Learning from experience is common when you’re starting out as an entrepreneur. If you have a great business idea, you may not be sure of how to turn it into a successful business. Learning from experience is all well and good, but that doesn’t mean you need to learn from repeated costly mistakes that will eat into your capital and your enthusiasm.

It’s a better idea to learn from someone else’s experience – especially when that experience includes the expensive mistakes you want to avoid. That’s why it’s important to pay attention to successful peers who have been down the road you’re walking and learn from their example. So, what are the basic steps you should take to turn your new business idea into a thriving operation?

Due diligence is essential

Your first decision is whether you’ll start your entrepreneurial journey from scratch – building a business from the ground up – or buy an existing business. If you’re buying a business, you might be so excited about the prospects that you’re seeing it through rose-tinted glasses. It’s an established business with a good location and a customer base – that's all you need to know, right?

Wrong! Any successful business owner will tell you that it pays to dig deeper before you buy. Why is the owner selling – have there been changes in the neighbourhood or the market that are reducing its profitability? If the business has inventory that you’re buying with it, are those products selling? Apply the following checks in your due diligence:

• Look at clear, independent financial records on the business’s performance over the past few years.
• Check if the existing inventory will sell, so you can expect immediate cash flow. Don’t assume that it will sell unless you have the numbers.
• Use technology. Inventory management tools can save you from costly mistakes.
• Don’t let ego or optimism blind you. If the numbers don’t add up, walk away.

Processes to lighten your load

For all entrepreneurs, hard work is a must. But if you try to look after everything, sooner or later you’re going to burn yourself out. Mistakes and inefficiencies will creep in, and you’ll lose business as a result. Consider the following countermeasures:

• Document everything and create standard operating procedures for key tasks.
• Automate whatever you can, using whatever affordable tools are available, like standard customer relationship management (CRM) software.
• Delegate – this is often the Achilles’ heel for entrepreneurs. If you’re not able to hire staff yet, there are many automated tools that can help with basic operations, so you can devote more of your time to making strategic decisions. Start small – maybe using 1 tool or hiring 1 person to schedule tasks and timelines, for example – and track how it improves your business processes and your top-end growth.

Focus your business offering

Many experienced entrepreneurs faced the problem of creating the right focus for their businesses when they started out. The pressure is on you to bring in customers to your startup, trying to serve everyone who shows an interest in what you do – but they might not always be a good fit. Most new entrepreneurs think that more customers mean more revenue, and more revenue means growth. But if your offering isn’t focused, the opposite can happen – every new customer will have different needs, which can stop you creating clearly outlined systems that attract and serve a sustainable customer base.

Pricing tracks value

When you’re starting out, you’re often uncertain about how much to charge for your goods or services. Lowering your prices seems to be a way to gain business if you don’t have a reliable customer base or reputation yet. Many entrepreneurs price their work based on fear rather than value, which leads to customers expecting high quality for low cost. But the right customers don’t want cheap – they want quality goods and services that match their needs, with clear outcomes and support. If you’re getting that right, you might start off with fewer customers, but you’ll develop better relationships with them and have more scope to grow your business.

Cash flow is key

Many small businesses fail not because they lack demand, but because they run out of cash. If you’re starting out, financial management is a necessity – starting with having capital available through investment or loans. Managing cash flow means you must budget strictly, separating your personal and business finances. Hire professional help when necessary, especially in areas like bookkeeping and tax planning. A checklist to ensure that your cash flow stays positive might look something like this:

• Track your income and expenses.
• Keep a separate business bank account.
• Plan for lean months by building a cash buffer.
• Don’t be afraid to chase overdue payments – your business depends on it.

Beware of customer dependence

For many startup businesses, having a dependable, high-paying customer is a godsend. But if more than half of your revenue comes from a single client, you’re not running an independent business – you’re functioning as a subcontractor. Protecting your business means diversifying and growing in the right way: by investing marketing, networking, and adopting a strategy to attract new customers that are right for your brand.

Ultimately, one of the biggest myths about entrepreneurship is that you need a perfect plan. You’ll be learning as you build your business, so be prepared to go for it – even if everything isn’t quite right or ready. If you keep learning and stay agile, you’ll adjust quickly to what’s happening in your market and your business. Help is always available – from market lessons, but also from peers and mentors. It’s good to take advantage of any forums for advice or support in what can sometimes seem a lonely pursuit.

Nedbank offers a full range of small-business support, guidance, and funding, no matter what your business idea is.