In the aftermath of the recent pandemic, which caused many businesses to close, a new raft of business workers and entrepreneurs are deciding to pursue their own dreams of being a new business owner, and controlling your own destiny. The cost of entry has never been lower, with new tools to create your own website, and free social media to get your message out everywhere.
Of course, starting and running your own business comes with financial and personal risks, so I always recommend that you do your homework first, and follow some tried and proven strategies to improve your odds of success. Based on my own experience as a mentor and angel investor, I find that as many as ninety percent of startups fail in the first five years, despite their best efforts.
To keep you out of this statistic, I recommend the following steps to all aspiring business owners as they step into this new and exciting world of managing your own business:
- Solidify your funding plan before you start spending. By far, the majority of new businesses I know are self-funding (bootstrapped) from your own savings and prior assets. The remainder use outside funding, including crowdfunding, friends and family, banks, and investors. Explore multiple sources based on your level of need and risk.
The key is not to expect any magic or entitlement here. We all see reports of venture capitalists who invest millions in new businesses, but be assured that these investments come only after you have a proven base business, and have a case for scaling it quickly.
Pick a name, location, and marketing strategy early. Names and taglines are critical to success. Make sure the name and trademarks you want are available, as well as web site address, social media tags, and any other intellectual property. These are necessary to attract customers, investors, and give you a line of defense with competitors.
I can’t emphasize enough how important a name can be. Some of us can still remember notable costly mistakes, like the Chevy Nova, many years ago from GM. Pundits in Latino countries quickly pointed out that the name, ‘no va’ means ‘does not go’ in Spanish.
Do a written business plan to validate your thinking. Even if your plan seems simple and intuitively obvious to you, writing it down and having it reviewed by experienced friends will moderate your passion and assure you that all key elements are addressed. Scribbled notes on the back of a napkin and talking louder won’t reduce the risk.
Test your plan to get feedback from real customers. Use social media or reward target customers to volunteer for a feedback session. If an innovative solution is involved, prepare a minimum viable product or a video to demonstrate functionality and usability. It’s much easier to pivot before full production and much money has been spent.
Establish a visible and positive public image and brand. Use social media, industry shows, expert contacts, and social media influencers to establish a memorable brand even before you roll out your business. It helps to advertise your new presence with a grand opening, viral video, and traditional advertising to highlight entry into the arena.
Network extensively for partners, investors, and suppliers. These days, you can’t start and run a business alone. Utilize all the avenues for networking, including industry conferences, investor meetings, peer gatherings, and local civic organizations, to make your presence and value known. Giving is the best way to get the support you need.
Build a capable team of skilled business professionals. Successful business teams today extend beyond face-to-face employees, to include freelancers and remote jobs. Do some real recruiting, excluding friends and family, to find the right players. Don’t forget online recruiting tools, as well as local colleges for applicants with the right skills for you.
Define key metrics to measure progress and success. Set milestones and targets for revenue, profitability, and market share, and use these to manage the business, as opposed to hours worked and gut instinct. Take advantage of inexpensive tools to gather data and provide analytics. Use comparable metrics for managing team member results.
In my experience as a business advisor, I still see too many businesses started in the heat of the moment over career frustration or passion for a specific solution Be aware that running your own business can be equally frustrating, and failure consequences can be drastic. But if you do it right, the joys and satisfaction, as well as financial returns, of your success can’t be beat.
