I have dealt with thousands of entrepreneurs and aspiring entrepreneurs, both before and after starting their own businesses. I’ve heard it all- from the “I wish that I would have knowns” and the “I wish that someone had told mes” to the “If I could do it differently nows”. Not only have these experiences given me invaluable insight into what entrepreneurs most need to know before starting their own businesses, they also inspired me to pen the now bestselling book “The Entrepreneur Equation”. And while I can’t stress enough that you should absolutely read The Entrepreneur Equation in its entirety (see point 2 below- do your prep!), here’s a quick head start on a few things that you should definitely know before you start a business:
(1) It’s Not What You Think
A lot of the entrepreneurs that I’ve dealt with have gotten all swept up in the romantic, Hollywood fairytale notion of what starting a business will be like. Because they love to bake cupcakes and their family members rave about their take on red velvet, they think “Wouldn’t it be amazing to bake cupcakes all day- I should start my own business!” But then, reality sets in, as running a business and all of the non-Hollywood type business related tasks are now the main priority- you know, stuff like doing the financials, marketing, payroll, administrative tasks, customer service, and taking orders- the kind of stuff that never quite made it into the baking cupcakes fantasy. In fact, you’ll hardly spend any time at all baking cupcakes and may even need to hire someone to bake for you, so that you can focus on running your business. Realizing what running a business will be like before you start your business is key.
(2) Prepare for Success
I am constantly amazed at the amount of people willing to risk their entire life savings (and often family and friends’ life savings too, for that matter!) on a business that they have absolutely no experience in and haven’t prepared for. Before you start, some of the prep work that you do should include: getting a job in that industry, asking to follow someone who is already running a similar successful business, reading and researching to understand all aspects of running a business, testing out your concept on a smaller scale first, getting advice from experts within your field, and crafting a business plan with milestones that you want to achieve and smaller steps that will get you there. As you’ve probably heard me say a million times before, “If you fail to prepare, you prepare to fail”. This preparation will minimize the amount of mistakes that you make and help ensure that your business will be a success. And if you aren’t willing to do the prep ahead of time, this should be a big red flag signaling that you probably shouldn’t be running a business in the first place.
(3) Expect the Unexpected
While preparation is an absolute must-do, there are unexpected situations that will pop up in every business. Your business can and will be affected by all kinds of unforeseeable things from a rogue employee, the economy, new competition, customer feedback, the time of year or season that it is, etc. and you will have to manage your cash flow during all of these twists and turns. I have a Rule of 3 in business: it will take 3x as long, be 3x as costly and be 3x as challenging as you initially think. So, make sure to give yourself enough leeway and capital to start your business, run your business and live on while you establish your business (I generally recommend at least 2 years worth). This is so important to understand before you start your business.
(4) K.I.S.S. (Keep It Simple, Stupid)
One of the main things that most business owners need to know before they start their business is to simplify, edit and streamline everything- from your product/service offering and customer base to your brand and marketing message. New business owners have a tendency to want to be all things to all people, but having countless options and complicated offerings for all types of different customer bases just confuses and overwhelms people. Figure out what your few best offerings are and target the niche that would most want those products/services. Keep everything small, simple and easy to understand. It is much easier (and more profitable!) to expand in the future than to downsize. A smaller, targeted focus also allows you to better adjust your business and offerings as you go along, while you figure out what is working and what isn’t.
These are just a few things that entrepreneurs should know before they start a business. What other tips do you have? Please share them below.