I’m on a boogie board. Crashing into my 11-year-old as he spins around on the wave next me. He banks left then slams into me again. This time my sunglasses fall off and I have to slip into the surf to find them. With my eyes open I reach down and grab them as a second wave knocks me over. I’m bounced along for a while and I feel myself smiling. Middle-aged, balding, overweight (like most Australian males), but surprisingly happy. And I reflect on why.

‘Cause it’s a beautiful day and I’m here having fun. And it’s a Friday, just after lunch. Yes, the kids were taken out of school early. Yes, I’m a bad dad. Yes, I should be at work…

And I would be, if I was employed by a big company. This is the fundamental reason you set up a business for yourself. So you can decide how and where to spend your time. It’s not the money, although it can come. It’s not just the f**k you to your current employers. It’s the freedom to steer your own ship. Or not, as the case may be, for a few hours…

Are you a chicken? A battery hen? Are you sitting there, coffee slowly going cold. Laptop slowly wearing your eyes out. Seat, slowly making your bum sore. Life slowly dribbling away. Bored.

Is it time to free range? Time to do something that may change the world or, at least, change yours? Is it time to put yours on the block? To start your own operation? I can feel a tingle coming on all over my feathers. I’d better close my office door.

Every marketing person I’ve ever met did their course or started their career with this goal firmly in their mind. (Not firmly in their hand.) One day they would be their own boss, be the chief engine and steering wheel of the great ship ‘Existence’. Most marketers want to run their own show and so, I’m betting, do you too.

But what to choose?

Assuming for a moment you are not a single-minded git with a burning desire to set up something truly off-the-wall like panty-sniffing vending machines on railway stations (very popular in Japan). Assuming you are interested in a few different options, how do you choose which one to start?

Many people start with personal preferences. Having been given a book on managing your life called something like Six Steps to Success and Sexiness for Christmas – there’s always a chapter on ‘do what you enjoy doing’.

Do what you love.

So say you like fishing. You say to yourself, “I could just go buy a boat and map out where to get whiting or snapper, then hire myself out as a fishing charter boat and off I’d go. Only need a couple of extra rods and an ad in the Yellow Pages…”

This is true. And a commendable venture, given you can take me out and get me near them. But the ‘cause I love it’ approach has several major drawbacks for the true marketer. Firstly, there’s often stuff-all marketing in it and you’ll have that intellectual side of your career totally frustrated. And there’s often stuff-all money in it, so your spouse will murder you in about three months. But the worst part of it, which is why almost everybody who sets up a business around their hobby hates it eventually, is that if you do what you love too often, it destroys it. Try listening to your favourite song 200 times in a row.

Do what you like.

You need to find something that you can still get kind of excited about, but that all the analytical bits of your brain think makes sense too. Hard call, I know, but it sure beats doing something that no analysis says works or that you already hate to start with. This leaves about two million businesses, so we should get to analysing what to choose.

What to look for

To be very serious for a moment, the business to look for has four key elements going for it.

First, it should buck a trend. A contrarian, or someone who runs against a market flow, invariably does way better than a fashion follower (i.e. if everybody is getting out of an industry, get into it).

Second, it ought to be inherently big. A volume game. An old saying is” ‘If you make for the classes, you eat with the masses. If you make for the masses, you eat with the classes.’

Third, it ought to scare other people off – by its complexity or by the cost or by the technology needed or something else that stops other people competing with you. There are 1200 personnel companies in Melbourne alone. Because they’re easy to start. Ask yourself, do we need another?

Last, the other players ought to be vulnerable. Look at what Virgin targets. Airlines were inflexible and had ugly old hostesses. Credit cards were too expensive and up themselves.

Why franchises are for the cannon fodder

Franchises, a worthy consideration for a blink, are set up for people who have neither marketing nor organisational skills. So they buy something that requires little analysis and no branding/operational brains. I’d like to think everybody who reads this magazine is way above franchises, unless it’s to franchise their own business, which we could all probably do in a year or two. But the politics of running a franchise operation, with all those trumped up little bosses…

The first few steps

Plan out what you have in mind on one piece of A4 and, on another, do a mud map of what has to happen in what order. This will take about 20 minutes, if you’ve spent a few weeks giving it real consideration while you’re on the loo, in the shower etc. You could even call it a ‘business plan’ if your spouse ever asks if you’ve done one…

Once you’ve done a game plan, register a business name and open a bank account. Put $1000 in it. Most importantly of all, get some business cards and letterhead. They give everything else legitimacy. Now you’re off. Good luck.

