Being a business owner is a dream of many. But, the road between thought and action is a long one. Even though the average American wants to start their own business, the average American won’t start their own business.
If you are one of the few entrepreneurs that have dared to launch their own startup, welcome to the adventure! But, strap yourself in because the odds are not in your favor.
Know Your Odds
So, what exactly are your chances? Only about 1 in 3 small businesses live long enough to see their 10th birthday. However, these numbers are not predictive, no matter how dismal they are.
Your startup can endure all the tribulations, but you have to live differently, act differently, and think differently. Being passionate is essential, but it is not enough. You can rest assured that almost every founder of a failed business was passionate about what they were doing.
When it comes to making decisions, don’t let passion take over. Instead, you must rely on knowledge. Ask experts about launching a startup, talk to prospects to find out your startup’s potential, and conduct market research. Think of it as driving a car. Your mind controls the steering wheel and your passion hits the gas pedal.
Success Takes Time
When it comes to business, there’s no such thing as an overnight success. There are only a few exceptions to this rule. It takes about 2 years before a new company gets some traction. You must come to terms with the fact that, at first, there will be a huge gap between the amount of work you put in and the gains you reap from it.
And, again, passion is not enough. If you are starting your own business, you need to prepare to dedicate yourself completely. If you don’t see yourself running the company five years from now, then you need to reconsider whether starting a business is the right move for you.
Many people who quit their day jobs to start their own business think they are quitting a 40-hours-a-week job to become their own boss. To succeed, you need a different perspective. You’re swapping your 40-hours-a-week job for an 80-hours-a-week job.
Chances are, your social life, your hobbies, etc. will suffer. Remember that every hour of extra time you put in your business is an investment. If you do things right, the sacrifices will deliver a great ROI.
However, this doesn’t mean you should spend less time with family. Instead, start off with eliminating other time-consuming habits. It may be time to cancel your streaming service subscription and install a social media newsfeed blocker on your smartphone. The time we spend on frivolous things can amount to a lot. Use that time to build your business.
You’ll Spend a Lot of Money and You’ll Lose Some
Undercapitalization is often a serious obstacle for small businesses. Whether you’re bootstrapping or taking out a small business loan, do know that you will need a significant initial investment. You’ll need to both protect your money as the valuable resource is in and to be prepared to spend it.
And, for that, you need to step up your financial planning game. You must factor in everything you need to operate your startup. But, before you do that, you need to separate your personal account and your business account.
Look at how much money you’ll need for marketing, supplies, rent, location. Be on the lookout for hidden costs and dependencies. For instance, driving a hydrogen car may seem cost-effective at first, but maintenance can cost a lot.
And, no matter how hard you try, there will be some losses. You need to think like a seasoned investor or stock trader if you want to learn how to spend money and how to mitigate losses. For instance, a stock trader needs to have a good understanding of market psychology if they want to keep their losses to a minimum.
Basically, this can translate to understanding the emotional and psychological aspects of investing and knowing how to recognize those factors. When spending funds on a growth opportunity, think about things like your own cognitive bias and overconfidence. Realizing that you are emotionally invested in something can help you see clearly.
For instance, let’s say you invested in a new marketing channel because it looked like the next big thing and you were really excited about it, but the numbers tell a different story. Knowing how to deal with your own biases would help you realize when to pull the plug on the new marketing channel that’s not generating leads and thus prevent further losses.
Your Employees Don’t Owe You Anything
Don’t expect your employees to work as hard as you do. If you have the wrong expectations of your workforce, you may fail to scale your business. Entrepreneurs often think their workers are entitled to them.
But, remember, your not just a business owner—you are a business leader. You depend on your employees and they depend on you. If you want your team to thrive, you need to know how to lead your workforce. If you want to have a good working relationship with your staff, you need to demonstrate that you are accountable, that you are ready to listen( and not just talk), and that you are their mentor ( not just their boss).
Never forget—you are an entrepreneur. You’re the one who doesn’t just see the doomsday news. You’re the one who sees an abundance of possibilities. Odds be damned, you’re becoming a business owner!