Five lessons for budding entrepreneurs
How can you move from entrepreneurial dream to reality? The author of Start. Scale. Sell offers five lessons, from adopting the right mindset to appreciating the real value in having a good business plan
For many people, starting their own company is the ‘itch you can’t scratch’. An idea that simply won’t leave you – an overwhelming desire to take more control over one’s own destiny, or a desire to make vast sums of money (or something in between) that won’t go away.
The nature of entrepreneurialism is fascinating and, in particular, why some people do it while others only ever dream about it. If the least successful business is the one that never gets started, then there is something in the idea of just getting started being one of the main contributors to success.
So, how do you become a successful entrepreneur and more importantly, how do you move from studying business to actually doing business? And once you get going, how do you give yourself the best chance of being successful? How do you give yourself the best chance of success?
In making the transition to entrepreneurship, the following five lessons are vital:
1. Getting into the ‘founders’ mindset’
While my entrepreneurial journey started early, I wasn’t one of those kids who made a fortune selling things to schoolfriends. My Dad was a self-employed painter and decorator and I learned one of my most important life lessons from him. Namely, what I earn and what I pay myself are different amounts. Even if you have a job, treat yourself as self-employed. Why is this important? It is the first step towards recognising the variability of your income. I call it getting into the ‘founders’ mindset’.
Many people get trapped in a salary as their lifestyle grows to account for everything they earn. When a business opportunity comes along, they are unwilling or unable to take advantage of it because the drop in earnings would be too painful. No matter how good your idea, it will never be a success unless you actually do it. Being self-employed, or considering yourself as such, allows you to have the right mindset and means you’re able to save up a war chest of savings so that when the right opportunity comes along, you can act on it and deal with the drop in income.
2. Knowing an opportunity when you see it
I was able to act on an opportunity when I saw it but how did I spot the right opportunity? I started my first business when I was 28 and it was sold shortly after my 30th birthday and to be honest, it was a bit of a fluke. The opportunity I spotted was a new thing called the internet.
It came to me when I was walking through the rain to get the tube (metro) home from work and I saw a consultant with whom I’d been in a meeting with only hours earlier drive off in a Mercedes. It wasn’t the Mercedes that made me realise. It was the fact that he was being paid to talk about this new internet thing. People were willing to pay to hear him and I thought I could do that too. So, I did.
3. Spending time with your business plan
I know many people view their business plan as an annoyance – a boring bit of admin standing between them and the fulfilment of their idea. I think that misses the point of a business plan. At its basic level, a business plan forces you to identify and understand how you will deal with things like sales, finances and legal issues. But going further, I think the real value in your business plan is to remove as many risk factors as possible before you start.
Eisenhower said: ‘In preparing for battle, I have always found that plans are useless, but planning is indispensable.’ So it is with your business plan – the business you build will bear little resemblance to your plan, but the process of planning will give you a greater chance of success. You’ll have enough to deal with on a day-to-day basis without having to deal with self-inflicted problems you could have dealt with earlier.
4. Not falling foul of the ‘six-month effect’
When you’re planning ahead, I’ve noticed a curious thing that I call the ‘six-month effect’. Six months is far enough away that you can plan, or hope, for things to have developed. What I’ve noticed is that six months pass by very quickly and this benchmark period often isn’t as far away as you think.
Why is this important? So many people allow for six months of money to live on while they get up and running or six months to win their first customers. Suppose it takes a little longer – eight months perhaps? I’ve seen businesses fail, not because they were bad businesses but because things took longer than planned. Self-inflicted wounds that were not necessary.
5. Building a business is a marathon not a sprint
You are a risk factor in the success of your business. There is a reason why good investors want founders to earn more than a bare bones salary. A business without a founder is likely to fail and it’s going to be a hard slog to get things moving. Allowing yourself a night out once in a while and the chance to blow off steam once in a while is vital. It is important to allow yourself a decent lifestyle so that when things get tough, you’re not tempted to throw in the towel.
In conclusion, acting like an entrepreneur isn’t the same as actually being successful as one. Spotting an opportunity and acting on it at a time of your choosing after careful research and planning, while allowing yourself a decent quality of life so that you stay with it for the long term is the best recipe for success. Remember also to keep going, and good luck.