Oh, I forgot to mention maintaining a cash flow by staying in your current job until things are really swinging, or at least keeping a part-time income going on the side, like a ‘consultancy’ gig with the old company.

Now get out there and sell your idea. I’d suggest you look around for some customers and work out how they are going to be persuaded to put their business through you. Have you researched the market? Have you worked out how to make your widget or where to locate your shops? Are there any competitors and how do they operate? Good hint – go and buy a book on starting your own business (or go on the web), there are thousands of them.

They all say the same stuff.

If you can’t sell, don’t bother

This may come as a surprise to many in the corporate world, veiled from the messiness of actually having to ask for an order or shake hands with a smelly customer, but if you can’t close a sale in the real world, you’re dead. This extends to every aspect of your new business, from talking the bank into extending your home loan to employing your first subordinate.

Sell like you aren’t

On the subject of selling successfully, especially to the bank manager or the first few employees, let alone customers, do it like you aren’t. The best salespeople are enthusiastic and know the issues and are good at being friendly, and never seem like they are selling at all. And a tip. Don’t ask if they want to buy something, just hold out your hand and say ‘savings or credit’?

Cash flow is king

Make no mistake, the thing that kills small businesses is cash flow, or lack of it. Change your payment terms from 30 to seven days. Take cash if you can. Reduce your outgoings or make multiple payments of larger bills. Stretch it out, make it smooth. Don’t over commit. Manage your money, or you won’t have any.

Managing people and time

These are the other two key variables. Time management is critical. You need to get the most done in a day you can, without exhausting yourself. If you are tired you make mistakes. And mistakes cost money. And this time it’s yours. Which brings me to the other critical issue: people.

Nobody can do it all

If you find yourself doing something too often, or for too long, hire someone. I know it seems impossible to pay them. I know you could do it and it will only take three hours or so, but the little jobs fill up your day and you’re better to have other people doing them.

Hire people (who meet all your criteria) on gut feel. Do you want to work with them? Will your customers like them?

How many really fail?

The story you get from the corporate world is that nine out of 10 small businesses fail in the first 12 months – losing their owners their homes, destroying their families and thus scaring the hell out of any employee who thinks the grass might be greener in self-employment land.

I saw an interesting (confidential) report a little while ago from a bank. They’d analysed their own records and found something truly amazing. Yes, on the surface, the businesses had ‘disappeared’. They’d changed. Many had gone from a personal name to a trading name. Or a trading name to a P/L. Or to a trust. Or renamed themselves, because it worked better for sales etc. Which means the name on the cheque book had changed and, hey presto, the ‘business’ no longer existed. My business was originally …anon advertising, which was very clever, while we were still working for other ad agencies etc., but it was unknown by anyone else. Changed it to Starship and more people remembered it. Point is we didn’t fold, we just changed our name. Way fewer start-ups actually fail than the stats would have you believe. Have confidence in yourself and don’t let the bastards scare you.

When is it not a start-up anymore?

• when someone offers to buy you for a big sum
• when your mum stops asking you how your hobby is doing
• when your spouse stops pushing/selling the business at school barbecues, and gets the guys in to quote for a new pool
• when your HR manager tries to stop you hiring pretty young things at cocktail parties
• when you get bumped instantly from a local bank manager to an area manager whenever you have a problem, or
• when people ‘vet’ your calls and say you’re too busy to see mates who’ve dropped in.

Momentum – businesses have a life of their own

Something few entrepreneurs believe, until it just happens to them, is that businesses have a life of their own. When you get to work and you’ve got five or 10 people already there and they are making phone calls and ordering widgets and ringing back customers, you suddenly one day realise that it’s not just your hard work that pushes things forward. You’re not the only little pony carrying a load. Companies of people live for themselves.

Is an entrepreneur the best manager?

There comes a stage, and often it’s only a few years after starting, where really successful people recognise that they would be better on the board than making every decision every day. This is the grown-up approach. Get a general manager in. Make it her responsibility to make a profit. Give her guidelines and incentives and be bloody generous with her remuneration if you want her to make you a fortune.

