It’s still early in the new year and, like every January, hope springs eternal. With a clean slate, almost anything seems possible . . . a new job, a new career, a new home, new relationships, maybe even starting a new business.
Despite the economic struggles of recent years, small businesses remain the backbone of the US economy—everything from the neighborhood handyman (or woman), to professional consultants, to Mom & Pop shops, to construction outfits, and more. You name it. Practically any talent or skill can be turned into a business provided you have the right stuff to make it happen.
Almost two years ago, I wrote a blog about the non-financial aspects of starting your own small business. Do you have an idea? Do you have a plan? Do you have the right attitude?
It was full of sound guidance then; it remains so today. Enjoy!
So You Want to Start Your Own Small Business?
(Originally Posted on February 28, 2012)
I am always being approached by friends, colleagues, and sometimes even strangers who are thinking about starting their own small businesses. They want my advice, my insight, a glimpse at whatever “secret sauce” I’ve been cooking that’s allowed me to start-up several successful small businesses in the last decade.
On one hand, I want to welcome as many newbies into the small business owner community—the more the merrier!—while on another, I realize being a successful entrepreneur takes a certain kind, some luck, and lots of hard work and sacrifice.
- FACT: The U.S. Small Business Association estimates that if you start a small business today, you have only a fifty-fifty chance of surviving to year four, let alone being profitable.
- FACT: The U.S. Small Business Association estimates that only about 1/3 of all small businesses EVER turn a profit. The rest either break even or . . . well, they don’t.
Now, with numbers like that, you might be thinking things look pretty bleak for your prospects of becoming the king or queen monkey of your own small business empire. Not so fast. Don’t take your bananas and go home quite yet. There are always two sides to every story.
- FACT: There are almost 23 million small businesses in the USA, many of which are successful and doing just fine, thank you very much. You are NOT alone.
- FACT: Your business has at best a fifty-fifty chance of surviving to year four. (I know, I know—I’m repeating myself. But really, is a 50/50 shot all that bad? Hall of Fame Baseball players only get hits about 30% of the time, and more than likely there’s a 50/50 shot of rain or shine tomorrow, wherever you happen to be—are those odds bad enough to keep you indoors?)
- FACT: According to the U.S. Small Business Administration, small businesses create 75 percent of the net new private sector jobs in the U.S. economy. Small businesses do make a difference to our economy in a BIG way.
I tend to think that all these statistics mean little or nothing to each individual’s unique business opportunity. The fact is successful small businesses start up all the time. And there’s nothing to prevent you from being one of the success stories—nothing that is, except for YOU.
So what’s my secret sauce? It’s quite simple really. I don’t have one—at least not something I consider proprietary or unique to me. That said, here are some common sense “Points to Ponder” as you go about starting your own business:
- CHOOSE WISELY: Many people become small business owners because they are passionate about some “thing”—a hobby, pastime, or a particular talent. This is good. You must be passionate about the work you do to be successful, but passion alone won’t turn a profit. Success rates are not equal across all industries. Think “print magazine” vs. “online video” start-up. Realistically, these days, which endeavor is likely to be more successful? So consider how you can apply your passion to an industry that’s brimming with opportunity.
- HAVE A PLAN: Entrepreneurs need to define their game plans before they start. What are the steps—personal, financial, legal, regulatory, etc.—you need to take to “be in business”? What kind of financial commitment is it going to take for you to be successful? Once you’ve set-up “shop,” will you have funds to market your business? Who are your competitors and how are you different? What does success even look like? Don’t just jump in. Look and plan before you leap.
- APPETITE FOR RISK: You can’t be an entrepreneur if you’re risk averse. I’m not saying you need to be reckless, but in order to succeed, you must not be afraid to fail so you can learn from your mistakes. “Failing fast” can make you hungrier than ever for success and fill you with insight about what works and what doesn’t work in your particular business or industry.
- BE WILLING TO SACRIFICE: As much as I love what I do, I’ve had to make sacrifices along the way to be successful. The last thing I wanted was to be the reason for my own failure. Gone were the days of my employer-backed steady paycheck (of course, having witnessed what lay-offs have done to millions of people across this country, I might argue now that paychecks only seem steady, but really aren’t). I needed to think about who was going to pay the rent/mortgage and put food on the table. As owner of a small business start-up, most likely that’s going to be you, your spouse/partner, or some member of your family. Ask yourself, how far can you go with little or no revenue . . . and is your family willing to take that risk/support you? I also had to consider how spending long days and weekends working on my business would affect family and friends . . . and so will YOU. Do you have kids? Are you married? What sacrifices are they/you willing to make to be successful?
- BE THE DECISION-MAKER: It’s lonely at the top. Gone are stress-free days or relying on others to make business decisions for you. When you are the small business owner, there’ nowhere to hide. You must be accountable for all decisions (at least if you want to be successful). Here’s a tip that’s worked for me: create your own executive board of colleagues, associates, and trusted advisors to meet with you quarterly and to hold you accountable.
- NETWORKING: You can’t be in business all by yourself. Networking exposes you and your product/service to a wider audience. Get out, whether it’s in the flesh or virtually. Invariably, someone you meet will “know” someone else or identify an opportunity for you . . . or you can do the same for them. Successful small business owners thrive by “paying it forward.” (Le tip of Culver City and Southern California Venture Networkers in Orange County are two great networking groups I belong to!)
- EXECUTE SMARTLY: It’s one thing to have a plan, but what you do with that plan will go a long way toward determining your success. Do what you say you will do. Don’t be afraid of a little hard work, and don’t be gun shy about “going for it.” Be willing to adapt to changes in the marketplace, and above all else ALWAYS deliver what you promise.
- WORK SMARTLY: Realize that in a small business, especially when you first start out, that sometimes you’re both the chef and the cook. Is this always wise? Can you realistically do it all, especially long-term? Recognize your limitations and play to your strengths. Are you bad with money? Consider hiring someone to keep your books. Is your command of the written word lacking? Consider hiring a wordsmith. Is technology your worst enemy? Get a tech-partner on board. And even if you’re good at everything (we type “A”s got to stick together now, don’t we?) don’t do what you hate, you’ll only end up hating what you do.
Do I have all the answers? No. Have I learned a lot starting several successful small businesses over the last decade or so? You bet. Is there more to learn? Every day.
Here’s one more item for the list, and perhaps the most important: ATTITUDE. With the right attitude, anything is possible. Chances are if you engage in any endeavor with an attitude of “this can’t possibly succeed,” it probably won’t. You must be smart about your small business start-up, and the first place to start is with a positive outlook. Repeat after me: “I love my business, I love what I do, and I will be successful.”
What are your small business success stories? Add them here.