Many people around the globe are interested in starting a business. Many nine-to-fivers are feeling uncertain about their job security because of the global economic downturn. Each year, more start-ups fail.
I’ve compiled some basic rules after long conversations with lucky people.
Keep it simple.
Many start-ups start with one idea that eventually becomes the final product or service. This simplicity allows you to focus. This keeps your business small and enables you to focus on a unique idea.
It is easy to lose sight of the main idea and expand your business model, even before your product launches. This is the first danger a start-up faces.
Over-spending too quickly can cause you to exhaust your resources and confuse the market, which could lead to investors being scared off.
You can keep track of potential areas for diversification, product ideas, and future opportunities. These can be dealt with in a strategic and planned manner later on if you are in a better position.
Your budget is only as strong as your contingency.
It is easy to underestimate your costs and ruin your chances of success. A start-up’s goal should be to succeed. It is not enough to have a budget that will allow you to survive. This initial capital is not enough to enable growth or break into new markets. Your revenue will soon dry up.
Entrepreneurs tend to focus only on the profit and cost of their products. They forget to consider other costs such as legal fees, market research, or additional staff needed to grow.
In your cost projections, always include an actual salary. Although you might be willing to work less in the short-term in order to reap higher rewards in the future, your landlord or telephone company will likely not be as flexible with payment arrangements.
Create a strong team.
A business owner’s support network includes family and friends. It is vital to have people to turn to for honest advice. The key is to distinguish between professional and personal help—people who are able to get the job done and not people you like.
Don’t fall for the trap of believing you can do everything. A business requires many skills and experience. Wise entrepreneurs will create a team that balances their strengths. Your core team should include people who have a different relationship with you than just a personal one.
Know when to throw in the towel
A business owner does not want to have to shut down a project they have invested their time, money, and hopes into. If you’re going to succeed, it is essential to learn when to admit failure. Henry Ford stated, “Failure only gives you the chance to start again more intelligently.”
Accept your losses and know when enough is enough. It is easier to accept defeat than to repair any financial or professional damage.
It is not easy to launch a successful business and make it profitable. You need to be patient, skilled, persistent, and able to recognize opportunities. It might not be easy, but you can learn from others’ mistakes and get there faster.
