DUBAI 18 March 2018: The recent trend of SME debt saturating the market, should be a very significant lesson to existing entrepreneurs who have not afforded themselves and their businesses bank credit, as also for those contemplating a startup, who may have sufficient funding now, but are viewing this option.
My advice: stay away from credit when you are managing your own business, because there is much more to contend with when starting up your new venture, than being bogged down by creditor calls when you can’t meet your monthly EMI’s (Equated Monthly Installments).
Normally, these EMI’s are not low or manageable – they are always over the top, because once a bank offers you a large amount of funding, even if you don’t need it, you will agree to sign the documents for the credit approved.
Once you have this extra cash, you WILL use it, period!
Somehow you will find a way to spend that money, even if it means travelling to exotic destinations and wasting it, because nobody really thinks that perhaps an investment would be more lucrative or acquiring invaluable assets that can easily liquidated in times of turmoil, because you never know!
If you don’t take heed you will find yourself repaying your EMI’s with this extra funding, then later apply for more funding to continue meeting your liabilities, then the inevitable danger zone creeps in and you will simply ignore it, until it’s too late.
The key is being wise about the commercials of your startup, secure a professional mentor to formulate the most effective startup strategy for you, because they know better than you, they have hands-on practical experience, they have walked the walk, lost, rebuilt, gained and learn’t tough lessons. You cannot equate this form of experience with theory, it’s just incomparable.
Although the current market is very tough now with SME loans and other form of credit, some will slip through the cracks and secure what they want, which could be detrimental to them and their businesses. Even if you start your business with huge funding, you always need to be careful how you spend that money, by creating an awareness for yourself of the road ahead, which will encompass some of the following points:
- Budget 1 – Set a budget for your startup to operations
- Initial Staff Compliment – Minimize your staff compliment from inception, until your business is operational, then review the situation to ascertain if you need additional staff, if not, don’t go there, a startup means, lean, mean and everyone does a bit of everything and everyone supports each other and there is no clock-watching
- Company Branding – You can brand your company on a shoestring budget, no need for big splashes, it’s a waste of money when you are new, because most prospective clients prefer your company to be one year old, but where you can convince them of your expertise, experience, service deliverables, competitive costs and meeting their requirements, then be sincere, keep your word and deliver on your promise, because it will result in ongoing referrals and hence, continuity of business without much prospecting effort
- Company Image – You can furnish your office including decorations by making the extra effort to visit companies that are closing, review the popular sites where these goods are advertised, make the time to view them and ask around for cost effective mini removals who will collect and deliver them at a fraction of the price
- Company Portfolio – This is extremely important and the 1st creation of a new business, so ensure you create the most professional image online, as it will be your brand
- Team Targets – Once operational, set targets to be achieved by your staff, diligently monitoring them and set in place policy documentation that there are policies to conform to, as it creates discipline, productivity, performance and achievement within your team/s
- Next Budget Setting – Then set your next 3months budget and you can continue this in quarterly goals until you achieve 12months of excellent performance.
- Staff Mentorship – Mentor your staff regularly, guide and nurture them, ensure you facilitate your performance appraisals so you recognize the achievers, because this instils healthy competition within the team
- Mastermind Group – One of the main principles to success in the book ‘Think And Grow Rich’ by Napoleon Hill. Initially, unplug for half a day to brainstorm as a team to tap into your team member’s innate gifts, creativity and innovation, as you need this contribution, because the success of your company largely depends on getting the best out of them
- Performance Achievements – Therefore, recognizing your staff’s individual achievements regularly is imperative, because every human wants to experience gratitude and thanks when they met the goals set for them and achieved, it’s part of human nature and an asset for the team
- Game-Changing – When something doesn’t work, change it and change it again, until you find the right solution, because it also eliminates complacency for everyone, and creates an aura of excitement, uplifts confidence and creates great expectation for a successful outcomes.
You might find it exhausting from the 1st into the 2nd year, but finally it will be rewarding and when your business is the ‘thing you love doing every single day’, it won’t feel like work, you or your team won’t be piling up resistance, so your venture may just enjoy the success you envisaged.
Note: Theda Muller is a UAE-based visionary entrepreneur, CEO & Founder of various UAE companies, business advisor and legacy mentor, US trained and globally experienced. She is also an author of two books: Embrace Financial Freedom Volume One: 10 Proven Ways To Release Debt And Emotional Fears In Today’s Economy, and Volume Two: Releasing Fear And Bouncing Back From A Debt Crisis. She also conducts webinars and workshops on debt recovery.