The Best (and Hardest) Way to Start a Company

This article is quoted from http://www.inc.com for Jeff Haden.

How to live the entrepreneurial dream while minimizing your risks and maximizing your success. (Warning: This ain't easy.)

Starting a business is easy. You can do it in a day.
Starting a business that lasts is a lot harder, even if you put all your time and money into it. And the all-in approach is a lot riskier, since the more time and money you invest the more you put at risk.
So if you haven't yet taken the entrepreneurial plunge, how can you live your entrepreneurial dream while minimizing your risks and maximizing your chances of success?
Simple: Start your business—and keep your full-time job.
Except in rare cases, keeping a full-time job is the best approach for first-time business owners.
It's also the hardest approach, since sacrifice, discipline, and a massive amount of hard work will be necessary. But that's okay; if you aren't willing to work hard and sacrifice, your new business will fail whether you keep your full-time job or not.
Here are six steps to minimizing risk while building a solid foundation for small business success:

1. Live like a college student.

Almost every business venture requires spending money before making money. (And if money isn't required, time certainly is... and time is money.) Some small businesses take years to turn a profit.
A huge percentage of start-ups fail because they run out of money, and even if you do not, chronic money problems can lead to making poor long-term decisions.
Never assume personal savings will see you through. Eliminate every bit of personal spending that isn't necessary.
Before you start your business, cut all your personal expenses to the bone.

2. Work incredibly hard at your current job.

When small business capital and cash flow are tight, losing your income is the last thing you can afford. Be a superstar. Work as hard and efficiently as possible. Get more done than anyone else you so you can leave on time without regret—and without raising concerns about your performance and dedication.
Work incredibly hard at your job so your evening and weekend time is yours, not your employer's.
You'll need it.

3. Set a daunting schedule.

When your "normal" work day ends, your start-up workday is just beginning.
Decide how many hours you think you can spend on your start-up every evening and add 25 to 50%.
Then commit to that schedule. Write it down, and if your schedule says you will work from 5.30 p.m. to 9 p.m. every evening, and from 8 a.m. to 3 p.m. on weekends, work those hours.
See the schedule you create for your start-up the same way you see your schedule for your current job—as non-negotiable.
Then work that schedule.

4. Ignore the temptation to whine about your daunting schedule.

Say you start a consulting business. Once you land a few clients you'll be working every evening and most weekends.
That's not a bad thing; it's a good thing. Landing clients means you're generating revenue.
You may have to get up early every day to take care of emails and voicemails before you head off to work. In large part your clients will choose your work hours for you.
Don't whine. Don't complain. Keep reminding yourself that having demanding clients is great because it means you actually have clients.
Resist the temptation to complain or feel sorry for yourself. Happily pay the price—it's a price most other people won't pay.

5. Be Ebenezer Scrooge.

At first you'll be tempted to spend your profits. That's natural.
Don't. Reinvest every dollar you earn. Use profits to set up the business infrastructure you need (not the one you want, but the one you need.) Buy supplies. Buy equipment you've been renting. Advertise. Or save cash to tide you through inevitable revenue downswings.
Don't think of profits as income; think of profits as a tool to further establish your business.

6. Keep your full-time job longer than you want.

Deciding when to quit your job and go into business full-time is the hardest decision you will make.
It's impossible to make an objective decision when you're tired, stressed, sick of your full-time job, sick of your boss... or when you just want your life back.
But don't quit too soon. When in doubt, hold out. Always focus on numbers, not emotions.
Your financials—personal and business—will tell you when it's finally time to quit your job.

Online business trend spells a reduction in listing: Deloitte

This article is quoted from Paul Smith journal, a technology editor based in Sydney's newsroom.
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Paul Smith

Rapid evolution of technology and frequent disruption wrought by the internet on established businesses will dramatically reduce the number of companies looking to list on public markets in the coming years and see a rush of listed players looking to go private.

This is the prediction of Deloitte Australia’s top technology, media and telecommunications expert.

Damien Tampling says the emergence of new and niche players in many market sectors has left incumbent players lead-footed. But nervous investors and the “short-termism” engendered by frequent reporting requirements means many companies are too fearful to make the bold moves needed to change course.

News last week that Google is partnering with MasterCard to launch its own credit card is a precursor to an era of joint ventures between incumbent and insurgent players, Tampling says. In a period of mutually beneficial co-operation, established players in various sectors will benefit from partnerships with more agile and innovative players.

Meanwhile, technology-focused companies will seek to piggyback on the reputations of established names to make an impact in new markets.

“In the next decade we are going to see an unprecedented level of joint ventures and alliances, and an increased preference for companies being privately owned,” Tampling says.

“Listing a company worked in the context when you could see a settled and positive outlook for the following three to five years, or even longer. Unfortunately the business environment and the speed that things are evolving doesn’t afford you that luxury.”

Companies need to react, and change direction quickly, if a new competitor emerges, he says, but admits that successfully managing a business in this manner would make any chief executive unpopular with investors.

Tampling says established retailers and media players are the most obvious examples of industry verticals being challenged by global technology players. But potentially smart moves to counteract the threat are likely to be punished by the markets.

“Investors may see bringing in a joint- venture partner as an admission that the business does not possess the necessary skills, and start selling off. Whereas it may be the best thing it could do for the longer term prospects of the company,” Tampling says.

“There is a degree of short-termism that exists for listed companies, but companies need to be able to think further ahead when making significant changes. They are being required to move quickly in so many different directions that I think being listed will just make it unnecessarily hard.”

Risk advisory partner at business advisory firm BDO, Stephen Coates, says he is yet to see a rush for the exit among listed companies.

But with more established businesses facing a make-or-break period, they need to reassess how they operate, Coates says.

He says there is an “alarming” under-representation of technology and internet experience on the boards of listed Australian companies. “[So] it is hard for established retailers to turn the juggernaut around when there is a speedboat running past them,” Coates says.

“A first step is for larger businesses to recognise that their market is broader than just the people that come and visit their stores, and to use their existing reputations to branch out online.”

Coates says businesses must boldly attack new product lines online, rather than protecting a perceived established reputation. For example, he says that while luxury retailers will struggle to compete for price online, that doesn’t mean they should ignore the internet.

“You look at Apple . . . they are a computer company that is essentially selling more cameras than anyone else in the world. I suspect if they sold scooters or wheelbarrows, people would go and buy Apple scooters and wheelbarrows, because they find a niche market and then retail to the customers in it.”

The Australian Financial Review