Starting/running a business

Do we have any entrepreneurs on here? Searched for a business advice thread on here but came up with nothing; I always assume that LFGSS caters to all niches.

Looking for some layman advice on running a company, and starting one.

What kind of company?

I just want to learn about the process, the skills required, that sort of thing. Nothing specific. No imminent plan. Maybe there's a book/course/website that people recommend?

Get chummy with an accountant....

Perhaps a question for this oddly empty thread rather than AQA...?

OR

How Not To Run A Business

I run a video production company. About 80% of our work is through advertising/marketing agencies either as 3rd party producer or white label under their own banner. One of the agencies we work with is particularly shit at paying which is frankly fucking our cashflow.

The problem (my own fault) is that this particular agency was never charged a deposit for the first job we did for them and they haven't been charged since on subsequent projects. So we're spending sometimes significant dollar on stock footage, illustrators, animators, camera crew etc then doing the work, delivering the work, then left waiting for months on end to get paid. Our freelancers get paid by us on time in a misguided notion from me that "oh, they'll pay soon". Obviously they don't. I also feel quite strongly that just because we have cashflow issues, people doing the work for us shouldn't have to suffer it too.

Other agencies we work with pay 50% up front as standard. This agency doesn't but we've done business with them for over a year now and there is a fair bit of work from them every couple of months. We do get paid, just not in a way you could consider to be 'on time'. So we end up living hand to mouth: we cough up, we're short, our hairs grey, we get their paid, relief, they send another job at us and we're out of pocket again etc.

Annoyingly we completed one job for them last October - they paid half but their client requested some additional work we hadn't quoted for. They said they're send amendments but that direction never came through (stopped chasing after about 6 months) and unsurprisingly neither did second half of payment.

Obvious answer is obvious - be less of a walkover and stop doing business with them. But we're newish (2/3 years) and eager to build up a quality body of work so don't want to risk not having that work even if it doesn't make things easy for us in the short term (we started the business with no money whatsoever so it's not like we weren't expecting it to be a financial challenge).

Obvious answer is also obvious - change the terms and submit T&Cs with stricter goalposts about revisions/amendments to work, 50% up front etc. Possibly but again the fear is that it leads to them ditching us.

We produce very good work, very competitively priced (especially for them given their credit terms), so there's no obvious reason for them to ditch us unless they're a bigger bunch of cunts than I had them pegged for and they've been planning this all along but that seems an absurd way to do business (no more than our own I suppose) for so little return.

Obvious answer is less obvious: ?

Suggestions welcome.

Whoops, didn't notice it was an old thread and went and responded to the year old bit.

Anyway, the Lean Startup is still one of the bibles lately
https://www.amazon.co.uk/Lean-Startup-Innovation-Successful-Businesses/dp/0670921602

What is your relationship with them like? Do they know you are heavily reliant on their business?

If you have a fairly grown up relationship, I would be inclined to discuss the issue with them openly. Tell them that the lack of any deposit is hurting you and while it was manageable for a time, it cannot continue. You really want to retain their business etc and would be open to a negotiation on the amount of deposit (if that would work for you) or better payment terms from them on the remainder (whichever is least painful).

Remind them that they would have to revert to this practice anyway should they threaten to ditch you.

CYOA - I think all your ideas are great, as is the idea of a adult conversation, above, but be careful - I assume that they don't pay on time because (1) they are disorganised or (2) they have cash flow problems themselves. In my experience, agencies are much more likely to be (1) leading to (2). So you need to protect your business, especially since you imply they are an important (necessary?) client? Other ideas;
A - Add in a %age interest rate (eg base rate plus 10% pa) on accounts more than 1 week old, and force it on them by sending a statement when the invoice is due, and then every week thereafter.
B - Plan to build a cash pile in your business (hard, I know) to ensure you can weather any failure by this client
C - You might want to see if you can get invoice financing off your bank/financier - however, this is expensive (>12%) and can turn into a cash flow drug.
Best of luck

^ & ^^ thanks both, some good thoughts and appreciated.

On the face of it the relationship is fairly good, get on well with the COO and the account directors/managers I'm in contact with. COO/CEO take us out for lunch sporadically etc. All seems very convivial, but I'm just met with brick walls when it comes to paying. They claim "oh it's in our end of month run" but it's like "which month is that?!".

@Silver-fox - have thought about 'A' before but having worked for a larger production company in the past (with notoriously bad finances) I have memories of the CFO/accounts-payable literally laughing at such practices from their creditors (camera operators etc) so I figured it wasn't worth the trouble as no-one adhered to it and it just irked those who received it.

Have thought about C too but generally decided against it in the past for the reasons you've mentioned.

B seems the best bet for now in lieu of @stevo_com 's advice which I think may be on the cards.

So a bit of an update - the customer in question has finally agreed that an overdue account is their responsibility and not our burden to bear. They've written it off as bad debt and will pay us what's owed. They're also up to date on other projects so we're finally in the black as far as they're concerned.

We've also just landed a fairly major client worth about 4 times each month the entire debt of the other client. So far so good. Now there are other issues like the ad buying agency this new client works with trying to dictate creative (our remit) but as problems go I suppose those are good ones to have by comparison to last year.

So I don't think we're growing as fast as we could be.

Does anyone have any recommendations for "growth advisors" if that's a thing (and it probably is).

At the basic end we've been pitched a few times recently by 'lead generation' services charging between 1500-5000pcm. They're all obviously cagey about what I could possibly expect for my money giving how long is a piece of string answers. Does anyone have any good experiences here or is it all snake oil?

