In my years of owning businesses and working with business owners, I have nearly had my own study of entrepreneurship.
Business owners come in all types. I’ve read many books and talked with countless entrepreneurs about their trials and tribulations. I have also witnessed the unfortunate demise of several businesses–some surprising and some not so much.
With that, I bring you a very abbreviated list of things you should know. I continue to crave new knowledge as our business grows, and I hope you find some of this helpful and inspiring.
10 Things Every Business Owner Should Know
Starting a business? Here’s what every business owner should know:
#1: Business owners don’t necessarily make more money than W-2 employees.
When planning for your big career change, don’t expect to make much money at first. It could be a year or even a couple of years before you make enough to pull some out for yourself.
Starting a business from scratch takes an enormous effort of time. Once launched, don’t expect instant success. Not all will succeed; some will fail.
It is important that you have the runway to stay in business long enough to build brand recognition. On the flipside, you don’t want to keep it going if it’s just not working.
#2: The most successful businesses don’t always have a new, superior idea or product.
I am the CEO of a marketing agency. I find it energizing to hear new small business owners share their plans.
We get to hear from business owners about all aspects of their products or services. And, of course, nearly all of them are certain of their success for different reasons. What I have learned from these interactions is this:
Our most successful clients have not always had great products; they all have good products. They all take the business seriously, but some are just much more pragmatic about what will lead to success.
I tend to see those who are convinced they have the “next big thing” almost always a flash in the pan.
In today’s information age, I want it to be clear that whatever idea you have has likely already been tried, is already being built, or already exists. Sometimes, the small difference in how a product is made, delivered, distributed, or re-thought leads to success.
#3: Don’t rely solely on your business plan to guide you through your first years in business.
I will just get this off my chest. I am not a big fan of business plans. I don’t know how anyone could sit down and write out a business plan that would be 100 percent accurate without having operated the business for at least two years.
That being said, it is still an OK exercise as it helps you identify your business’s different needs. Business plans are a good starting point to test and incorporate your initial predictions, and see how things go.
But whatever you do, don’t let your business plan guide you to failure. Pivot–fast, if you need to do so.
#4: You need more than detailed planning and processes to ensure your success from the beginning.
You need a certain amount of runway to start a business. That runway is built on preparation, ideation, cash, and action. Way too much time is spent on preparation and cash.
I believe success is more predetermined by ideation and action than anything else. Preparation is important, but don’t let this keep you from starting.
Enough cash to survive is also important, but a great business can almost always find investors or access to cash down the road.
#5: Your service or product doesn’t need to be perfect before selling it.
Your service or product need only be in stable beta form to sell. In fact, why not try to sell it before getting a business license, business plan, bank account, or business card?
Too many people put off the, in my opinion, hardest part of business: selling and testing. Many people, especially friends and family, will pat you on the back and praise your idea.
They will tell you, “Of course, I would pay for that.” The trick is finding 10, 100, or 1,000 people who are actually willing to part with their money and give it to you.
Why not test that before you spend too much time and money?
#6: What works for others may not work for you.
It’s relatively easy to find someone who has been successful doing exactly what you want to do. Unfortunately, there is a trend of people making money by sharing “their exact recipe” with those who are willing to buy it.
If you need to buy your business plan or business idea, somebody else in your neighborhood is likely doing the same thing at this very moment. This type of copycat, “instant business owner” creation is nothing more than a money-making idea for those selling it.
The truth is, as I’ve stated above, the path to success isn’t just about the idea or the recipe. It’s also about the small things.
#7: Cash is king.
Cash is every business’s lifeblood. There are a few exceptions, mainly in software and social media, of well-funded startups that sacrifice cash for users.
But even those types of companies have a plan to turn into a cash-positive business at some point.
From day one, cash will be an important measure of success and provide you the ability to make growth moves. When you price your product or service and determine your marketing budget, do so with a positive-cash-flow mindset.
Allowing lengthy net terms and IOU notes are big risks to new companies. Great clients and great customers nearly always want to pay you for your services.
#8: Cash kills.
If cash is king, why would cash kill a company? I think this is more human nature than a business rule.
I’ve seen many companies became flush with cash too early, leading them to make poor business decisions.
Maybe these types of companies become complacent and believe the early success will continue. They may create and execute on marketing initiatives that are more self-serving and self-important than ones that actually convert.
Ultimately, they end up making the business more about them than about the customer.
#9: Save money by taking on more responsibility.
At the very early startup stage, a business owner has many roles and responsibilities. Good luck, and make sure to get some sleep.
At some point, you’ll see the value in unloading responsibility. Remember that your time is worth money.
It may even help to put a number on your time. Is it worth $200 an hour or more? Always evaluate how much your time away from your business is worth.
When it comes to being the head of your company, invest in people, processes, and products that free up your time to focus on the most important initiatives.
#10: You are not the expert at all facets of your business.
So, you know your business better than anyone else. True. This will always be true when you are the owner.
But are you the expert who must hand down directives for all roles? No, you’re not. In fact, you really suck at some things. For others, you are a passable replacement for an employee.
Always take ownership, always lead, and always direct and steer the company direction. But never forget to replace yourself with other capable people. Then, trust them.
It is not uncommon for even long-standing companies to suffer from stunted growth simply because the owner won’t let go of certain responsibilities.
A business owner can be successful, but there’s no formula for success that works the same for everyone. Creating a profitable business takes time, energy, and money.
To be successful, find out what you’re good at. Then, delegate everything else. This can save you valuable hours, which you can put toward growing your company.
Ready to scale your business? BrandCraft, a growth marketing agency, would love to meet with you. Connect with us today for a complimentary consultation.