Like boxing or chess, business is a game of strategy. There are things every entrepreneur must understand about starting a business in order to have a chance at success. Starting a business will never be easy, but understanding a few basics can make for a healthier start.
Over the last decade I’ve started 4 businesses, went out of business once, sold two businesses at cost, and am currently working on a startup now. My businesses have failed many times, but I have not, because I chose to learn and grow from each experience. Today I have a much better understanding of what makes a healthy start to a business.
Here are 5 things you must understand before you start a business.
1. Your business is a vehicle, not a job.
A business is a vehicle that will carry you places, in life, that very few careers will. Freedom. Time. Money. Influence. Authority. These are few of the rewards of a successful business. However, many people who start businesses end up creating jobs for themselves, because rather than working ON the business, they find themselves working for the business. Many times it’s worse off than being employed. Trust me, I’ve been there!
If you choose to go into business, first you must be honest with yourself and understand WHY you’re making the decision. Where do you want this move to take you? Only THEN can you begin the process of finding the right business… the right vehicle to take you where you want to go.
2. Research is a non-negotiable, but perfection is not.
My first business was started on a whim. On Monday I didn’t know what I was going to do with my life and by Friday two weeks later I was licensed, and had started my insurance agency. I was told (mostly because I believed it) creating a business plan isn’t necessary… and well, its true.
Creating a business plan is only necessary when you want to succeed. At a bare-bone minimum, you have to know who spends money, on what do they spend it, how much of they spend, and with whom they spend it before your business can make money. That’s just common sense. After you know those four things you can point your business in a direction and run toward it.
Perfection is not necessary, but without knowing who you’re serving, how you’re serving, who is the competition and if enough people will buy what your offering, your doomed for failure… or at least a painful learning experience.
3. Plan with success in mind, but don’t forget to start.
Like boxing or chess, business is a game of strategy. You have an end-game in mind, you know your market, and you know your competition; now how are you going to succeed?
Answering this question falls under the category of business planning, and just like research, I believe it is only required if you want to be successful. Also like research though, you don’t need perfection. Make a plan, but remember excessive planning is often a fancy form of procrastination. It’s also a sign that you’re scared to move forward because you’ve not done the research to prove success is possible.
4. Passion is required; capital is helpful.
Listen, starting a business is hard. It’s not for the faint at heart, and I don’t recommend it for very many people. There are days when the stress of owning your own business will cause you to question everything in your life. I’m sorry, but it’s the truth.
There are only two things that will make your new venture slightly easier: Passion, which must translate to insane levels of hustle and work ethic, and capital, which means available cash.
From day one, I’ve had a passion for business, and it’s the only thing that has kept me in the game. However, I’m just now learning the art of turning that passion into hustle and insane levels hard work (my day starts at 4:00a now). Anyway, the fact is, if you’re not head over heals in love with business (marketing, sales, finance, and people), then your probably not going to succeed. The great news is, that if you don’t have it now, you can learn it.
Until recently, startup capital is something I’ve never valued or possessed. It many cases start up cash is not necessary, but oh boy is it helpful. Without the cash you have to be creative, stubborn, and a little bit insane, but you can make your business succeed.
Here is the bottom line: Passion, hustle, and a lot of hard work without capital is possible, but capital without passion, hustle, and a lot of hard work is wasted money.
5. Money is made on service; profit from stewardship.
Being in business is a noble profession. It’s not greedy or selfish, and it’s not even slightly dishonest or slimy. In order for you to succeed in business you have to make serving people the goal. The better you serve, the higher your revenues will grow. You can speed up the growth with great marketing, sales, and communication, but if you don’t serve people the money will not come.
My first two business failed because I was focused on money and my third business did several hundred thousand times better when I focused on service, but it still did not succeed. After you serve people, and they give you money you must to steward your business expenses and investments. Without proper stewardship you may have a lot of money coming, but you’ll have very little money left.
Remember, the purpose of your business is to be a vehicle, not a job. This means that planning, strategy, service, and stewardship all should be done with the end in mind. Do you want to work in the business your whole life? You can do that. Do you want freedom to leave your business? you can do that too. Whatever you want from your business though, be sure to be intentional about making it support your life.