The majority of Americans want to start their own business, according to a Gallup poll. The distance between thought and action, however, can be vast: The sad reality is that the majority of those Americans won’t start their own business.
If you are one of the few who are launching businesses, though, welcome to the adventure! The odds are not in your favor, but that’s why you’re doing it. If you decide to bridge that gap and take the plunge, you might be the kind of person who hears the following words and thinks, “Yes!”
We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard.
— John F. Kennedy
You’ve also probably also been electrified by Steve Jobs’ famous line:
The people who are crazy enough to think they can change the world are the ones who do.
If such phrases resonate with you, you probably have the tenacity, the gut, the grit, the chutzpah, the energy to succeed. What you might be missing are some insider tips from a well-seasoned entrepreneur. Here’s what you need to know about starting your own business.
1. Your business will probably fail.
If you fall in step with the statistics, your business is going to bite the dust.
Popular knowledge puts the overall business-failure rate at around 90 percent, which may or may not be accurate. The more reliable statistics are nuanced, factoring in issues such as industry type and failure time frame. They don’t tell a dramatically different story.
One significant factor to consider is timing. When it comes to that crucial timing issue, 50 percent of businesses will fail by year five. After ten years, about 75 percent to 90 percent of small businesses will have been shuttered.
As dismal as these numbers are, they aren’t predictive. In other words, just because many businesses do “fail” or close within a given time frame doesn’t mean that your business will be the same.
Entrepreneurs were born to think differently, act differently and live differently. In the crowded mass of struggling startups, your startup can rise above and endure.
2. You will have competition.
Don’t dive into entrepreneurship, thinking that you’re the only fish in the pond. There are a lot of others competing for the same customer base.
And the thing is, some of those competitors may be better than you! Their branding may be snazzier, their pockets deeper, their talent superior and their knowledge greater.
So, be prepared for it, but don’t be discouraged by it. Without competition, you could easily grow lazy and lose your edge. Embrace the competition and improve because of it.
3. You will need to know more than you already know.
Most entrepreneurs build a business because they are experts or very well-informed about their work or trade. However, as Michael Gerber aptly pointed out in his book, The E-Myth Revisited, what these entrepreneurs possess in expertise they may lack in business acumen.
In other words, talent and expertise alone do not guarantee success. You’re going to need to know a lot more about accounting, scalability, marketing, sales, software, laws and a host of halo topics required for operating and making a business a success.
Related: 3 Famous People Who Started With Little but Achieved Great Success
4. You will need money to spend.
Businesses can be bootstrapped, meaning launched with nothing more than one’s existing cash or resources. Nonetheless, businesses often require significant initial capital beyond good financial planning.
One common place to get initial capital is through small business loans. Note the word small. Small business loans are for small businesses, and are usually for small amounts.
In the commercial banking industry, the median range of a small business loan is $130,000 to $140,000. That may sound like a lot, but when you consider the many expenditures you’re faced with — legal services, service providers, working space, employees and other operating costs — that amount rapidly dwindles.
You should be prepared to spend money, and also to protect it as the valuable resource it is.
5. You will not immediately become rich.
The title of “business owner” has a certain cachet, sometimes associated with visions of Bentleys and Rolexes. The harsh reality is that business ownership is more of a soul-sucking adventure than an income-boosting joyride.
Riches may be in your future, but the path to attain them is narrow, long and hard.
6. You need to obey laws.
In every country in the world, businesses have legal regulations with which they must comply. Perform your due diligence to understand how to register as a business entity, the licenses you must obtain and the taxes you must pay.
There is nothing worse than finding yourself in a legal mire due to laxity.
7. You can’t do it by yourself.
The Lone Ranger entrepreneur is a romantic image. It also looks economically provocative. Unfortunately, this image is not accurate. On average, startups with a single founder have a higher failure rate. One of the major reasons for failure is the emotional pressure that business ownership exerts upon an individual.
Paul Graham, entrepreneur extraordinaire and cofounder of Y Combinator, explains this.
The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws.
At the very minimum, start your business with a cofounder — or three. Beyond that, hire the help of independent contractors or other service providers to supplement your time commitment, talent and knowledge.
8. Your customers won’t come flocking.
No matter how great your product, how innovative your idea or how groundbreaking your technology, customers won’t automatically find you and flock to you.
In the real world of business, you must do marketing. Through online marketing, content marketing, and growth hacking, your business will grow. There is no other way.
9. You’re going to want to quit.
Let this final caution settle in. At some point, some time, you are going to be racked with doubt and consider jumping ship.
Rest assured that you will face a time during your entrepreneurial adventure when you will utter these words: “I’m done.” It’s hard. It’s really, really hard. I know.