Nothing is more rewarding than starting and leading your own business. There are so many firsts, so many milestones - your first customer, your first employee, your biggest deal, your best year yet - and you succeed or fail on your own terms and based on your own ideas and decisions. Nothing compares.
But it’s hard. New businesses are incredibly fragile: figures vary but suggest around 20% of businesses fail within their first year and over half fail within three years.
Having founded the IT services business Harlex Consulting in 2010 and led it through to acquisition in 2016 before leaving in early 2021 after 11 years, I wanted to share some of my own thoughts about what to expect and how to approach starting your own business. Some of these ideas and lessons learned apply equally to people leading a team or a department in a larger company, or even to people thinking more generally about managing their own workload and career.
However, my experience is, naturally, limited and specific to my own background and industry and to the size of the company that I ran, and there are countless alternative ways I could have approached this. More than anything, I have tried to structure this article around what I wish I had known back in 2010 or even earlier in my working life, the advice I would have benefited from at the time. I hope it helps.
(By the way, present those numbers above the other way round and it doesn’t look quite so daunting. 80% of businesses survive their first year. Go for it.)
Leadership is about choices and one of the big decisions to make if you are running a company is what to focus on. What are you in business to achieve? What problems do you solve for your customers? What is special about your company and what you offer?
All of this seems obvious but, by saying what you are, you are by definition also saying what you are not and this is where it gets more difficult. The temptation will always be to spread the net wide because you don’t want to limit your opportunities. Right? Wrong. Being able to demonstrate focus on a core market or excellence in a describable discipline, particularly as a new business, makes it easier for a customer to understand you, gives them a reason to buy from you instead of from a more established competitor, helps you to build a brand and a reputation, and makes it easier for you to hire the best talent in that market.
Consumer behaviour (as opposed to what consumers say) indicates that buyers often choose a particular company or brand, not because they are confident it is the best option but more accurately because they are confident it is not a bad option. They make the safe choice. “Nobody ever got fired for buying IBM”, or Accenture, or Deloitte, etc. As a new company, this is a significant barrier to market entry. Why should anyone take a risk on you? By showing clear focus and specialism, you are demonstrating that you are putting your reputation on the line because you have as much to lose from a poor outcome as your customer does. You are committed.
You have to be willing to make decisions. To rule out as well as to rule in. Because if everything is important, it can start to look like nothing is important.
By far the most important attribute or characteristic in the people you are looking to recruit into a start-up company is their attitude. Time, experience and training build knowledge and expertise but it is far harder to change someone’s attitude to work and to life.
You need people who care, who naturally take ownership and responsibility for an outcome, who step in when others don’t, who are optimistic in the face of adversity, who are persistent and relentless and reliable. In a new company, there are no departments or structures and perhaps little in the way of clearly-defined processes, so you need people who will roll up their sleeves and make things happen.
Your top team should be better at their jobs than you would be. This gives you the confidence to give them the freedom to make decisions. In fact, more than that, to insist that they make decisions. It is counter-productive to hire a talented individual and then tell them what to do. I have always felt that it is my responsibility to set clear objectives and articulate an overarching strategy and then give team members the job of designing and leading its implementation. Give your colleagues the freedom to present options, recommendations and plans that you can review with them. Then let them get on with it and support them when they need it.
It also means that you need to clear about your own strengths and weaknesses. If you are a longer-term thinker and naturally drawn towards a broad sweep of ideas, you will need someone in your top team who is much more practical and detail-focused who can take charge of implementation. If by personality you are more detail-oriented and most comfortable working in the background or in small teams, that is not an impediment to success as long as you recognise the gap and have someone in your team who relishes the opportunity to get in front of customers.
Finally, think carefully about the targets you set. The focus I talked about above should lead to simple performance indicators. For example, does it really make sense to set ambitious sales and growth targets at the same time as higher profitability goals? Make a decision as to which is most important. Are you looking to build a nicely profitable lifestyle company or invest to grow? I have certainly been guilty in the past of pursuing profitability at the expense of longer-term investments in training and marketing.
The biggest advantage you have as a small company is the ability to move quickly. You can work this advantage through a simple organisational structure, a clear direction and a small talented team who are clear what their roles are in achieving the objectives you set.
I have talked about the importance of giving colleagues the responsibility to make decisions. This requires a working environment in which people feel free to take a risk and make mistakes because nothing shackles innovation and progress more than the fear of being blamed for making a mistake. Taking too long to make the right decision is often worse than making the wrong decision. After all, you can fix a mistake.