How to manage

Live by two rules. One, never ask anyone to do anything you won’t do yourself and two, if you’re prepared to do anything, you never have to do anything very long. These of course virtually cancel each other out, but it does make my life interesting and it does make for a happy workplace.

Something else to keep in mind is that people respond better to praise than being told off. If you’re not enjoying yourself at work, give up or go home. Oh, I could keep on going for weeks with management philosophy. So can anyone else. If you want to read that sort of shit, go to Readings and check out the ‘business’ section or buy BRW.

When to get out

Many of us see a good exit strategy as negotiating to be bought out by a bigger player. This can work. They will usually value your business on the basis of anticipated returns. Expected risk affects this. How surely is the income going to be there and does it depend on you? Or is it rolling along like a freight train and doesn’t need anybody’s help? Typically they’ll value it at a multiple of your earnings after tax. Could be anywhere from three to 10 times or more what you’ve made over the last couple of years. Then there’s floating, which is more expensive to do, but you can keep control of your baby.

Can I get it back if I change my mind?

Richard Branson ‘cashed out’ some years ago, but got sick of ‘them’ stuffing around with Virgin, so he bought it back. And I think he actually made a profit on the deal. (Some 500 million dollars?) Not all of us can afford to do both. It does require good lawyers and helps if you sell the business to bad managers in the first place.

I know most people say ‘it’s a big risk’ and they’ll give you a lot of reasons why your idea will fail and stories about how Uncle Harry started his own fruit canning business and then ended up living in a caravan park and drinking metho. But do it anyway.

When things get tough, and you wonder if you’ve done the right thing, remember these immortal sayings: “When the going gets tough, the tough get going” (Animal House?); “It’s better to live like a lion for a day than a lamb for a hundred years” (Bible?); “I did it my way” (Frank Sinatra); or “Ask not what America can do for you, but what you can do for America” (JF Kennedy). I guess you should insert Australia where it fits… Most entrepreneurs know lots of these quotes.

Greener Seas?

So you’ve decided to become the master of your own ship – but where
to sail it? Here are some of the more well-charted waters of
entrepreneurial ex-marketers…

An advertising agency: Yes, I can write a brief. Yes, I can hire a creative. Yes, I can put together a proposal. Yes. I’m an agency head in a day.

A design company: I always have my pens neatly in a row and haven’t worn a colour other than black for 10 years.

Market research: I’m shy. I’m happier asking than telling. I am good with numbers. I write a nice report. I should be a market researcher.

Marketing consultancy: I’ll take an hourly rate, but I ought
to be on your board. What does the research say? Have I told you how I
saved Astra Corp from being taken over? Yes, I’m still sleeping in my
car.

Promotions: What is it you want? Coloured hats? Chicks with
big knockers in tight t-shirts? 250 school kids in yellow on a beach
singing the ‘Banana Boat’ song? No problems.

Food: Everyone wants to start a franchised vegetarian falafel
bar. Or a muesli bar that says ‘healthy’ on the front and has chocolate
on the back and sells in Coles.

Fashion: My husband is a whiz with a sewing machine. (If it
gets big I can send the designs over to China.) I can hit 20 stores a
day and they’ll all pay. They all really liked me. They wouldn’t rip us
off.

Web brand: I can sit at home. I can buy Dreamweaver and email
people to supply me with pictures of their products and build the site
myself. Now what to sell? Roses only. Oh, someone’s done it. What about
wine? Holidays? What if I… kids toys?

Importing: Fashion, farm products, food, anything that takes
work/profits/power away from Australians and gives it to Asia is a good
thing.

Retail: If you go overseas you notice a significant change.
All the shops are nice and friendly and people help you without
grumbling. Almost any retail idea, run by a decent marketer, will do
well here.

Cleaning/plumbing: Things people don’t want to do make money.
Look at Pratt’s Visy – they just collect (and make) rubbish. He’s not
short of a quid.

Farming: Just ‘cause everyone else is in olives (wine,
ostriches, tulips, insert your own over-supplied product) doesn’t mean
it’s wrong. I’ve done all the research. And the property is only
$750,000 – it’s a bargain.