6 Things Every Entrepreneur Should Know Before Starting A Business
Running your own business means having to wear all different types of hats. Whether it’s your marketing hat, your sales hat, or your general people skills hat, you’re going to need to know how to court sales, and on the other side of operations, you are also going to need to know how to run a balanced account and continue to grow your wealth. There are many business skills that a successful entrepreneur will have. When you’re getting ready to start a business, you may think all you need is a great idea and the cash to make it happen. This is a good place to start, but there are so many other elements to startup success that entrepreneurs tend to overlook when they’re caught up in the excitement of a launch. Ten successful startup founders and executives shared the best tips they believe every aspiring entrepreneur should know before starting a business.
The one thing that no one can teach you is the two R’s: risk and resilience. In order to become an entrepreneur, you must be willing to take a risk—to throw away the comfort of a regular paycheck—and you must also be a resilient person, to stand firm with your vision in the face of disappointment whether fiscal issues, missed opportunities or challenging personnel issues. So you’ve made the decision to start your own business. Before you get started there are a few important things you need to consider. Here are some of those things every entrepreneur should know before starting a business:
Many people make the mistake of selecting a franchise based on what the business does, what the person likes or where their passions lie. It’s important to understand if a business is actually structured to be semi-absentee. If your heart is set on having an home improvement business, you’ll find that this type of venture lends itself to the owner-operator business model, requiring full-time commitment from the owner. Keep an open mind when looking for a semi-absentee opportunity. Many people make the mistake of selecting a franchise based on what the business does, what the person likes or where their passions lie. It’s important to understand if a business is actually structured to be semi-absentee.
If your heart is set on having an home improvement business, you’ll find that this type of venture lends itself to the owner-operator business model, requiring full-time commitment from the owner. Keep an open mind when looking for a semi-absentee opportunity. Your role is the ambassador and sometimes the chief bottle-washer of the business, but if you have employees, it means having the backbone to hire the right people—not just people you like or friends—and firing them if they cannot achieve the goals you set for them.
Before you venture into your new business it’s important to conduct some market research to see if your idea is feasible. You need to find out if there is a need for your product or service and who your competitors are, their strengths and weaknesses and how your business will differ from theirs. Some questions to consider are – what product or service you will provide, is your idea feasible, how will you protect your idea, is there a market for your product or service, what skills do you need, who are your competitors, what difference will you bring to the market, do you have the financial capacity to own a business?
Putting the effort into researching your idea will help you determine whether you can turn your idea into a profitable business. Read our Market research and statistics topic for information on assessing your market and competitors. The real number-one skill is raising money. It is a risky and ill-advised plan to use all your own money and credit on a new venture. Hot on the heels of fundraising is sales skills, particularly the willingness to ask for the order. Without sales skills, personal and business, the venture will go nowhere, and not much capital will be raised, either.
People management skills are key to successfully operating a semi-absentee business since you will be providing oversight to a manager or managers if you have multiple locations. You need to be comfortable surrendering control and delegating the day-to-day operations of your business to the managers. Taking one bad step can make or break your business, especially when it is still in the early stages of development. Entrepreneurs that are successful with their ventures make a plan and stick to it, thinking out every risk, benefit, and cost of an option available to them. They also make their plans realistic and factor in things such as time and budget in order to make their plans a reality.
A business exists to deliver value for a segment of society while creating returns for its shareholders. The best measure of how well a business does [in achieving] that goal is net income. Ensure the basics, that is, revenue to expenses, will give you healthy profits. Forecast it, measure it, ensure it. Be prepared for your business to take twice as long as you planned. Remain open-minded to facing challenges that you never saw coming, as perseverance is the hallmark of a successful entrepreneur.
Planning And Strategy
Know the laws, industry standards and guidelines, and competitive market in the business that one is opening. Entrepreneurial success demands the same discipline, grit and vision needed to be a world-class athlete. Confidence is the key to all locks. The critical step after that is taking action. Successful athletes and entrepreneurs do not overanalyze, nor do they have time to wait. They take action. Our five steps to success are focus, accountability, persist without exception, exceed results and have a true sense of urgency. The most important thing a person needs to know before starting a business is, ‘If I build it, will anyone buy it?’ In other words, does a market exist — or will exist in the near future — for what you intend to sell? The most common cause of startup death is running out of cash, but this is only [a] symptom. The root cause is you’ve made something no one wants, and as a result, you cannot grow using cash flow or raise funding for your business. The best way to find out if a market exists is to test the waters before committing to a full build. This can be done by polling potential customers, collecting preorders or indications of interest, [or] crowdfunding.
The best business skill has always been a healthy curiosity. This will lead you to look into what your competitors are doing, and it will also allow you to utilize new technologies to the best of your ability to streamline your business and even reach out to new customers. When the only limit you have is what you can imagine and apply, just about anything is possible. For some companies, “growth” means more revenue; for some early stage companies it may be more web traffic or PR exposure. Just be sure to define it, because if you don’t, others will define “growth” for you, and may confuse you. Early stage companies should be focused on building brand and exposure, plus revenue. Mid-stage companies should be focused solely on revenue growth. Mature companies should be focused on maintaining market share and new innovations that will drive more revenue and ensure strength when benchmarked against competitors.
For some companies, it is solely about revenue. For others, it’s about service and reputation, repeat customers, or marketing brand recognition. Know your definition. There are a lot of people who will come out of the woodwork—relatives, old friends, advisors—who want you to build your firm their way. Listen to them, take the “best practices” from each, say thank you…and move on. Always listen to your inner voice and keep focused on the end vision. Ensure that all advice you take is focused on that “big dream”—and take advice that guides you toward that. You might upset people who want you to do it “their way.” So be it.
Successful entrepreneurs keep a narrow focus–on the customer that is paying their bills. They do not forget that everything that they do is for the customer, since the customer is the one that is allowing them to do anything in the first place. A good business owner will always have time for a customer, whether they have a complaint or praise. Having good customer focus will mean that you see every customer as an opportunity to do better and grow, versus an annoyance or a difficulty. Since you are gainfully employed, it’s important to consider an opportunity that offers you the flexibility to operate your business on the side while maintaining the work-life balance you prefer. If any one of these four important factors is missing, it will be difficult to find a semi-absentee business that fits your criteria.
Also keep in mind that your finances, skills and availability must be what the franchisor is looking for in order for them to award you a franchise. It can be a viable option to grow a business on the side while you keep your day job. It’s a smart way to diversify your investments through owning a business. For some people, a business on the side is their exit strategy from the corporate world. Once the business generates enough income to replace their salary, they are free to leave employment behind. Another common motivation is to generate supplemental income for current expenses, such as private school for children, or to put more money away for retirement. Whether it’s an investment move or an exit strategy, semi-absentee business ownership while you have a job can be a wise and potentially lucrative decision.