Being a successful entrepreneur whether it’s a small service startup…
Making the Jump to Small Business Startup
People who desire the freedom and autonomy of self-employment are usually an optimistic and visionary lot, however with SMB failure at high levels, it’s easy for entrepreneurs to fall hard on the path to small business success.
I discovered this myself with issues ranging from client incompatibility, insufficient financing, personal/business conflicts, dead end service packages, not investing in my business, not going for it 100%, and false promises and more can end your otherwise successful business.
It appears that failure is inevitable. The key to success is what you make of your failures — Russ Alan Prince on Forbes.com.
Constantly studying failure should be a monthly habit that might save you from falling into booby traps. Some people feel that avoiding mistakes and understanding what mistakes actually are, is a business management priority.
Studying Failure Leads to Key Insights
We don’t spend enough time trying to analyze our mistakes. We’re too quick to move on without learning. Although, it isn’t easy to know what is a mistake. Usually, long after the mistakes are made, we eventually gain clarity. It’s our own reluctance and stubbornness that blocks the way to understanding how mistakes created our path to success or failure.
I’d recommend taking this topic seriously. Dig in and learn something they don’t teach you at school. Start searching for “business failure analysis” now, so you’re not doing it in 3 years. There’s some excellent additional tips at bottom.
And on this topic of small business success and avoiding mistakes, I came across a great article from Beth Done, a managing partner of Main & Rose in Los Angeles. Her post on Inc.com is entitled The 5 Mistakes Entrepreneurs Make when Going from Employee to Self Employed. I’ve got it outlined below.
But before we get into those tips, consider this entrepreneur success story:
Success Story: In 2010, Chris Campbell decided to quit his intense, globetrotting consulting job, and pursue his business idea. He came up with a cold brew process for coffee that makes it less acidic and bitter, something Starbucks wouldn’t do. The ready to drink market was one of those stellar opportunities, a niche with a future, and that tells us a lot about timing and markets. We should jump on the creating waving of technology or culture to be a sure winner in business.
Campbell focused on the big picture, eventually met a Whole Foods store owner, got $9.2 million in Venture funding and now 7 years later his company has good revnue with a bottled ready to drink coffee product called Chamelion.
The mistake he avoided and speaks about? Don’t grow slow. He and his wife gave themselves 6 months to get it going, and in less than six months after the company was founded, Chameleon’s coffee was on supermarket shelves.
But did Chris and his wife avoid the key problems that foiled other entrpreneurs. What is it that determines success from failure in SMB ventures? They’re in the right market but highly financed. They’ve gone from big to small in a hurry. Did they have enough time to learn about the mistakes that could take them down in the years to come?
According to Telstra’s Smarter Business Research, Aussie SMBs (SMBs) admitted their biggest business blunder for 2014 was not building the necessary partnerships and relationships — from Telstra.com.
So You’re Thinking of Launching your Own Business?
I think now might be one of those times when you could do it (Trump economic era), but as Beth Done points out in her post on Inc.com, there are some key must-do’s before you consider it. I’m going to present her top 5 (with my thoughts) and add a few of my own observations about successful entrepreneurs.
Read this post if you’re not sure if your business idea is valid or has legs?
These hopes for self-employed success, self-directedness and freedom are all pipedreams until you really nail this entrepreneur thing the right way. Even those who think they’re great will soon be challenged by the reality of doing business today. And as Beth alludes to, you’ll be doing some success hacking despite all your preparation and business models. Hopefully, you’ll be willing to look at the negatives and potential mistakes and learn before set sail.
Speaking of business models, I have two posts you might like to take a look at. One is regarding digital marketing agency models, because marketing is so vital and reverse engineering an already successful company.
There’s so many things that take you down in business today, such as taxes, no marketing presence, skills incompatibility, wrong niche, poor networking, insane competition, and recessions. The penalty for failure though is probably a lot higher today than getting another 9 to 5 gig back. It’s like divorcing your spouse and leaving town.
