I was recently asked by a colleague if I had any advice about what things prospective business owners should consider before packing in that old safe, secure, reliable job and venturing out on there own. After lending my advice to my colleagues I figured why keep my advice to our small business group and thought I’d share it with other aspiring entrepreneurs.
1. Entrepreneurs are born, not taught.
I believe business ownership, or at least the values behind what makes a personal a successful businessperson, comes from your core. We each have 5-10 top values that sit at the deepest core of each of us. If you’ve never tried a values analysis before visit HERE and pick yours. Really take the time to really think about your TOP 10 values, and pick carefully. Once you’re completed you will know if your core values are inline with what it would take to be a successful business owner.
If you find out that your most important values would be better met focusing on other areas of your life then that’s OK. To be happy in your life, you have to intelligently work towards goals that will fulfill YOUR values, not anyone else’s. Nine out of 10 small businesses fail before 5 years. This isn’t just poor planning or lack of money. I believe many quit because they don’t have enough of the desire to continue once they realize that it’s hard! You have to realize that your odds are against you from day one and have to be willing to fight to be the best. A good audio book that helped me see the pros of entrepreneurship was Rich Dad, Poor Dad. But, I strongly urge you to consider the fact that if your business ownership plan isn’t inline with your value system then even if you end up being successful you still won’t be happy, and who wants that for a life plan?
2. Measure 1000 times, Cut every 10.
Ever heard the old rule “measure twice, cut once”? I believe it comes from the construction industry. If you’ve ever done even minor construction work around your house then you’ve probably known why it’s a good rule. I can’t tell you how many times I’ve messed up and then had to fix holes, re-drill, re-cut, or run back to Home Depot because I ran out of supplies!
In the business world, things are constantly evolving and changing. Before starting out, you need to have a well-crafted business plan to know which direction you want to go in, but the planning doesn’t stop there. You need to constantly revisit your plan, make sure that you still have the same goal, and determine whether or not you’re still progressing towards it. Factor in new current events, changes in technology or new competitors. Businesses evolve and people evolve. Make sure you’re evolving with them or you will end up progressing towards a goal, end up accomplishing it and then realizing you’ve just met a need that no longer exists.
3. Social Media and Networking is your new social life.
Successful entrepreneurs give ALL of their time to their company. Late nights partying with friends and expensive vacations will need to get put on the back burner with the stove turned off and the power to the house turned off. How’s that for an analogy? :) It’s easy to say you’ll do it in the moment (because starting a business is exciting at first!) but it’s very hard to follow through with later. Having the business be the best it can be needs to be your most important goal. Friends, family, relationships, even children or even the possibility of starting a new family will all take a hit.
Now I’m not saying you have to choose one or the other but the amount of effort you will have to put into your company will definitely take it’s toll on all these other areas of your life. Do not be ignorant and think that it won’t! You can still make it work but it will take due diligence on your part, as well as their willingness to accommodate you, to make sure you’re not neglecting any of the other roles in your life. A good tool that will help you is the “Roles and Goals” section of the Franklin Covey Planner. I also highly recommend reading The 7 Habits of Highly Effective People.
4. Plan for your finances so your emotions don’t control your decisions.
If your financial life is a mess don’t even think about starting a business right now. First, get your financials in order. I highly recommend reading The Total Money Makeover. Basically, you NEED to get rid of any and all your debt and learn how to leverage risk with things like a mortgage!
Then you need to start by building up a personal savings, a big emergency fund that you and your spouse can live off of. I’d recommend at least 12 months of living expenses, but the bigger the better. In addition to your personal savings, you need to also have a business savings account used to fuel the company. Businesses are expensive to run. This savings would be separate from your personal savings and used only for business purposes. Again, 12 months of allocated expected-expenses would be great, but the bigger the better. Money will be needed for building the company, acquiring company assets, marketing, advertising, employees, etc. You can always get investors or a credit line but investors won’t invest their money if you don’t and with the high rate of business failures you shouldn’t risk your personal financial well-being for the sake of having your own company because your to impatient to wait until you can afford to.
Then you need to get your savings out of your mind and live FRUGALLY. You don’t actually HAVE that money…it will go extremely quickly if your business struggles. It is meant as only a backup. Savings is more for peace of mind and will allow you make intelligent and well-thought out decisions about the direction of your company without having the stress and worry about how your going to pay for next month’s rent. I suggest getting a part time job, or putting the entire business plan on hold, if (and hopefully IF) that savings ever drops down to the 6 month mark. If the company is profiting and you don’t need to use your savings, then you should still live frugally but keep adding to both your personal and your business fund cushion every month.
Getting your financials in order may take time—it may take several years. That’s ok, you don’t have to give up on your dream. Make your business plan now and keep checking it and tweaking the results as time goes by. Keep saving and planning and work part-time in your business making small efforts towards your goal until the time when you can safety (without debt and with savings) venture into this exciting next chapter of your life.
5. Don’t start a business for yourself—do it for others.
Always remember your business is not for you, it’s for other people. Think about it. Sure, you will spend ALL of YOUR time, money, and effort on it but it’s best to keep reminding yourself that you’re in this to MEET the NEED of somebody else. Your customers and clients are why you do this. If you haven’t defined EXACTLY who your customer is and HOW you’re going to fulfill THEIR needs then you haven’t planned accordingly. There are tons of businesses and 99.99% of the time people are already doing what it is that you want to do. Make sure that you’ve defined a need (within a niche market) and have a solution for how you’re going to fulfill that need better than anybody else. Then attack that niche with aggressive focus and determination. Good Luck!!!
See you at the top!
Brian S. Holmes