A ton of people I know have talked recently about starting their own business, about being an entrepreneur, about well… becoming a millionaire. Ok, I’m slightly exaggerating when I say that everyone who wants to start their own business wants to become a millionaire. However, with the rise of young tech start-up leaders like Kevin Rose and Mark Zuckerberg many people do think it’s as simple as open doors and collect a check. In case you were unsure… it’s definitely not that easy. While I am no millionaire, I have created and run multiple entrepreneurial endeavors and have learned a lot from both the achievements and failures I experienced. Yes I did say failures, they happen and they are honestly some of the biggest teaching experiences of my life. But I’ve also succeed. I’ve been featured on CNN and Fox for a company I started on my own, and I’ve also help lead emerging and midsize business to new levels of success. Over the years I’ve started looking at the different business I’ve run, I’ve worked at, and I’ve read about and started to look at what rules exist to help create a greater likelihood of being successful when starting your own business.
1. The Mindset of an Entrepreneur:
Being an entrepreneur is a mindset NOT a career. This is extremely important to understand. If you want to start your own business it can’t be just because you “want to be your own boss”. I don’t care whether you want to build a tech startup, start a fashion line, or open a bar, the amount of work you’re going to have to do to succeed is going to be unbelievable. With that being said, you can’t just be a person who does “what’s required of them” and that’s all. You need to be the type of person who’s always looking to make things better, make them more efficient, and just generally wants to be successful. This is especially true when you’re working for other people. A true entrepreneur doesn’t just punch a clock, they are looking to innovate, improve or succeed even when at a major corporation. You need to understand that. You want to be the person who’s staying late or coming in early – not because you were asked to but because you know it’s needed. You want to be a disruptor, who’s always thinking and questioning why are things being done and how can they be improved. When you do start your own business, if you want to succeed, in the beginning, it is damn near impossible to just punch a clock (9-5) and be satisfied with good enough. You need to possess the mindset of an entrepreneur.
2. Identify a Need:
A lot of people have great ideas, but haven’t really ever identified a consumer need that said idea satisfies. Opening a restaurant is a business, but the need for a new restaurant in a particular area should be the basis for starting that business. The selling of a product or service requires consumers, who at some level, have a need for what you’re providing. Quite often people think that their idea is so good that they ignore the fact that consumers don’t really need what they are providing. That’s not to say that some companies don’t create a need by through the launch of their product but: A. that’s a big risk to take and B. it’s very rare situation. So the first step, especially for bootstrapping entrepreneur is to identify a consumer need that needs to be satisfied.
3. The idea:
Amazingly, I’m going to say that this is both a highly underrated and overrated part of starting your own business. The idea of what your starting doesn’t always need to be groundbreaking or visionary, in fact sometimes those things can make it difficult to get people to understand your product or service. Sometimes, just improving on something that already exists is good enough – especially when that product or service has already proved to have a consumer need. With that being said, a great idea with terrible or even poor execution is nothing at all. It is for this reason that I say the idea can sometimes be overrated. If you aren’t capable of executing, don’t know how to execute, or simply don’t put the effort into execution… the greatest idea will fall flat. Fact is, for 90% of entrepreneurs you need to have an idea that answers a consumer need and that you’re able to or desirous of executing at a high level.
4. Don’t try and please everyone:
Your market is not and is rarely everyone. Your market should be identified and your product or service targeted to them. Keep it simple and execute well. You’re never going to be able to satisfy the needs of anyone at a high level when you’re trying to please everyone. Some of the best businesses and start-ups are super highly focused. Understanding this will prevent you from adding all kinds of features that will ultimately complicate your product. It’s like when restaurants have too many dishes and too many food genres on the menu – if you want to be a diner, be a diner but if you’re trying to be an italian restaurant there is no reason to have burgers on the menu for the few people who don’t like pasta.
5. Know your role:
When you go to start a business you really need to understand your own abilities inside and out. Then you need to be able to transpose these abilities onto the business that you’re trying to start. Are you a creative, a techie, an operations person, just a worker, or a financier. There are many roles to be filled in any business, the key is to know which one(s) you can really fill. Even if you just have a great idea, that doesn’t mean that you have to possess the abilities needed to execute it – but you need to be aware of this fact. You don’t need to be a chef to have a great restaurant idea, you don’t even need to be someone with restaurant experience (although it obviously helps), but being aware that you’re neither of these people is what will help you be able to build out the team you need to be successful. Self-awareness is key, and wanting to be the CEO just because it was your idea, without the ability to actually fill that role, is a big pitfall. No matter what the business is that you’re starting, you’re going to need help and don’t be afraid of taking a smaller role that you can really fulfill over trying to do it all at an average or subpar level. Remember as the founder, you’ll be rewarded professionally and financially based more on the success of the business as a whole than on your role as an individual.
