I love being in the room when founders start talking about their new business idea. There is so much excitement when you’ve decided to start your own business, and the energy and joy are contagious. Even more so when it’s a mission-driven, for-purpose, sustainable venture.
You believe in the mission, your idea is enhanced by your lived experience, and you know – in your heart – you can bring value and find solutions to real-world problems.
As a business adviser, I’ve worked with over 400 founders, predominantly in the creative industries, but across every part of the economy, to find ways to strengthen those ideas, unpack what sustainable means, and design revenue engines that generate results.
As a solo venture founder or small business person, particularly if you are new to entrepreneurship, there are myriad traps and decisions that can derail your business and impinge on your ability to tackle the mission you have set for yourself. So I’d like to provide you with three foundational practices for you to incorporate into your new idea. This also has relevance for people who have an established business as a way of kind of health check for your enterprise.
3 strategies before you start
Tip 1: Clarify your reason
Before you begin looking outside – deciding who can pay for services, who will buy your product, what your logo should look like – I want you to look inside and ask yourself a really important question.
Why am I doing this?
There is no wrong answer here. If you are doing this for money, be honest! I need to pay my bills, I can’t get a regular job in my town, I hate my boss but can’t afford to leave work so this is my get-out-of-jail strategy.
But then; go deeper.
Use the 5 whys exercise to really drill into the reason you are starting your own business or taking on the social enterprise or sustainable business challenge.
Take care: Your root cause often needs to be something more than just the cash. So if your first “why” is “I hate my boss”, and your last “why” is because your boss is a jerk, I recommend you do the exercise again and look for the reasons why you’re struggling with the 9-5 grind, or working with difficult people. In your own business, you will work way more than 9 to 5, and you will have clients and customers that will make your old boss look like a kitten!
I started my own business because I hated my boss, and it turns out the root cause was nothing to do with my employer, but that my skills and training were wasted in a job that had an unappealing future.
Tip 2: Understand what sustainability means for you
Sustainable for you could mean something that doesn’t cost you money. And there are artists I’ve worked with where a breakeven business model is all they really need. There’s also environmental sustainability, and taking on wicked, worldwide global problems such as climate change or poverty. Sometimes, founders try to be both financially sustainable and impact sustainable, and that’s where the fun and biggest challenges, for Social Enterprise businesses take hold.
You’ve got to sit down with a financial planner or an accountant and look through what kind of accounting compliance applies to your idea. So for instance, a sole trader in Australia has to think carefully about their income streams when it comes to their annual tax return. The Australian Tax Office has record keeping and income compliance areas you need to follow.
If you have a legal business partnership, you’ll have to work out your own finances and get support to really understand how you and your business partner will deal with the money, the operational challenges and any disagreements. All of those partnership aspects will have an influence on the type of system or transparency you’ll bring to the money side of your business and have an impact on financial sustainability.
The other really important part I’d like to highlight about money is that it’s never going to lie to you. So if you have a system in place that gives you the financial data you need, and you understand how to do really boring things like reading your profit and loss statement, growing a balance sheet, or projecting your forecast expenses and income, then you will have the right metrics to help you tell the truth about the journey that you’re on.
Sustainability can also mean environmental or social impact.
Take care: It’s easy for mission-driven or for-purpose sustainable businesses to get lost in the mission!
We get lost in trying to measure the impact or track our progress towards the goal, or the challenge of the work that we’re trying to do becomes so overwhelming we forget why we are doing this in the first place. We lose objectivity.
Your cash will tell you the truth every single time. Either you will have enough to do the job, create the impact and live sustainably or you will not. You need money – explicitly, profit – in order to tackle the wicked problems and solve the challenge you have set for yourself. So make sure, when you build your business and design the impact you want to make, it is matched to your financial model!
Tip 3: You need an exit plan
Even if this is the type of business that you never, ever want to get rid of, that will be part of your DNA, that you will take to the grave; that’s still an exit.
And so you need to think critically, you need to think sustainably, around what your succession might look like. How long do you want to keep this business? How long do you want to be serving the needs of your clients? How long do you want to be just a sole trader? Just a sole practitioner in your venture? What might it look like if you bring staff on? What might it look like if you need a new legal structure, like a company or not-for-profit legal entity? What happens when you die?
What if you need to grow and service a completely new market area and you need investment? How much work do you want to do in your business?
Take care: Often business advisors talk about working “on” the business, instead of working “in” the business. I consider this to be a false binary. You need to do both and sometimes you have to do both at the same time. The way to manage the overwhelm and get enough done is to manage your time. It sucks, and you have to be accountable for your schedule, but it saves you time, money and heartache in the long run.
So here’s a bonus tip for you. If you’re walking into this space, feeling nervous, feeling unsure, there’s one principle I want you to take forward. As you review your A to Z of starting up your sustainable business, I need you to be a good boss to yourself. Give yourself time off, ensure you have the capacity and resources to do your job properly, plan for the future, and then celebrate your progress. I want you to remember all the ways that you were treated badly in past employment situations and take that into the future as a recipe for what not to do. By being a good boss to yourself, you’re building a very strong foundation on which to build success.
Good luck on your journey.
More about Irene Lemon
Irene Lemon is a creative entrepreneur and start-up founder. She has 20 years of experience coaching, mentoring and advising Founders and has several board positions on Social Enterprise companies in Australia. She specialises in Creative Economy and creative industries business growth. Irene is currently the Business Development Manager for a Group of Eight Australian universities, supporting Humanities, Arts and Social Sciences researchers to advance their research and partner with Industry for real-world innovation and collaboration.