If you’ve ever considered starting your dream business, you’re not alone. Michael Gerber, the author of The E-Myth Revisited, called it the “entrepreneurial seizure.” I have to admit, I’ve experienced it a time or two as a business owner and actually grew up in what I call a “small business family,” working in my father’s business as a teenager.
In fact, I learned how to work mowing the lawn at home and sweeping the floors of my Dad’s warehouse. He was adamant that I learn a good work ethic, making sure that I understood the right way to both mow and sweep. I didn’t appreciate at the time that there was a right way and a wrong way to do either—those lessons are more meaningful to me now than I think they were then.
Having experienced the act of starting a business from scratch myself, I can share a few lessons I learned along the way. Taking the entrepreneurial leap should be a decision based on rational analysis rather than hope. As much as possible, grasp the sacrifices you may have to make so you can determine if the risk is worth the reward.
Fortunately, in a study conducted not too long ago, 90 percent of the business owners said they would do it again and never look back.
Before you entertain the idea of beginning your own entrepreneurship, here are some points to consider:
- Beginning a business is hard. Staying in business is harder. I’ve never worked harder or longer hours than I did when I owned my own business. I can’t count the number of times my wife would call at 1 or 2 a.m. to ask if she needed to bring me a sleeping bag (my cue it was time to call it a day). In our survey, two-thirds of those surveyed said they worked over 50 hours a week, nine of 10 put in time on the weekend, and 80 percent of them continued working after leaving their businesses at the end of the day. That’s not to say it stays that way forever, however. If it does—and you’re not happy about it—you should reevaluate what changes need to be made.
- Is your idea for your business sustainable? Will people pay you for it? Over the years I’ve talked to a number of friends who had what they thought was a great idea for a new business, but their idea didn’t really solve a problem for their potential customers. Before you jump into business ownership with both feet, make sure you have something to offer that solves a problem, makes life easier, or that your potential customers are looking for. What’s even more important is determining whether or not they’re willing to pay for your solution at a price that will be profitable for you. A solution your customers won’t pay for isn’t really a viable solution.
- Can you identify your competitive edge? Is your product or service less expensive than others? Is it easier to use? Does it last longer? If you can’t describe what makes your product or service better than anything else available, it will be difficult to convince your potential customers to spend their cash on what you’re offering. If you can’t find your competitive edge, work to create one.
- What will your solution cost? How you set the price for your product or service is critical. Price it too low and not only will you reduce your profit, but you risk giving the impression that your product or service isn’t valuable.
I met an inventor who had broken his arm. To ease the discomfort from itching, he drilled a hole in his cast so he could blow cool air into it with a hairdryer. He decided to make an adapter that could be placed in a cast by a doctor. Although it only cost him about $.30 to make, he charged $25. “Because,” he said, “doctors won’t buy it if it’s too cheap.”
I learned that you can price things too low as well as too high and make it more difficult to sell your product.
- Do you know your stuff? In my off time, I enjoy maintaining my motorcycle and take pride in doing the work myself. I’m not a real motorcycle mechanic though, and opening up a shop to fix other’s motorcycles wouldn’t be a good idea because I really don’t know what I’m doing. Every new project is an adventure of discovery. I’m passionate about it. It just wouldn’t be a good business idea for me. If you’re going to take the risk of starting your own business, make sure you have significant industry knowledge and can leverage your expertise into building a strong, healthy business.
- Make it legal. If you’re going to start a new business, even from home, make it legal. Get a business license, register with the state, and be a business. This is important for a number of reasons, but it can make a difference when you’re looking for financing down the road. Lenders want to see a track record (the longer the better), and if you’ve been doing business for seven years, but you didn’t get a business license until last year, you’ve really only been in business for a year—at least as far as the bank is concerned. Get a business checking account and separate your business expenses from your personal expenses. This applies regardless of the business entity you choose, but is something mandatory that you’ll need to do should you decide to incorporate.
- Location, location, location. Where you decide to do business is every bit as important as your product or service. Retail businesses should probably be in locations where potential customers will find them; it’s a different story for online businesses or industrial businesses. I know of one business that started out working from a storage area. His father owned office buildings and offered him the free space to get things up and running. He eventually wound up a major tenant of the building but started with those humble beginnings.
- Do you have the capital you need? Many businesses fail because they don’t have the cash flow to support their business. Unfortunately, finding capital is very difficult for new businesses without a record of accomplishment, no revenues, and no credit history. This isn’t the end of the world, but financing will be difficult until you get a couple of years under your belt. This is the time to start small and be patient. If you have a business idea that can scale quickly with the infusion of some extra capital, it might be possible to find an equity investor willing to help you get going. However, an investor will likely be looking for an exit plan and will want some decision-making influence as well as a seat at the table when important decisions need to be made.
- Cash is great, but creative problem-solving can take you far. Popular media would have us all believe that money solves all of our business problems, but it’s really creative problem-solving. Are there ways you can reduce your costs to get started? Most entrepreneurs are always looking for ways around, over, under, or through problems—I think it’s part of their DNA. Can you look at a problem or other situation from other perspectives and find creative solutions? This is a skill you’ll need to successfully survive your “entrepreneurial seizure.”
- If you build it, will they come? Not if you don’t do any marketing. You may have the best solution on the market, at a price your customers will be willing to pay, but if they don’t know about you and your business, you won’t make any sales.
Marketing your business is one of the first and best investments you make toward your eventual success. According to the SBA, investing seven to eight percent of business revenue on marketing is a good rule of thumb. However, if you choose to wait to invest the recommended amount into your business, you can gain some exposure locally.
Participate in your community events by volunteering, setting up at street fairs, holding a fundraising event. Participate in Small Business Saturday® and Shop Small®. Or, start small and simple with your marketing by sending a direct mail piece that offers a new customer discount. All deals for now offers their Blue Envelope full of local business coupons that households anticipate receiving. Invite your community to a grand opening or holiday event with a postcard.
In the very beginning, when my business was very small and we didn’t have a budget for the large direct mail campaign we wanted, my partners and I created our own postcards, addressed and stamped them after work on Monday, and deliver them to the post office. For somewhere around $100 every week we were able to send out postcards to customers and prospects to remind them we were there and introduce our weekly special. Like clockwork, the phones started ringing on Wednesday as our postcard arrived in their mailbox. Eventually, we had the budget for the large-scale direct mail campaign.
Marketing doesn’t have to be expensive, but you have to do it. Be creative. Don’t be afraid to try something new. And, don’t be afraid to tackle something yourself. I think one of the things that made our postcard so successful was that it didn’t look slick and overproduced. It looked like exactly what it was, something we were doing ourselves.
There’s nothing easy about starting your own business. It takes hard work, determination, commitment, vision, and sacrifice, but it’s also very rewarding. Doing your research and knowing what to expect will help you decide if business ownership is right for you. If it is, get out there and make your dream a reality.
If you’ve decided that business ownership is something you want to make a reality, or you’re already there, All deals for now is here to help you grow. With over 145 franchise offices across the United States and Canada, there’s a All deals for now marketing expert near you. Download our Media Kit* and contact us today!
Ty Kiisel is a contributing author focusing on small business financing at OnDeck, a technology company solving small business’s biggest challenge: access to capital. With over 25 years of experience in the trenches of small business, Ty shares personal experiences and valuable tips to help small business owners become more financially responsible. OnDeck can also be found on Twitter.