Nowadays, becoming an entrepreneur is all the rage, they are the new heroes of our society and governments constantly encourage individuals to launch their own business. Still, there are a lot of psychological barriers and real risks when it comes to entrepreneurship. Let’s see what it takes to become a successful entrepreneur and how you can mitigate these risks.
Cost: don’t break the bank
This is actually a theme that usually comes first. Most people are afraid of the amount of capital they may need to launch their business. But that’s actually one of the biggest myth, if you run an online business, you can launch it with $30 (the cost of the website domain, that does not include your own time spent of course). You also need to register a company but the costs and process time really depends on the country and whether you are local or not (it can be super fast and cheap like in New Zealand (half a day for $120) or the worst and most expensive administrative nightmare (yes I’m looking at you Indonesia and Malaysia!), so pick the right country to create your business!). Do not underestimate the recurrent administrative burden that comes with the jurisdiction that you picked, it can be very high (no I won’t mention any country, but the one I have in mind is famous for its wine and cheese), contrary to a neighboring country sometimes dubbed the Perfidious Albion :) If you want to launch a brick and mortar business, the cost will be obviously much higher, since you will need to buy/rent a store/office, or even build a plant, hire staff… So if you want to play it safe, I would advise you to start with an online business. You will definitely make mistakes along way but these mistakes won’t cost you your house :)
Timeline: double, triple your estimate!
The timeline is unfortunately something most new entrepreneurs do not pay enough attention to. Your company won’t be profitable within 2-3 months, you will need at least 6 months to 1 year to see the first fruits of your hard work so patience is key in the long run. You need to focus on your product, and sales to drive your business. So make sure that you have enough savings to last for a year without any income. Getting the first few clients is often difficult but also a good lesson to find the best system to get leads and how to convert them into clients efficiently. Depending on your business, it might be better to get clients through email blast using Mailchimp and SEO for instance, networking in person, getting referrals from current/former clients or making cold calls. There is no one way to do things and it also depends on your own style, you might love human contacts and meeting people face to face or better are propagating your voice through Youtube Videos. It is also highly dependant on your sector.
Skills: a unicorn?
Which leads us to another important theme, what skills do you need to launch a new business successfully? A good entrepreneur is someone who will think outside the box, who will constantly think of new ideas/concepts, be curious and open minded. Also being an entrepreneur means creating a new product, something that does not exist and will attract clients, so a bit of creativity is also a good skill to have. Furthermore, rigor and organization are paramount for the success of your new business, you will need a good plan, with data to analyze and classify in order to have a live view of your situation and as a consequence be as reactive as possible. I often see business owners that have no clues about the most essential data in their business (average monthly revenue, cost, inventory turnover, Debtor/Creditor Aging…) which is definitely a huge red flag.
Expertise: your key differenciator
I can usually tell you within 15 minutes if an entrepreneur can succeed or not, just by questioning him/her about his/her own sector. If you really know your sector/domain of expertise, then you will have a huge edge over the competition and people will trust you and come to you. Expertise creates trust, it’s as simple as that but you will need to work hard to create it, which means researching, belonging to the right business associations, participate to conferences, write articles, books, network, get certifications…
Passion = success
If you are not passionate, you won’t succeed, because you can’t fake passion and this is something your clients are looking for. Passion means dedication and high quality work. With passion also comes energy and you will need a lot of it especially initially to drive your business and give it the right foundations. If you are looking for a 9 to 5 job, run away please. And for those who love the “4-hour week” from Tim Ferris, it’s an interesting read and a catchy title but it is not realistic (at least not before numerous years of hard work).
Plan, Plan, Plan!
You can’t run a business without a plan, and sticking to it because otherwise, you will run in all directions without any efficiency. And you need to focus on your priorities, spending a lot of times on marketing when you don’t even have a product yet is certainly putting the cart before the horse. Focus on the product first, research the market and make sure that it is compelling and respond to a need. Once that’s done, you can put your salesman costume on, perfect your sales pitch and power up your marketing engine. Anticipation will also be crucial for you, stay in touch with the international/local economy, you might think that you are doing well, but what will happen if let’s say, the price of oil drops by 50% and most of your clients are in the Oil&Gas sector? Or like most analysts, you think a recession is coming in 2019, can you withstand the shock and react accordingly? You need to develop different scenarios and ways to react. This is usually what makes the difference between a good and a great entrepreneur. Remember this motto, hope for the best, plan for the worst!
Age & Familly situation
I see a lot of kids excited by the success of Zuckerberg and think that they can launch a successful business at 23 and earn several billions of dollars a few years later during an IPO. Let me tell you that your chances are pretty much nil. At 23, you know nothing about business, all you have is a bit of theory from your classes in university but reality is usually completely different from theory. So like Socrates, acknowledge that you know nothing, and get a demanding job in an area that interests you, learn the rope and then launch your own business after at least 5 years of experience (10 if you want to play it safe). Your chances of success will be much higher and you will have a network that you can count on when you look for your first clients. Furthermore, if you have a wife/husband and kids, you need to be extra careful. Make sure that your partner is ok with it and will support you through this demanding career path. Not all husband/wife will be happy if you dedicate 100 hours a week to your new business. Sacrifices will have to be made. Also do not launch a business if your partner cannot support the family on its own, remember that you won’t be profitable immediately. Of course, if you are on your own, the choice is easier but it will also be a lonely journey which can be tough psychologically speaking.
Career Impact & Plan B
Finally, you also need to think of a plan B in case all the forces in the universe derail your project and you have to give it up. In the US, failure is not seen as the end but as a necessary learning curve and you will see plenty of serial entrepreneurs that at first failed but then become successful because they learnt from their mistakes. Banks and business angels are useful risk takers who will more often than not back you even if you failed with your first business. But what if you leave in South American or Continental Europe, the mentality (even if it’s fortunately changing fast) will be quite different, and failing a first business might mean being ostracized for good, i.e being unable to get new loans or going back to a more traditional job. So you need to be extra careful in these regions and make sure that you have a strong plan B.
Tell me more about yourself!
If you are thinking about launching your business or already did and want some advice/help, then don’t hesitate contacting me, I will be genuinely happy to talk to you and help you (check out my website and here is my email: [email protected]).