Many people dream of leaving employment to start their own business. Almost everyone relishes the idea of being their own boss. But few are prepared for the realities that come with starting a business.
The truth is that entrepreneurship is a tough path. There’s more to starting and running a business than money and a good idea. There are plenty of things you need to know and do to be a successful entrepreneur. Most of the lessons about entrepreneurship are best learnt on the job. However, you can still learn some of them the easy way. Here are a few things you need to know before starting a business:
There’s nothing like overnight success
You’ve read tales of entrepreneurs who launched businesses and achieved what seems like overnight success. But while overnight success isn’t impossible, in most cases it takes plenty of work and time to be successful in any endeavour.
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“We have to remember that great things take time to mature. I agree that there are those who will take a shorter time to become successful, but a majority are the products of hard work and sacrifice,” says business magnate Chris Kirubi.
If you go into business expecting to make it in your first year, you might be sorely disappointed. Statistics show that most small businesses take at least two to three years to be profitable, and seven to 10 years to become truly successful. As Amazon founder Jeff Bezos says “All overnight successes take about 10 years.”
Money is not everything
Money is an important aspect in starting and running a business. In fact, the leading cause of business failure is lack of adequate capital or funding. Raising capital can be a difficult task for beginner entrepreneurs.
But despite having plenty of capital at their disposal, many businesses still fail. Why? There are many moving parts that make for a successful business. It all starts with having a sound business model that ensures consistent cash-flow.
The entrepreneur must also be passionately invested in making their business a success. On top of that, you need to have a competent team of passionate individuals. As Elon Musk says “a company is only as good as its people and how excited they are about creating.”
Smart entrepreneurs know that the key to success is hiring the smartest people they can find. As R.H Grant puts it “When you hire people who are smarter than you are, you prove you are smarter than they are.”
Focus on value instead of competition
Unless you have a truly unique and innovative idea, you will always have competition in business. Your competitors might be bigger, more popular and have more money than you. Trying to outcompete them will probably get you nowhere.
Instead, focus on building value for your customers. Remember, it isn’t about who does it first but who does it best. To do so, you must have a keen understanding of your customer and their needs. Do your best to collect customer data through social media analytics, questionnaires, and surveys.
Armed with the right information, tweak your products and services to better serve your customers. Capitalise on what makes you different and unique. Do you have more ethical sourcing for products? Are you a family business with strong family values? Are your products hand-made? Do you give part of your profits to charity? All these are great points of differentiation that can earn you loyal customers.
Separate yourself from the business
Many new entrepreneurs experience challenges in differentiating their personal finances from that of their business. Learning how to keep yourself separate from your business will help you avoid problems down the road. For example, if your business goes bankrupt, your personal finances won’t be affected.
A great place to start is by properly registering your business as a legal entity. This means your personal assets will be protected from business debts, losses and lawsuits. Additionally, set up a bank account for your business to avoid making transactions from your personal account.
When taking business loans, use the business account to build your business credit score. This means that you will be able to qualify for bigger loans or lower interest rates. Having separate accounts for your business also makes it easier to get a clear picture when computing your taxes.
Just like any other employee, pay yourself a salary from your business. Don’t take money out of the business for personal use whenever you feel like. Make it official by writing yourself a cheque each month from the business checking account to your personal account. Budget your personal expenses wisely and wait patiently for the next payday.
When you have to pay from your pocket or use personal items for the business, you can charge it to the business account. Finally, make sure that your partner, spouse, children and others understand the clear demarcation between personal and business finances.
Maintain a strong work-life balance
There’s this idea that successful entrepreneurs have to work in their businesses for long hours every day. But as any psychologist or health specialist will tell you, that isn’t sustainable and is likely to cost your physical and mental health.
Getting enough rest and sleep, and not losing focus on the things that really matter are also important for your wellbeing as an entrepreneur. To be optimally productive, you need to have adequate sleep every night and make time for your family and friends.
Learn how to outsource, delegate, and automate some of the time-consuming business tasks. For example, you can hire a virtual assistant to manage your social media, respond to business queries, and create website content.
Find the right business partner
You can start a business alone and make it a success. But the journey might be easier with the right business partner. Most of the highly successful businesses in the world owe their success to great partnerships. For example, Bill Gates and Paul Allen founded Microsoft. Apple was created by the powerful partnership between Steve Jobs and Steve Wozniak.
Choosing the right business partner to work with is a key element in a successful business. Make sure that your partner shares your passion and vision, that they have a good work ethic, are trustworthy, have the finances needed, and bring other complementary skills to the table. To avoid unnecessary disagreements, have everything clearly stated in a proper contract for both of you to sign.