6. Build a team for success:
EVERY BUSINESS NEEDS A TEAM. Never forget this. No matter how smart, how hard working, how talented you are, at some point you’re going to need a team to succeed. Maybe not day one, but very early on if you want to grow you’re going to need others to help. With that being said you need to look at your idea and your skills and have the foresight and strength to build a team that: fills the needs of the company, makes up for your weaknesses, and eventually amplifies your strengths. What you don’t need, especially early on, is repetition. Want to start a tech company? You can’t do that with 4 sales guys and no tech experience at a founding level (well rarely can you, there is always the exception). You’ll need people who can program, design, project manage, and market your product. You need to acknowledge the skills that will ultimately determine the success of your company, and fill team roles with people who possess those skills. There is no room in a start-up for dead-weight. Efficiency is key. Who you fill your team with is crucial to your ability to execute.
7. Empower your team:
When you get your team in place you NEED to trust them and you need to empower them to do what you hired them to do. If you’re trying to get a company started, and you’ve brought in a team who’ve got specific skills necessary to execute, you can’t try and micromanage everything. Part of picking your team is selecting people who you can trust and who are motivated. However, you need to focus on doing your role and observing everyone else. Learn from them, be involved, but don’t try and do everything or not empower your new team to do their roles independently. Even if you’re the CEO, you can’t get mired down in the minutia of sales or programming IF you’ve got people on payroll who are capable of handeling these things. You need to be checking in, figuring out if they have what they need, making sure deadlines are hit, all while giving people the space and ability to execute. If you don’t feel that you can trust them to work this way, then you shouldn’t have hired them.
8. Work with partners NOT friends:
Quite often we tend to try and start businesses with friends. Quite often these businesses fail and so do the friendships. That’s because when you’re starting a business you need to be focused on the collection of skills necessary to execute. Apple succeeded not because Jobs and Wozniak were friends, but because they possessed different but essential skills. If they were both programmers or both creatives, no amount of friendship would have made them successful. When businesses begin to hit hard times or even fail, quite often the friendships fall apart as well. Having strong personal relationships (especially if they are professional as well) can be a great asset, WHEN they are added to a partnership of necessary skills to run your business. Don’t feel that you need to start a business with your best friend just because they are willing to jump into the fire with you. Make sure they are the right person to help you first.
9. Have a plan:
In today’s entrepreneurial world, business plans are beginning to become overrrated. People are getting millions of dollars in investment off prototypes and 8 slide power points. However, that doesn’t mean that YOU don’t need a plan. Put pen to paper, or fingers to keyboard, and plan out what you need to accomplish and in what order for you to be successful. It doesn’t need to be MBA level and it doesn’t need to be 20 pages long, but it needs to be a roadmap that you can constantly check back against, updated and monitored in order to make sure you’re getting everything done.
10. Set deadlines:
This is one of the biggest failings for people starting their own businesses. They work, and work hard, but with no pressure pushing them to finish in a specific amount of time. Whenever you set out to accomplish something, anything, set a deadline along side it. That deadline should be realistic but it needs to push action. The moment you don’t have deadlines, I promise work will slowly never quite be completed. You’ll believe you’re working hard, putting in those extra hours, but weeks, months (sometimes years) will go by before anything is completed.
11. Get proper capitalization:
Bringing in financing for your business is extremely important, but bringing in the wrong amount can be extremely detrimental to your success. The biggest rookie entrepreneur mistake is to think everything can be done for less than it will really cost. I’ve got friends who can help me here, I know a guy there, I can cut materials costs here, on and on. This is before we get into the less obvious costs like legal, accounting, entertainment, etc. that for some reason most first-time entrepreneurs completely forget about. There is a value to putting together a lean operating model, but don’t be naive. Figure out, being conservative with timelines and expenses, what it will really cost you to start this business and hold true to that number. Don’t underestimate that number and have to cut corners (quality is everything) or need to go back for more money because this will erode the trust your investors have in you. There is also the problem of being over capitalize which can cause laziness, inefficiency, and sometimes even a sense of latency that can actually lead to the demise of your company. Investors are smart people, usually, and come to them with an unrealistic funding goal and they will know it. You want to position yourself as an expert in your business area, knowing how much it will cost to execute is a huge part of this.
12. Pick the right investors:
Getting money, believe it or not, is often not has hard as it sounds. However, finding the right investors is another question altogether. You want to bring in investors who first and foremost understand your business and have realistic expectations for it. Secondly, you want to find investors who aren’t cash-poor and in risk of putting added pressure on you to succeed JUST because they need to see a faster return on their investment for personal reasons. Lastly you want to find investors who can potentially help your business from a strategic sense. Starting an ad agency? Wouldn’t it be great to get investors with experience in this particular business, or maybe from someone with media or ad sales contacts. All of these qualities can help make an investor not just a financial asset, but a professional asset as well.
