People say many things and give lots of advice. Here is my experience from starting, running, and closing several businesses in 4 countries over 25 years:
1. Know at least one aspect of the business you are starting.
The manufacturing or operations, the sales and marketing, the people or have the money. If you know one of the first 2 you will need less money and will not need a chief operating manager.
2. Have funds available to you that are at least 3 times what you initially estimate your project cost to be.
Your project will not take off the way you anticipate. There will be hidden costs you did not imagine or calculate. There will be delays which will keep your over head meter running while depriving you of revenue. There will be delays in staffing and government approvals.
3. Convert your business model into financial numbers before you start.
You may start your business because you don’t like the way your boss runs the company. Or because you always wanted to work for your self. Or because an inner voice is telling you that it is the right thing to do. Whatever the reason.
Your business model must be viable when you convert it into profit and loss statement and a proforma balance sheet. Without assuming that costs will magically be lower and that sales will rise over time. If the business model is not profitable - change it before you start! There is less pain, and damage to your ego to do it now, than later.
Remember that at the start we are not creating a Fortune 500 company or a multinational Franchiser. We are a start up. We can become something else only if we survive this phase!
4. Keep your ego in your pocket not on your sleeve.
An entrepreneur by definition must have a big ego to go it alone. 75% of new independent businesses fail. But this ego which helps him to start and work through the various trials and tribulations of a new business is the very thing that stops him from accepting the changes required to persevere and succeed.
It is a simple truism which is so obvious that we don’t do it. If something we planned or believed in is not working, we must change it. But we don’t because we identify with that idea so strongly that we come to wrap our self image into it. And some times this idea is what we need to abandon, to save our company.
Many US corporations have discovered that for a restructuring to succeed, the CEO needs to be changed first! Why?
5. Learn to endure and persevere.
Remember your motives when you started the business. You will be very lucky if you make money without going broke first. 25% of new businesses survive. But for most of us our business will start doing well in the long run - if we are still around.
At first we will be indefatigable. Our ideas will be implemented. We will hardly have any time. Revenues will start, slowly but surely. Our seed capital will be there to meet the short falls. And we will strut around as successful entrepreneurs who have started a new business.
Then our capital will slowly run out. We will be scrabbling to meet the operating costs which will unexpectedly be rising. Revenues will not have caught up, and we will start becoming masters at borrowing money, and stretching our suppliers payments.
We will be spending less time at home. Perhaps will think of selling our wife’s jewelery. Moving to a cheaper house. Changing our children’s school. Taking on a job. Taking a partner. Thinking all the time that we now have a working formula for our business!
And here is when we need to look at whether our initial idea is working. Whether our image of our-self is ‘working’. What should we change? It is at this time that we must keep our ego in our pocket. Accept the change to keep the business alive. Over time it will succeed. We just have to endure.
My brother always told me about ‘Purusharth’. And then showed it to me as an example by living his life that way. The Gita recommends ‘Purusharth’ as a way of life. ‘Purusharth’ loosely defined is, doing one’s duty as a man. However I take it to mean that I need to do the every day what is in front of me without worrying about the results. And following this principle into my business to keep it alive.
6. Don’t start the business because you think you will make lots of money.
I know, that sounds absurd. People have always said that the purpose of business is to make money. Entrepreneurs start businesses to become big, sell out to a large company or do an IPO and retire with mega bucks. That’s the stories we read, but we we dont hear about their motivations or their journey.
No one can go through this tough journey only on the basis of making money, because at the first sign of distress we would abandon the business.
The most effective motive would be to start a business because you love doing that job. This is the only reason that will help you get up and be up for the day, every day.
You will make lots of money over time. Nothing will stop it. But over time, provided you stay with it, and as a by product of doing what you love to do.
