenses you rack up during the ongoing running of a business!

So if you can't compete on price, how do you expect to win over a customer you may ask? Well, for starters, you don't compete with the larger corporations at all, you simply target a different segment of the market. With the burger example, rather than trying to offer the cheapest equivalent of a Big Mac, offer a more gourmet option. Offer something that is not necessarily the cheapest option on the market, but it has its own unique taste. Provide a higher level of value to the customer through exceptional service and wow your customers in ways that will have them talking to their friends about you. Compete for a small section of the market but one that comes with higher margins. What would you rather have – 1000 customers with $5 profit per customer, or 100 customers with $50 profit? I can assure you; the lower number of customers will come with a lot less grief. On top of that, with less customers to manage, your attention and care per customer can be far higher, compounding your mission to provide the highest level of value for money.

When starting, it was easy to look at the domestic cleaning market as crowded; there were hundreds of companies all competing for their slither of the market. But what we identified was that the majority of these companies were competing with each other on price. They all had a series of similar deals and offers to try and win over customers with the cheapest price. So rather than join the fray, we chose to position ourselves at the very top of the market. We marketed ourselves as a premium company, one that only sent professional, experienced cleaners with several years experience. We did not shy away from our pricing, we were proud to be the more expensive option than our competitors. In fact, you could argue that we were no longer competing with a large portion of the other cleaning companies in Melbourne. They were targeting people who wanted to pay as little as possible to have their homes cleaned. We were targeting people who wanted to pay those extra few dollars per hour to have a premium level of cleaning. We were effectively selling "free time" for our customers – the ability to do something else that they wanted to do rather than cleaning. In this busy world that we live in it is clear that we all value our free time very highly. By doing this we were able to actually corner a section of the market and minimise our direct competition.

Always leave on a positive note…

This may not sound particularly important at first. However, ensuring everyone who comes into contact with your business is treated with respect, and consequently their final interaction with the business is a positive one, is incredibly important. It is widely understood that providing a high level of customer service is critical to the success of almost any business. Part of the process of providing excellent customer service comes back to ensuring customers are happy with the product your company offers. Realistically, it is not possible to ensure this happens on every transaction. However, what is within your power is the way customers are dealt with preceding this and how the relationship is left after the transaction has been completed. At Maid to Clean a huge part of our customer ethos is to always ensure customers are left feeling positive about the business, even if things did not go as smoothly as expected and the customer chooses to no longer use our service. By making the smallest of extra gestures and showing both care and respect to every customer you engage with, you will help create a very strong positive momentum for your business. So long as a customer does not walk away feeling they did not receive value or that they were just a means to an end for the business, it is then very rare they will spread negative feedback about your business. As discussed earlier, the impact of negative online reviews in our market is great, so this principle goes a long way in keeping on the right side of your customers and their comments online. Part of our success has been linked to our customer service and as a result our online reputation far exceeding that of other cleaning companies in Melbourne.

Aside from your customers, it is also extremely important that your team are cared for and respected too.  It is all too easy to forget that once you start hiring staff, they become the ambassadors for your business and keeping them happy and motivated is absolutely paramount in creating ongoing success. It's also equally important to understand that if you want to be the best business, you need the best staff, and if you want the best staff, you need to treat them better than other companies might treat them. At Maid to Clean it was decided early on that we would look to attract the best cleaners in Melbourne through paying more competitively than other companies and creating more efficient and tailored systems which would in turn making cleaners come to us, and stay with us.

Take Action – Get Started

Finally, what is all too common in our society, especially in the entrepreneurial space, is a culture of over-thinking and a lack of action. Where this comes from I am not entirely sure; it could be from an inherent desire not to fail, risk aversion, with extra thinking and planning creating the perfect excuse for not getting started. It could come from a desire to get things perfect first time round as surely the more time spent planning a particular project the more likely to get it right. It could be from our very nature as human beings – we are designed not to do anything that could risk hurting ourselves or pushing ourselves out of our comfort zones. There are an infinite number of reasons why we might decide to keep thinking and planning our next project, and this is why the world is full of "wantrepeneurs" and not happy, successful business owners. Too many people are waiting for the perfect moment, the perfect opportunity or the perfect situation before they get started, when really, there never is a perfect moment or a perfect time other than right now. As discussed earlier in this article, you simply will not know what you don't know until you get started. You could spend a year planning the launch of a business and then after actually getting going, realise after 2 weeks that half the work was pointless due to some unforeseen circumstances. In reality, no matter how much time is spent making the perfect business model or drawing up the perfect business plan, things will never go as expected and what you create will never be perfect to start.

What is incredibly powerful, however, is the momentum and the progress you can make by simply taking action and getting started. I launched Maid to Clean in less than 30 days from conceiving the idea. A one page-business plan, a good-looking website, some ads online for cleaners followed by a serious amount of hard-work meant I had a starting point and not long after, my first customer. Over the course of the next 5 years I have been constantly building and developing the business and taking quick and decisive steps at the start meant that I had something to build on and grow. Could I have done things differently and made less mistakes? Absolutely. But at the end of the day, it doesn't matter. Making mistakes, learning from those experiences, and generating success go hand in hand and it is only when you truly understand the power of action and the necessity of failing and learning from these failures, will you be successful.


About the Author

Edward ClaytonEdward Clayton is a former engineer turned entrepreneur who moved from the UK to Australia in 2013. Driven by a passion to work for himself, Edward started Maid to Clean in 2014 and is attempting to build the most highly respected cleaning company in Melbourne.

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