Top 5 Mistakes Entrepreneurs Make
- Not Finding the Right Niche — Yes, through research and experience you stumble into the right niche. And not having a niche often means not being sustainable. I you’re not being patient to go through this niche discovery process is not good. I’ve targeted Realtors even though others have warned me not to pursue that niche. Over time, your real niche, even inside a dubious niche, will appear. Your niche is your true calling – and it doesn’t appear until you’re ready to see it. Not Being Patient — keep your mind open to where you belong, what you can do, how you can flourish in business. Rigid, old-school preconceptions could be a cancer to your success. Old school planning is good but is just a guide.
- Budgeting Poorly — Having a couple of years income in the bank is smart, but probably, this never happens. And ironically, it’s unlikely anyone will invest in your business until you’ve made it. What I learned from my first business is that you need to invest a good portion of your income/savings into the business and in marketing especially. Smart investment of funds important for larger businesses and but active budgeting for marketing determines your future income. And there are top names in business with the best products and services who lost to lesser firms because they didn’t do marketing. The crappy brand won!
- Underestimating Timeframes — It does take longer than you expect and you’ll forget this fact when the pressure to pay bills arrives. Bills are what make you come unglued and so does time to acquire customers. Speeding up some elements of your business is wise if you can do it (hyperaccelerated growth) however, speeding up other people and the economy is probably not doable.
- Not Being Selective Enough – Selecting clients, opportunities, and business partners is vital. And to find the diamonds you need a certain amount of connections. With more connections, you’re likely to find the ones that fit perfect with your value proposition, style and goals.
- Having Incorrect Definitions of Success – And when the bills come in, only one definition of success will suffice — paying the bills. With that of out of the way, your real measure of success is how closer are you to your ultimate goals? Achievement, money, giving back, travel, hobbies, sports time, writing a book, visiting relatives and friends are all things you may have given up, and when you get them back, the feeling of success comes through.
Beth says: “Instead, pay attention to what really inspires you — and make sure you include that in your daily life.“
What are the 5 Top Attributes of SMB Entrepreneurs:
- Versatile and Skilled – sometimes you have to do it yourself or know what’s really involved
- Well connected – lots of business partners, business connections, happy clients, and financiers for insight, advice, and support
- Moneyed – money is the liquid currency of business and it magnifies the power of their ideas and services and it sustains them in bad times or when a big push is needed. They make sure they’ve got the cash necessary. In a post on Americanexpress.com, Jared O’toole, an entrepreneur said this on the issue of money: “Start with capital, pick a way to make money, and stick with it.”
- Clarity – their personal and business vision is integrated and they all talk so confidently and convincingly about what they do and its value
- Ambition and Focus – they’re driven and they see people and tasks clearly. And they avoid poor projects and business partners who don’t commit emotionally or financially to the project — they pick like minded people to partner up with
One way to look at mistake avoidance is that it helps you get laser clarity about what you need to do and to avoid tripping yourself up. I hope these 5 pointers from Beth help you gain a more realistic and focused attitude. Because you’ll need it in these important setup and launch years.
Avoiding mistakes also helps you achieve escape velocity on your way to big success to break away from the crowd, differentiate your business, and gather all the resources neeeded to build and nurture an unbeatable unique value proposition.
So What Are the 5 Things You Must do to Go From Employee to Self-Employed?
- Choose a money making business idea that will ride on a cultural, economic, or technology wave and use your time and cash very wisely
- Understand clearly how your skills, experience and smarts will add value to your customers
- Find a successful related business to emulate, study their strengths, and build a bridge from that to where you are now
- Know how your marketing and personal networking will give you access to the right people and financing to elevate your company’s potential to compete
- Know the mistakes others make, why others failed, why the market might not be worth it, and how you can avoid and overcome these mistakes.
Experts, family and friends are well meaning when they give you their input, which is valuable. If you’re not passionate about what you’re doing and you feel unable to overcome others negativity and misunderstanding, then you’ll lose faith in your mission. Keep things balanced and in perspective, then you’ll gain clarity. I can tell without reservation, that once you set sail, clarity is very important. Clarity reduces frustration, waste, wrong paths, and improves delivery of value to your customers.
Make sure you get in with the right crowd. That’s people who understand what you’re doing and why. They’ll help you get focused on what you want.
Good Luck on your new venture!