Would a monthly rolling service like that makes more sense than hiring a dedicated person within the company? I.e. only one person and their expertise vs a dedicated company and their cumulative expertise (albeit a fraction of the overall) for a similar yearly cost.

Get someone with experience, the lead sourcing companies are all shit, we've used many. Issue you are going to have is that lead generation stuff is hard- can be thankless and soul destroying. Is there a route forward in your company for a lead gen person? i.e. a sales role? In which case you might be better off hiring a sales person who has to do their own lead gen.

Don't be in too much of a rush to grow. It can quickly get very tricky. If things move on too fast you can soon struggle to provide the service you should as you end up fighting fire all the time. It's a horrible feeling knowing you're not doing things properly as you're too busy.

Steady growth is much better.

Stick to doing good work, customers will find you and when they do they'll be great customers as they'll really want to use you. Employing selling techniques, especially through third parties, may well get you more pitches but they'll be lower quality 'leads' and you'll have to work harder for them and often compromise what you do.

Not that I know anything about your industry, I just know how stressy it feels when your business gets popular quickly and you can't keep up.

Just feels that other companies who came up at the same time are pulling away from us (I know, I know, it's marathon not a sprint etc as evidenced by what I thought was our biggest competition going out of business last summer).

Two firms in particular have very similar stories to us though I know they both took sizeable bank loans and other financing in the past 12 months which is making the gap more obvious - they've both hired a bunch of people in biz dev roles. We've never borrowed money and I don't really want to start. But I do think we offer a worthy service compared (I know - comparison is a mugs game) to these other guys. We have capacity to handle more business from a creative / production point of view so yes there is definitely room for a sales-ish role. I suppose the ideal would be an 'accounts' role who can bring in new business and help manage existing clients - at the moment this is me. Is there a book for people to read who started a business by mistake that answers these questions?

https://www.youtube.com/watch?v=JD2P9Px3enI

Anyone want a job in Brighton?

Suspect we are in different areas, but can tell you from our experience as a marketing\business consultancy.

We started about six years ago, had decent growth for a few years, doubling revenue each year, we then employed quite a few people, some we desperately needed, others (like a new business guy) that in hindsight we really didn't need. We employed a lead gen company (who over 12 months delivered one meeting, which turned out to be a dead end). Our revenue then plateaued as our costs increased, until we were only scraping by. In the end we had to lay off some people, had an acrimonious split from one of the founders and generally had a shit year all round. We scaled back to a smaller team of people we really trust, and our now making more revenue and profit than ever before, and now growing faster than ever, but doing it in a much more controlled fashion, only taking on clients we actually want to work with, and making sure than the people we do employ keep the same level of consistent delivery.

TLDR: Growth too quickly is normally bad, as quality dips. Lead gen companies are rubbish unless you sell widgets.

What do you want to grow? Revenue, profit, share, headcount?

All of the above?

Dredging this up. How is everyone doing? About to take the leap myself but have got the pre race nerves

Thanks for dredging this thread up. I just came on here to post a current projects for the business I'd like to start but am feeling clueless about.

Where are you in the process? You have an idea, a location, a target market, a product design, a price-cost estimate?

Early stages.I have a product in mind that I'd like to sell (herbal teas and tinctures), I have a target market (Outdoor and sports entusiasts who are also interested in wellbeing).
I just started a thread.

• Work in the field for someone else first, acquiring knowledge about what's a good niche for your business
  
• Start a LTD company
  
• Don't take out a huge loan, use a small amount of your savings to start
  
• Bootstrap company profits for 1-2yrs to enable growth of company
  
• Avoid all recurring large costs (rent, staff) and your overheads will remain low
  
• You don't need a USP immediately but you do need one to grow properly
  

I read your other thread, sounds similar to my story, hopefully there’s stuff in it that could be useful.

I went straight to bricks and mortar. It’s tempting to want to get started the cheapest possible route but:

Mail order from home: How are you going to get known about and persuade people to use you vs all the much better resourced and experienced competitors?

Going mobile with a trailer or something: Mostly impulsive one hit wonder sales. No repeat custom. Shitty working conditions

Cheapest possible premises in poor location or trading estate: Nobody’s coming, same problems as going direct to online.

Sounds to me like you’re doing this because you like it and want to make a living doing something you enjoy, which is the route to long term success as opposed to knowing about business primarily then choosing a product that fits your goals. In which case it’s you that’s the product so you need to make yourself as visible as possible.

Opening a proper shop in a good footfall area means you will be able to impress on your customers your enthusiasm and expertise which generates word of mouth, repeat custom, loyalty and growth. It is also very rewarding and motivating for you. Aim to become a local institution. It takes investment to begin but start small, reinvest your profits, figure out a way to subsidise losses for a year. I managed it at age 37 with £20k life savings from me and my wife. No rich daddy money. Losses were filled by doing freelance coffee work while a staff member operated the shop 3 days a week.

Make sure you continuously figure out how to keep your enthusiasm and energy in the culture of the business without you having to constantly be there or you’ll burn out in 2 years. Just rest pussycat. Hiring the right people, paying them well and being nice to them is the key to putting your trotters up in Nice in 5 years time.

Thank you everyone for taking the time to reply to me. I still have a lot to think through with this idea and I really appreciate having your opinions to prompt me.

This is an online business in my head mainly because of my lifestyle (I've spent a year cycle touring followed by 4 months living on a boat and next month I head off for another few months. I'm not a settled person at the moment). This needs to be something that I can work on whilst traveling.