I am a fanatical entrepreneur, I admit it. I love the thrill of attempting to organize chaos. I love taking new and undeveloped ideas and making them a reality. I love challenging myself and others. I started my first business when I was 8 buying candy in bulk from a wholesaler and selling it to the neighborhood kids at retail. I have helped raise millions of dollars for two startups and I have had some great successes. I have also had some miserable failures.
For you new business owners and also you job-laden entrepreneurs seeking to strike out on your own and throw so-called security to the wind in hopes of achieving the seductive dream of riches and independence, I speak to you. I embrace you, my fellow entrepreneurs, and applaud that fire in your belly that keeps you up at night seeking something more, but I also have a couple of suggestions and warnings.
1. Estimate how much money it takes to run your own business, then double it. Felix Dennis
, a famous magazine publisher, described how to get capital: inherit it, steal it, win it, marry it, earn it or borrow it. I certainly don’t advocate stealing it (and few of us are lucky enough to marry, win or inherit it), which means most of us must earn or borrow it
. Never underestimate the financial requirements of getting a traditional business off the ground. If you fail to properly finance your company, you will never be able to gain enough business momentum to make it past your first year.
2. Learn how to deal with people and study the art of sales. If money is tight, consider a business that needs little startup capital such as a home-based business or consider taking a commission-based job before you venture into business ownership. There are many companies that have tremendous sales training and educational systems that teach you how to make money from sales-based activities. If you can’t make a living selling, you will struggle to make it as a business owner. Business owners must sell to prospects, employees, vendors and their significant other. However, in addition to their sales responsibilities, business owners also have the combined duties of company accountant, gopher and janitor. Learn people skills and get a sales background, it will become invaluable as you grow your business.
3. Have a written plan. After a couple illustrious childhood entrepreneurial ventures of selling candy and mowing lawns, my first real venture into financing my own company came in 1996 when I put $10,000 on my credit card to have an online information portal built by a local web design company. The site was built on the latest technology and was a great reference tool. It was everything I dreamed it would be, but I had forgot to figure out how to monetize the thing. Three months later, I was paying interest at 15%, wondering why such a great site with so many visitors didn’t have any income.
There are many entrepreneurs that practice the philosophy of “Take a leap and a net will appear.” I know I sure did in the beginning, and I have to fight from doing it still today. It can be disastrous. Entrepreneurs are confident and often cocky because they truly feel they can accomplish anything out of sure grit and determination. Many entrepreneurs think that they will figure out the details as they go. However, taking the time to properly run some numbers and research new or profitable niches will give you the focus to truly exploit them. You will spend less time jumping from idea to idea and have more time to use your creative resources to sell your product or service.
It does not matter if you are in a home-based business, network marketing distributor, or even if you are working on commission for someone else, a game plan is never a bad idea
4. Spend $500 on an attorney. I went to three years of law school to be better at business, not to become an attorney. Trust me, legal protection is important. For a small investment, you can protect your personal assets by forming the right legal entity or by protecting the partners from each other. If you plan on having a business partner, you better understand the rules of engagement. Partnerships work great until you start making money, or after you’ve lost all your money. Either way, protect yourself by having a good legal entity and a real understanding of your partnership responsibilities. I frequently say that partnerships are like marriage without love. For better or worse, you are stuck together once you open that bank account together. If things fall to pieces, divorces are always easier to settle when you know who gets what.
5. Get Lucky.
Luck doesn’t just happen. I have yet to win more than $5 on a lottery ticket and besides, Vegas-style roulette is a bad way to cover payroll. Edna “E” Mode
from Pixar’s The Incredibles
says it best, “Darling, luck favors the prepared.” Luck rarely finds those unwilling to take a chance. Sweat, passion and perseverance are the most important ingredients to “getting lucky.” Constantly educate yourself on your industry. Study successful businesses. Read books and work hard on finding employees that buy into what you are doing. When you are really prepared, you may get lucky.