I have started a number of businesses over the years. Some have worked and some have been failures. All of them I learned from, and continue to learn. So with all of my experience in mind, the following advice is what I would give to anyone starting their first business.
Know the risk
Eight of ten new businesses fail in the first five years. So, your chances of success are not very good. To succeed, you must be prepared to work harder than you have likely worked before. The level of focus and effort needed will likely demand time ordinarily devoted to something or someone else.
Be certain to take the time to inform family and friends of what you are doing and that it will likely demand time you have given them in the past. Ask for their understanding and support. If you don’t get the understanding and support be prepared for crisis and ask yourself is it worth it?
If you decide it is worth the risk, as you understand it. Then, make sure you understand just what the risk/reward equation looks like. Develop a plan. Once you have developed the plan review the numbers and rewards and ask yourself again; Is it worth it? If you are still saying; Yes! Then go for it.
Five critical components
Don’t start without a plan. Your plan should include five critical parts:
A market analysis
A market analysis – Performing a market analysis often seems like a waste of time since your product or idea is so great and you are certain, just everyone will want some of what you have, however don’t you believe it. Know what you total market is, whether you will remain local or sell nationally or even internationally. Know your competition and be certain about what distances you from them.
An operations plan
Know what it will cost to make your product or deliver your service. You will likely under-estimate those costs so try to keep you numbers in perspective. Be conservative.
A people plan
People will be the determining factor in your business success so approach the hiring of people in a deliberate way. Make sure you know what you need and it is likely not more people like you. Seek professional help. It will most likely be beneficial.
A money plan
Know how much money you will need and know that you will likely under-estimate this as you did the costs in the operations plan. Understand the phases of growth you will likely encounter i.e. Start-up, Growth, and Public. Know you will not get that money for free and you must be prepared to give something up in exchange for the capital to make your dream come true.
An exit strategy
Lastly, know how you will end this effort. Know what you intentions are; Will you pass the business on to family or will you grow it and sell it. Just have a plan. You may change it latter but, at least, begin with the end in mind.
I have seen many businessmen and women quit and someone else, come in behind them and reap the rewards the quitters should have enjoyed. As Winston Churchill would have said; Never Give Up!
Pursue your plan with passion
If you are not passionate about your proposed new venture, you will, likely fail. Passion does not guarantee small business success however it does enhance its likelihood.
Be prepared to change your plan
If your original plan is not working, change it, try something different. It is not very likely that you will have a clear picture of the right steps before you have even seen the staircase.
Well there you have it, straight from a serial entrepreneur. What I have shared does not guarantee success however it does bring the likelihood of business success a lot closer.
Go ahead, take the plunge and start your own small business. It’s a fantastic way to shape your life and your future.