New Year, New Business?
Whether you’re happy at your job or feel like there’s more you’d like to do but can’t where you are today, chances are you’ve thought somewhere along the line about starting a business. It might have been a brilliant new idea you believe would surely sell. Or perhaps you thought about a service that you could deliver much better than what’s out there today.
Read more from this issue
Wages are finally beginning to rise and employers are doing more to attract and keep talent. But given how much the economy appears to be warming up, it’s also a good time to start a business—not to mention that the U.S. needs more startups.
New businesses are at a 40-year low, according to 2014 U.S. Census data, the most recent available. Startups historically have accounted for much of the hiring in the U.S., and they create new avenues for commerce, which ripples through their suppliers and complementary peers. So if you have a skeptical spouse, you can tell him or her you’re finally going to start a business not just for yourself, but for the good of the country!
Seriously, though, the best reason to start a business is that there’s nothing more exhilarating. Once you do, you’ll wonder why you didn’t do it sooner. Launching, and then making it work, can take every ounce of your being. But you will find that it enriches your life both professionally and personally.
Any would-be entrepreneurs should ask “how do I want to start,” just like when you’re starting out in the board game Life. In this game, you can set out to do something that makes a comfortable living and that’s it, or shoot for doing something epic.
I recommend the latter. It conditions one to constantly think ahead, handle surprises and nimbly modify strategy to stay ahead of the competition. You may end up with a business that doesn’t grow all that robustly after all. But starting out too passive is one reason up to 50 percent of startups don’t last beyond four years.
Either way, if you’re one of the thousands who are thinking this will be the year to start your own concern, here are some tips to consider based on my experiences, as well as stories we have reported over the years on entrepreneurs ranging from Life Time Fitness’s Bahram Akradi to Maud Borup’s Christine Lantinen.
Before you start
- Is this what you feel most passionate about spending your time on? The answer must be yes.
- Is this something that addresses a need?
- Can this scale into something really big?
- How long can you go without financial stability, or even a paycheck at times?
- Make sure you are physically and mentally ready to do this.
- If you’re married, make sure your marriage is strong enough too.
- Realize this will become just as important and emotional as having a child.
Before you launch
- Gather a ton of relevant intelligence—know your niche and industry inside and out.
- Understand your customers or clients—and everything else they’re buying/being asked to buy that’s similar to what you’re going to provide.
- Study the competition—and not just online! Your best intelligence comes from other people.
- Understand all legal, financial and regulatory requirements: local, state, federal and international.
- Don’t go solo: Start with a great team (and a partner, if possible). If nothing else, make sure you have close advisors; then you can consider finding good partners and employees.
- Run questions and issues by a lawyer who knows this space.
- Articulate your vision, mission and purpose in a good business plan, complete with a thorough description of the need your company will uniquely address, estimated universe of people who can benefit from your product/service and bios of the people who will make this happen.
- Bankroll more than you think you’ll need.
- Always have three plans of action for major moves, such as seeking financing, strategic partners, excellent talent or other elements critically important to your business. I launched a business with plenty of capital and a wealthy investor who was set to invest more. Within nine months, I learned my head of sales was providing false reports (sales were much lower) and my deep-pockets investor was going bankrupt. Luckily, I had a plan B (another wealthy investor) and C (another media company). I went to B, he was all set to buy in and then at the last minute his lawyers said he couldn’t due to a conflict of interest. This led to Plan C, which worked.
- Schedule time every week to work on the business, not just in the business. Entrepreneurs need to do more of the hands-on work in the beginning, but this can suck up so much time they have little or none left to do what they need to do most—continue strategizing.
- Plan the time necessary for your upcoming crash course in leading people, managing financials, recruiting, sales and marketing, law as it pertains to your industry, accounting, public relations and more.
Even with this fairly lengthy list, well-chosen steps and carefully prepared plans, there will be a wide range of surprises that come up—some good, some potentially detrimental. Just remember that it’s the journey that will matter the most, and to enjoy it!