13. You will struggle and you will fail… accept that before you start:
Listen, I don’t care how brilliant you are or how amazing your track record is at some point when running your own business you will have struggles and you will have failings. The key, however, is to: acknowledge them, accept them for what they are, analyze them, and learn from them. You can’t let them eat you inside, or make you feel like a failure. Trust me everyone who has started a business has either almost failed, or actually failed at some point. It’s ok. But you need to be able to persevere through these times but not being emotional but being analytical.
14. Be open to change:
You’ve got a vision and maybe you’ve even had some success, but don’t be afraid to change or adapt. This isn’t to say that you need to change, in fact quite often sticking to what you know and what you’re good at is usually a strength, but you need to be always open to the idea of change. Look at signs in the market, listen to your team members, and ask the advice of other experts with regards to your product and service and how they think it can be improved. Sometimes those changes are minor but other times they are major and you’ll be extremely thankful you had the foresight to make those changes. A successful businessman isn’t stubborn they are smart. Being smart is sometimes admitting when you’re initial idea has run it’s course and an update or business operations shift needs to occur.
15. Have realistic expectations for success:
Success can be different for everyone, and what you measure your success by should be very specific to your own situation and nothing else. Do not get yourself overexcited that you’re going to make billions or millions because that’s rarely the case. It’s good to have a big overall vision for what success looks like, but also set staged expectations. I want to get our first customer by X date, I want to be cash positive by year 2, I want to have a full in-house production team by year 3, etc.. The goal is to keep yourself motivated but also to keep your morale high. Just having one big lofty goal, especially one that may not even be within your control, can be dangerous. Set small visions for success, and try and reach them in defined time periods. If you hit all of those staged goals you should at least be on your way to your big lofty goal.
16. Quality over Quantity:
In the beginning, there is always a desire to just produce as much as possible. Whether that is a product or service, a lot of people tend to get focused on selling and selling volume. However the key to establishing a new business is through establishing trust with your consumers/clients. You want to focus your efforts on executing exactly to your customer’s expectation and never below it. If your product or service is great the word of mouth will be the marketing foundation for your company. Likewise if your product fails to meet expectations, you’re late in delivery, or the quality is simply not there this can sometimes lead to irreparable harm to the trust component of your business. A young/new company must be able to be trusted.
17. You’re a business not a charity:
Just because you’re a start-up doesn’t mean you should be just giving things away for free or at a cost to you on a regular basis. Sampling can be a useful part of any marketing mix, however many young businesses tend to just give things away for free or do work for free to try and build relationships or get their foot in the door. Unfortunately, usually, this does not work. If you don’t set a value on your time and effort, rarely will other people set a value on it. This is one of the big reasons that you need to have a quality product that meets a consumer need. If people need your product or service, and you’ve established trust that you can fulfill that need, you should charge for it. People who can’t afford to pay shouldn’t be your clients, and people who can afford it but don’t want to pay – well that’s what sales is about. Convincing them you’re worth it. However if you don’t bring in revenue, you won’t be in business very long.
18. Titles are overrated:
You’ve got a new company, a new business card, and let me guess… you’re the CEO. But wait, how many people do you have working for you? Zero? How much revenue have you generated? Zero? So what exactly are your officiating or managing? Listen most of the people you’ll come in contact with will appreciate the fact that you’re just starting out, but they’ll also see through someone trying to “fake it till you make it”. I’m sorry but you never want to be seen as doing that. Don’t be ashamed to just represent yourself as a founder, and honestly let people know that you’re just starting out. Quite often, if people think that you’re hard working and passionate about what you do, they’ll actually be more apt to help you or work with you. But CEO, President, Managing Director… save those titles for a few years down the road.
19. Say Thank You!
This is one of the most forgotten rules of business, saying thank you. As you’re starting your business you’re going to be asking people for advice, meeting potential vendors and employees and clients all of whom don’t “have” to do anything for you. So whenever you deal with anyone never forget to appreciate the time they’ve spent with you. Send them a follow up thank you within 24 hours…ALWAYS. With smart phones and wifi there really is no excuse for not doing so.
20. You’ve got to love it:
This sounds cliche, but it’s 100% true. If you’re venturing out on your own it really will take every ounce of your energy, passion and time to really become successful. Additionally, there is the stress of knowing, at some point early on, that you’re not earning a paycheck for all the work you’re doing. You can’t start your own business because you want to get rich, don’t want to have a boss, or just have a good idea and still be successful. You’ve got to throw yourself into it. You’re going to hit rough patches where you want to quit, and great times where you want to reap the rewards, BUT if you love what you’re doing you won’t lose focus on running the business and staying the course. So after reading all 20 of these rules, don’t forget to really make sure you love what you’re doing. It’s not a cliche, find a job you love and you won’t work a day in your life.