The thought of following your dreams and becoming your own boss, working your own hours, and getting to sit back and relax, while telling others what work needs to be done sounds appealing. Right?
Millions of people around the world dream of becoming an entrepreneur. In fact, according to the Global Entrepreneurship Monitor (GEM), in Developing Countries, for every person that starts a business, there are six people that want to start a business. While it can be a rewarding career choice, it’s not that easy, so you must be prepared for the hard “slog “ahead, physically, mentally, and spiritually.
Here are some tips on how you can deal with the long, sometimes uncertain road ahead, so it can become a successful and enjoyable journey for you. The following is based on an article written on Entrepreneur.com by Ashley Armstrong. Venturing out on your own path to run your own business and succeed at entrepreneurship can involve a lot of risks, even if you are only choosing to do it in your spare time. Here are some tips on practicing Safe(r) Entrepreneurship.
Practice Safe(r) Entrepreneurship
Many of the risks outlined below can be very scary. Before starting your own business, consider gaining experience either by building your own “generic” community of like-minded others, or being part of a community that has similar interests to you, where you can build your contacts and learn from each other. Significant commercial opportunities can arise from this with very little risk to you. You can even hustle by providing a customer for others you believe in. Give them the business, and “clip the ticket” along the way, by getting a referral fee or commission. This could be a low-risk, low-cost way to start your business. More importantly, it’s a great way to test the validity of an idea and a great way to build trust and rapport.
Furthermore, in the process of building a “generic” community, you will gain invaluable experience and lay the foundation for a market for your own products when you actually launch your own business.
Here are “10 Common Dangers” many aspiring entrepreneurs only appreciate after it’s too late!
1. No steady paycheck
All businesses must reinvest capital back into the company to allow for growth, and it can take months, if not years, to be able to pay yourself a steady wage – finally.
- Start with a gig on the side and then have a minimum of 6 months of regular income saved before jumping into becoming a business owner.
- Plan for the unexpected, as you may need to cut back to the bare necessities and live a minimalist lifestyle until your business venture succeeds. As we stay in the startup world: “get ready to eat ramen noodles“.
- Learn to pay yourself first, even if it is a smaller amount than you normally would receive otherwise. In this way, you can build a disciplined approach to your business, but more importantly, as your business grows, this could represent the wage of your first employee. It can also be good practice, to reward yourself for your hard efforts, so you don’t run out of energy, but remember to NOT go overboard in this process, as you could impact the financial health of your business.
2. Relying on cash flow
If your cash flow depends solely on the income from the sales of your products and/or services, what happens if a client doesn’t pay their invoice on time? Do you have the capital to cover the daily expenses should unforeseen circumstances arise?
- Build your own community, associate with others doing the same, and seek advice from successful-like minded entrepreneurs before leaping into the business owner pond.
- Do your research. Test the market in advance.
- Secure reliable clients/customers and know the costs of not only your daily operations but also account for breakdowns, loss of clients, legal fees, market changes, technology advancements, and so much more.
3. Market demand for your product and/or service
You may be very excited about your idea only to find that your intended market is not as excited as you. Also, the marketplace can and does change very quickly, so It’s wise to have a plan in place and be flexible enough to pivot your organization to match market demand.
- Test the market for your product or service before you launch. Build a “Know Like & Trust” personal community that will support you as you pivot.
4. Time Management
As a business owner, your time quickly becomes swallowed up as you are the key to ideas, marketing, sales, prospecting, closing, etc. You are responsible for every detail surrounding your business, from legalities to the final decisions, and without proper time management, you will quickly be overwhelmed and fall victim to burnout.
- Do as much as possible before launching your business (while you have cash flow from other sources), and always seek advice from your trusted peers and networks.
- When you launch, remember to take time to unwind.
- Make it a habit!
- Perhaps a set time at the end of the day to turn off your cell phone and close your laptop to focus on yourself and your family.
- Learn to delegate responsibilities to employees, VAs, or contractors (see below), you trust and get organized with a proper calendar schedule (such as Google Calendar), so you never miss a deadline or suddenly feel overwhelmed or rushed.
Unlike working for someone else, you can no longer call your manager and request a sick day and expect your business to run as usual as, without you, there is no business. Burning the candle at both ends may initially give your business a boost; however, you will quickly discover that sleeplessness, stress, and burnout have a detrimental effect on your thought process, ideas, and temperament, hurting your business in the long run. Burnout, stress, and illness are hurdles every entrepreneur must face, and they all can have detrimental effects on your health. So, it’s not what happens to you but how you deal with it that counts.
It was recently reported in the media (SBS News), as a consequence of the pandemic lockdown, and current global events such as the war in Ukraine, the potential for a recession, and increased inflation, two-thirds of business owners were currently suffering from mental health issues, such as depression, anxiety, and suicidal tendencies. So, startup founders can’t afford to ignore mental health issues (unless you want to be one of the statistics), but in general, keeping your health in check, (physical, mental, and spiritual) is absolutely vital.
- It is important always to make time for yourself because a healthy you, will ALWAYS grow a healthy business.
