Five things to Expect When You Start a Business
You’re thinking about starting your own business. You’re excited. You’re eager to get going. And there is a little bit of recognition that you don’t know what you don’t know. This post highlights top things to know when starting a business. Knowing them in advance will help small business owners effectively deal with them when they arise.
Five things Every Entrepreneur Must Know:
1) You will work harder than you ever have in your life.
2) You won’t make any money for a while.
3) You’ll probably make some bad decisions (everyone does).
4) Your friends and family won’t understand what you’re doing.
5) You will be lonely at times.
Working Harder than Ever
Most entrepreneurs say they work more hours than ever, including nights, weekends, and even ducking out from the reception to take a call. It never stops. Mostly, they say, they wouldn’t want it any other way.
If this concerns you, consider what most entrepreneurs say they left behind. “I worked fewer hours in my previous job but had no control over my schedule. Worse still, many things I was asked to do were misguided or pointless. I had no sense of accomplishment at the end of the day and was always stressed out.”
Running my own business, every hour I work takes me an hour closer to achieving my goals. I’m on a journey and stay on course. This way, I’m much more productive than when I worked for someone else. In fact, I’ve never been so busy in my life. But it’s a good kind of busy that keeps me motivated and excited about what I’m doing.” “I work hard, but I also play hard. I’m not chained to a desk all day, every day, and that’s one of the things I love about being an entrepreneur. My schedule is flexible and my time is my own. And because I have so much more control over my life now, it feels like less of a sacrifice to put in long hours at times.”
Not Making Money for a While
Most entrepreneurs have unrealistic expectations about how much money it will take to start their business and how long it will be until they surpass their current earnings. Those who understand this are often reluctant to jump ship from the corporate world with the regular paycheck and benefits plan.
That may be why so many small businesses are started by people right after they are laid off, fired or left their job to relocate for personal reasons. The risk-reward ratio changes when you’re not seeing those automatic deposits drop into your account with bi-weekly precision. That said, anyone starting a new business should closely examine the financial implications for themselves and their families. If you’re looking to start a new business, or have been thinking about it for some time, here are a few things to consider:
- Take a close look at your personal budget. Figure out how much you need each month to cover your essential expenses. Missing certain monthly expenses is not an option. Your mortgage or rent, car payments, and health insurance bills must be paid. If you fall behind on these items, fear will set in and you’ll soon experience levels of stress that make it hard to stay motivated to run the business. Start by knowing that monthly number.
- When you consider the startup costs of your business and your funding plan, it is critical to consider your minimum financial needs. This IS a business expense, because if the founder is financially incapacitated, the business is at high risk. Establish a salary that you need to take even before the business is making money. The amount of business investment or loans you take must be sufficient to cover your basic salary. Investors and lenders will want to see you have “skin in the game.” That means, they would likely expect your salary to be lower than what you were making in your previous job, until the business starts to make a profit.
- Finally, consider that most entrepreneurs underestimate their expenses and overestimate their revenue. It is very hard to raise additional money after you’ve demonstrated that what you said was going to happen, did not happen. The time to solve this problem is before it ever occurs! Check your numbers, curb your expectations for immediate success and budget for things to take longer to ramp up. Seek out advisers who have been there and get their input. Have conservative estimates of how fast you’ll start to turn a profit. Fund your business for conservative estimates. No lender or investor will be upset if you get there quicker!
If you do not make any significant mistakes or missteps on your road to success, you’ll be the first person who didn’t. Perfection is not a trait successful entrepreneurs pursue. Resilience and perseverance are the qualities most successful business owners consider most important.
How to Avoid Making Bad Decisions
Have a plan with goals. Identify key performance indicators (KPIs) that will provide feedback on whether the plan is working as expected. Monitor them closely and don’t explain away any shortcomings. Find the balance between patience and knowing when to tweak the approach. Know when it’s time to pivot completely to a new approach. You can also use SMART goals.
Most of all, study your mistakes even more than you study your successes. Learn from them and become a better business owner. Nobody is born an expert at anything. To become an expert, you must make and learn from some mistakes.
Family and Friends
Let’s break that into separate categories, family and friends.
Being the significant other of an entrepreneur is a particularly challenging endeavor. They are responsible for keeping you grounded and ensuring nobody shows up to repossess the car or foreclose on the house! That’s not meant to be funny. That’s what many partners worry about night and day, while you’re toiling away to make the business a success.
Family members generally fall into two categories: 1) The worrier, someone who finds a regular paycheck as important as a regular heartbeat. 2) Your biggest fan, someone who believes that you will achieve everything you set out to accomplish and they are there to root you on all the way to the bankruptcy court.
Then there is you. It would help if you recognized that whether you are with a worrier or your biggest fan, neither one is completely wrong or completely right. Both personas want you to succeed. One is driven by fear and wants to protect you both from the financial devastation of failure. The other one is completely trusting you to not let that happen. Know where you stand and be supportive of your partner’s position.
Your friends. Let’s be a little harsh here. Your friends who are not themselves business owners, probably wish they were. They are stuck in jobs, just like you were, but they haven’t found a way out. One of the things holding them back is fear. You don’t have that fear. When you take risks and succeed, it will highlight that someone they once thought of as a peer in life, has actually moved ahead of them. You were right–starting a business is the way out. They stayed back and that’s where they still are.
The reality is that most of your friends want you to succeed, but not so fast or not so big that it makes them feel diminished. That’s okay.
Avoid turning to your friends who are not business owners for business advice. Choose friends who make good friends and advisors who make good advisers. Don’t mix them up.
The worst question friends and family members will ask, which demonstrates they do not understand the entrepreneur’s mindset, is this: “What are you going to do if this doesn’t work out?” Entrepreneurs don’t spend time thinking about what they’ll do when they fail. They spend all of their time and energy thinking about what they can do to succeed.
Loneliness. Being a “lonely” business owner doesn’t mean that you don’t have social contacts. However, business owners often find that there are things they would rather keep to themselves. You can’t share with your employees that you’re under great pressure waiting for a payment to arrive and without it you don’t know how you’ll make payroll. You need to show confidence to employees and even family members, which means not getting into everything that concerns you. There are people at work you enjoy spending time with, but you realize that it’s better to keep work and friendships on separate tracks in many ways. Collectively, these things can be isolating. For many first-time entrepreneurs, this is a new feeling.
Consider finding peer groups of other business owners to meet with. There are many such organizations available. Search for “peer advisory groups for business owners” to find some in your area.
By knowing these five things that impact almost all entrepreneurs, you’ll be equipped to manage through them. After all, you are an entrepreneur. You are driven, hard-working, and, most of all, resilient!
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