In a team of committed, talented individuals, there will be disagreements. That can be a positive because it is often difficult to really throw rocks at an idea if there is a consensus of opinion. You want a culture in which people feel free to disagree and in which the best idea wins even if (and in fact especially if) that idea is not yours. And once a decision has been made, everyone needs to support it. This is possible as long as there is open and transparent discussion before a decision is made. In an excellent description of their leadership principles, Amazon calls this “disagree and commit”.
Going back to the subject of targets and incentives, an overly complex or contradictory set of KPIs can also have a detrimental effect on company culture. I am aware of at least one company where they incentivised the HR team to reduce salary offers to new joiners by 15%. I think we can all imagine how a decision like this could be made in a meeting focused around hitting a profitability target but this a perfect example of an objective which, when defined very narrowly, makes good business sense but in reality will have a destructive impact on how people feel about their employer. A successful business is a long-term project and you will eventually reap the rewards or face the consequences of how your treat your employees and customers.
As I said at the start, nothing is more rewarding than starting and leading your own business, so enjoy it. Once a year we used to give the entire team a day off and take them to the Friday at Royal Ascot. If you want to buy an arcade machine or a wine fridge for your office, get one. If someone has been working very long hours and would benefit from a couple of extra days off, why not? If you employ people with the right attitude and nurture a culture of excellence and innovation where group behaviour drives individual performance, there is no conflict between a happy and enjoyable workplace and a committed, professional workforce.
Running a company is demanding. In the early days, I would regularly find myself spending the normal working day with a customer before continuing long into the evening on planning, marketing, proposals, recruitment and finances, with weekends or holidays spent working or thinking about work. Over any period of time, this becomes draining and distracting. So how can you guard against it?
First, time management. You need to stay above the fray. It is a problem if your diary is filled from morning till evening with back to back meetings because it leaves you with no time to think and to plan and to keep a focus on longer term direction. If you remain too involved in project delivery (in a services business) or software development (in a technology business), you will find it hard to be effective in your leadership role. This is of course why it is so important to recruit the right people and build a structure below you as soon as you can in the life of your business.
Second, and this is easy to say but harder to achieve: mindset. You need to retain perspective. There will be problems: project delays, sales opportunities you lose when you expect to win, unsettled employees, overdue customer payments; the list of issues that can drag you down is endless. You have to expect problems and see them within the wider context of the success of your business. Again, having a trusted team is essential: it is easier to assess a problem objectively if there is a bit of distance between you and the situation.
It can also be helpful to build outside relationships. People you can go to occasionally for objective feedback and advice. Someone to act as a mentor. This could be an ex-colleague or a former boss; it could be someone you know who also runs or has run their own company; it could be a more organised advisory network like the Consultancy Growth Network; it could even be a competitor or an executive within a friendly customer. Some companies choose to take on a non-executive chairman to provide that support in a more formal way.
However you decide to do it, it is important to have someone you can speak to outside of your own day to day role.
There will however be plenty of times where, as the founder or leader of a business, you need to get directly involved in dealing with an important challenge or difficult issue.
In the People section above, I talked about attitude and the importance of recruiting a team who are committed and relentless in the face of a challenge. This is obviously all the more true as a requirement in the leader of a business. However, more than that, you need to be willing to be visible in the face of a challenge.
There is a bit of a myth that leadership flows naturally from force of personality, that heads of companies or departments (or of course governments and countries) are natural leaders, but I disagree completely with that. It has certainly never been true for me. Visibility in the face of a challenge, or leading from the front, is a habit that can be learned through repetition. Kathleen Reardon in the Harvard Business Review called this "courage as a skill". Some of the world's most famous leaders have talked in similar terms: Nelson Mandela described courage as triumph over fear. Warren Buffett is famously introverted, saying that he "had the intellect for business, but not the persona" and had to learn to communicate better in groups.
Michael Eberhardt, the CEO of SNP, told me that Meg Whitman, the former CEO of HPE, had the motto "run to the fire" as her guiding principle in business. This is an excellent mantra for the leader of any company and great advice for life more generally (thinking about going to the gym is always worse than actually going to the gym). If a customer is unhappy, go to see them; if an employee is upset, have a coffee with them. Prioritise a telephone call over an email and a face to face meeting over a telephone call, and don't do it tomorrow if you can do it today. Harlex co-founder Mitch Collinson had his own motto on the same theme: JFDI. Just (F) Do It.
As the founder or leader of a company, you are in a special position in that you have ex cathedra permission to pick up the phone to any customer, employee or business partner. So take advantage of that opportunity. In running a company, as in life, the moments you regret are generally the decisions you didn't make, the chances you didn't take. Make every effort to address both opportunities and problems head on, and enjoy the ride.
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