I Want to Start My Own Business
Maybe you don’t fit the other profiles. Maybe you see two or more of those in you. You just want to start a business. No matter. The principle is the same. Figure out how you will make money before you run out of what you have right now.
The biggest mistake first-time entrepreneurs make is to underestimate—by a mile—how hard it is to find a sufficient number of customers to buy your products and services, bringing in cash that slows down and eventually overpasses the amount of money that is going out.
This is by far the #1 reason for the failure rate of most startups—the founders quit after a year, two years, or three years, because of the enormous financial burden they end up shouldering.
So, advice #1–don’t start spending a penny until you have figured out how you are going to make money. Continue to bring in cash whether from your current job, a part time gig, or whatever you have to until you have figured it out.
“Figuring it out” means that you have:
- Found a compelling problem that you can solve. If not compelling, then it will take forever to find customers.
- Identified the types of customers who have this problem, that they are of sufficient number, and that you know how to reach them.
- Developed a product or service that fully addresses the compelling need, better than any alternative they have
- Priced the product or service such that it is easy to sell, but still profitable
- Defined where to get started with the business operations
- Sufficient capital to get started–you know exactly how much you have to sell to break even, how long it will take you, and you have access to the capital you need to sustain your business until then.
To summarize, don’t start a business unless you are:
- Consumed by building the business to the exclusion of anything else
- OK with basically doing everything yourself for some time to come, working 60-80 hours every week with no vacation for the first 2-3 years.
- Willing to handle a significant amount of financial pressure in the meantime.
That is the life you have chosen.
Can be very rewarding…you just have to know what you are getting yourself into.