- Set a routine for daily exercise, even if it is just a 20-minute walk; this can make such a difference to your mental stability. Having a routine will help you develop the discipline necessary for creating healthy habits, as Steven Covey wrote in his book: Seven Habits of Effective People.
- Focus on the things you can change, and don’t get immersed in the things you can’t change, such as the economy. Having anxiety or stress will not help you solve your problems and could put you in a bad state after a while.
- Practice gratitude; be thankful for the things you have rather than the things you don’t have. This will help reduce anxiety
As a new entrepreneur, you likely will not have the initial capital investment needed for a large team of employees, making it vital to either learn it all yourself or find and hire a small group of people who match your goals and energy.
- Consider outsourcing such as contractors or virtual assistants (VAs) to build your team.
- Consider building relationships with as many other entrepreneurs BEFORE you launch – they can often help you source great team members quickly. In many cases, such people can also provide you with discounted rates, barter, (quid pro quo), or even pro bono services.
- Do your research, learn to ask the RIGHT questions, and don’t be afraid to hire on a trial basis with set project deadlines to ensure your contractors/employees are the right matches for your business.
- Most importantly, beware of going into business with one or more partners – although this may be financially appealing initially, it often comes unstuck. As they say: “A partnership is not a marriage made in heaven, but rather like a love affair, it has to come to an end at some point”. Sometimes, this end can be nasty!
- You should only create your team with people that not only understand or buy into your vision, but have similar values, or what we call Shared Values. This will help you remove most of the red flags, and also help build trust more quickly. However, getting it wrong can lead to disastrous consequences for the business, as one wrong contractor/employee can drastically hurt deadlines and goals.
- Be prepared to fire if needed, and trust your instincts. The rule is: “hire slow-fire quickly“.
- The right team is out there, don’t be afraid to recognize when it is not working and do what is needed to rectify it.
Becoming your own boss is an exciting opportunity! Unfortunately, many startups also fail within the first year. Markets change, clients dry up, and you could face bankruptcy, legal action, and several other unforeseen circumstances that could cause an outstanding amount of emotional and physical stress.
- Be prepared for downfalls and stress by having support systems, mentors, and plans in place to help your emotional well-being during trying times.
- Learn to manage your cash flow and business accounts properly, as this is often the leading cause of business failure, especially with inexperienced entrepreneurs.
- Have you accounted for your support system? Other than your spouse or family, do you have someone who can listen, emphasize, and be your champion? If not, I highly recommend you build that foundation from the start. Ideally, this should be either your mentor or a business colleague or peer, who is not emotionally engaged with you (such as your spouse or family member), but one who can understand your situation and actually listen! Sometimes being heard and empathising with you and not offering advice, can make a huge difference to your emotional well-being
8. Competitor risk
Every business has competitors. Be vigilant in learning the ins and outs of your competition while protecting your own business. There are several legal costs involved regarding your intellectual and proprietary rights, as there will always be copycats out there who will attempt to steal your name, designs, etc., and market them as their own.
- Create a community of raving fans that buy into your vision and sing your praises – think Apple computers & Harley Davidson motorcycles.
- Test the viability of your idea before investing the time and money into patents and trademarks.
- Keep an eye on your competitors, but DON’T get obsessed with them, or copy what they are doing. Just focus on what you are doing and deliver to excellence.
9. Operational risk
IT technology systems, supply chains, record keeping, fraud, system maintenance, etc., all fall under operational risk, and the more you neglect each system, the higher the risk of one or more failing. Record keeping, for example, must be done accurately and consistently to avoid errors on your books that could cost you thousands if not millions of dollars in fees or fines.
- Find out from others in your trusted network to see how they manage their operational risk. Many people provide great services that will take such pains away for minimal cost because they know they will benefit as you successfully scale.
Sacrifice is essential in business. Often you have to give one thing up to have the bandwidth for something more important. Family should not be sacrificed, but it often is. For example, trying to create a balance between being an entrepreneur and a mum is really tough, so you need good family support from people like your spouse and even your parents. It’s tough but it can be done without sacrificing the needs of the family.
- Preparing your family in advance will help them understand that you may not make it to every soccer game or family dinner.
- Let them know why you are doing what you are doing and how they will benefit.
- Inviting them to join in your journey can also be educational for them, so allow them to be your ambassadors!
- Taking on each day as it comes and choosing to flow like water by being agile, adaptable, flexible, and staying “in the moment”, will allow you to eliminate the stress and guilt you may feel for being so distant.
- It’s not about balance; it’s about fulfilling your needs by making a choice at that moment for what will fulfill your spirit.
In short, becoming your own boss on the road to being a successful entrepreneur has many dangers. However, preparing well by building your community in advance, learning from other entrepreneurs, and seeking mentors can dramatically reduce the risks of moving into your own business.
Now that you have a clear understanding of some of the risks of entrepreneurship, go out there and prepare with everything you’ve got because there is nothing better than being your own boss and making your dreams come true!
By Guy Wilson and Tobi Nagy