[Editor’s note: This is the first in an ongoing series, by serial entrepreneur Tanya Titman, on the secrets to building and scaling a successful SME]
“You’ll never make it” taunted one of the partners at the practice I was departing. Part of me thought he might be right. At this early stage, I lacked full confidence in my abilities and an appropriate sense of value around my professional contribution.
Had someone told me then that in less than five years’ time I would own a 20 person, multi-million-dollar accountancy practice almost twice the size of the one I had been working for, as well as a childcare centre, and that I would have moved onto my third entrepreneurial venture, I would have shaken my head in disbelief.
There are many ‘Sliding Doors’ moments on the journey from solopreneur to building a successful business. My first one came when I needed to choose between an equity pay-out from my existing business partners or taking my clients with me into my own practice.
The value of my client portfolio back then was less than the equity I could have cashed in on. In immediate value, the equity seemed to represent the safest option. But over time, those clients became the core asset base for my business, a practice that has delivered the value of that original equity many times over.
This choice was a huge test of my self belief. Would my clients follow me into my new, smaller practice on the opposite side of town? Would they quickly leave, eroding my financial security?
After a few weeks of self-doubt, the entrepreneur in me rose to the occasion and I decided to take the leap. To my surprise and delight, my clients backed me 200%. That was an exciting turning point for me. I realised in that moment the value in my business was based on me and my contribution – not the brand I represented or the size and reputation of an established practice.
The next critical test of self-belief came up around my office setup.
Part of my motivation for leaving the existing firm was getting access to an office closer to home. With two young children under five and more in the wings, I also wanted to claim back the family flexibility I craved by owning and operating an onsite childcare centre. Returning to work after four-weeks and expressing milk in the office bathroom for 12 months was less than ideal – surely we could create a better environment for women. I found three strata titled units on the top floor of a building. The accountant in me was committed to buying rather than leasing the building – a move that was made easier when one of my clients was keen to join forces – we planned to offer shared services in the space and create a shared childcare centre together.
Our contract for the building settled the day the 2007 Global Financial Crisis hit – causing my client to retract from our plans and leaving me with all 750sqm of unoccupied space for my two employees, and little more than a big dream to fill the space with all the staff I was planning to recruit.
I’ve never been afraid of debt, and it is certainly a great motivator. I went ahead with the childcare centre and my commitment quickly paid off. The family-friendly approach meant I attracted great people – many of whom had left the workforce because they didn’t have workplace flexibility. In a short space of time I had a business incubator also running from the space with a number of aligned businesses keen to share the facilities.
Whilst many of these decisions felt like more of a survival strategy at the time, looking back there were six key principles at play that led to my ultimate success:
- Be passionate about your purpose. Creating a business is a long and intense journey – it’s not worth all of the stress unless you are passionately engaged in your vision and see the business as a future asset – rather than just a salary replacement.
- Understand your risk tolerance. Would you be willing to risk your own home to build the business of your dreams? Don’t get me wrong – I don’t advocate that you need to put the house on the line, but it’s a good test question to ask at the beginning of your entrepreneurial journey. Ultimately every successful entrepreneur I know had made considerable personal and financial sacrifices to build their business success. There is risk at every stage of the entrepreneurial journey – not just in those nail biting first few years – and not everyone has the risk tolerance to survive that stress. Some people work better in a complementary partnership because it balances their own business style or skills. For example, if you are more risk averse, being with someone who has a higher risk tolerance can create balance, or vice versa.
- Build the right team around you. One of the hardest lessons for me starting out and scaling up was recruiting all the wrong people. I spent far too much time beating myself up about the things I wasn’t great at. I love the big vision and the strategy – but get very bored by follow-up items. I used to see this as a weakness – until I realised I simply needed to find people who are geared that way to fill those gaps. I also learned that I need people around me to keep me energised – that’s just part of my personal style. Once I realised this, the growth in the business came quickly and easily.
- Get your personal life under control. When you are first building a business there are so many things that get thrown at you – you need some order and stability in your life and a safe space to come home to balance your stress and energy levels. One of the best early decisions I made was hiring a housekeeper – why not pay someone $20 an hour to do the things that left me free to earn $200 an hour.
- Do your numbers and have your plan. If you are building a business on a gut feel, including your pricing model, you may find out it doesn’t work. A classic rookie error is to tell friends and family your great business idea – receive amazing feedback, but no sales when you finally launch. A solid business plan means doing solid research into your offering and its fit with your target audience. It also means running the numbers around best and worst case scenario and middle of the line. If you can’t tolerate the worst-case scenario numbers, don’t start. Clearly it helps to start with a revenue platform – rather than building off a zero base.
- Value your contribution. Discounting your services when you start is a mistake I see many women repeat. Many women I have worked with undervalue themselves and their contribution in business and feel they owe their foundation clients a huge discount for supporting them. This is a slippery slope that is hard to recover from. Instead, of looking at yourself in terms of an ‘hourly rate’, look at what value you deliver and focus your client conversations around that.
About the author
Tanya Titman is a serial entrepreneur and Founder of SME focused accountancy practice Consolid8 and Female SME growth program Acceler8. She was recently interviewed by Dynamic Business for the feature article Financial literacy, not gut feelings, key to female founders scaling past the $1m mark.