Have you ever thought about starting your own business? Going out on your own and being an entrepreneur?
I talk to clients all the time about their future, and what their careers might look like next week, next month, over the next ten years. In many of those conversations, the idea of becoming an entrepreneur comes up. In most client relationships, I like to ask the question of whether that is something my client might be interested in, unless they have expressly stated that they have no desire to do their own thing.
When the topic comes up, the most common responses I get from clients are things along these lines:
- “But I don’t know the first thing about running a business!”
- “Where would I even begin?”
- “There’s so much to it – I am completely overwhelmed at the thought of starting and running a business.”
- “I could never make enough money doing my own thing.”
- “It’s SO expensive to start a business – how could I ever possibly come up with that kind of money?”
- “What if I fail?”
- “What if no one likes what I am selling?”
- “Why would anyone want to buy that product/service from ME? I’m no expert!”
The idea of starting your own business can definitely be daunting for all of the reasons above. Like anything else in life that is uncertain, and unfamiliar, it can be really scary to think about taking that risk….about making yourself that vulnerable.
But let me ask you this question: Have you ever felt like that in your life before, and moved forward anyway? I guarantee you everyone reading this article has. You may not remember it now, but we have all been there. When we made the transition to starting school as little kids, when we transitioned to middle or high school (yikes!!), when we got our first jobs, when we moved out of our parents’ house, when we bought our first house. When we look back on it now, we shrug our shoulders and think to ourselves “Oh, that wasn’t so bad”, forgetting the crazy mix of emotions and fears we were facing at the time. We have all had times when the prospective situation in front of us seemed completely overwhelming…..terrifying, even….but we moved forward anyway (whether we were ready or not!), and more importantly, we survived!
I don’t know the first thing about running a business!
When this topic comes up with my clients, I like to remind them that when someone is a first-time entrepreneur, NO ONE knows what they are doing. People do it every single day, and most of them don’t know any more than you do about starting that business. Now granted, some people have more experience on the business side of things, but when you’re an entrepreneur, all skills come into play. While an accountant may know how to take care of the books, they won’t necessarily know the first thing about business development, about sales, about project management, about managing people, or about marketing. Everyone brings a different background to their business, and figures out a way to make the rest happen. Fortunately, we no longer have to rely on Encyclopedia Britannica’s – we now have this wonderful thing called the internet, where you can find information on how to do pretty much ANYTHING. There are also a lot of amazing resources available for small business owners through organizations like the Small Business Administration (SBA.gov). And anything you don’t want or know how to do, you can hire someone to do for you! There are a ton of people who freelance, and hiring someone to do your accounting, design your webpage, edit your videos, or put together a marketing package is extremely easy…..there are people from all over the world providing these services, and you’d probably be shocked to find out how reasonable the cost is for many of the services.
How will I pay for it, and how will I make enough to survive?!?
This is usually one of the first (and biggest) concerns that people have about taking the plunge into entrepreneurship. The financial piece.
To begin with, how are you going to get the capital together to start the business? At this point, I love to ask the question “And how much is it going to cost?” Sounds like a basic question, but many people are quick to write the possibility off before they actually sit down and put numbers on a piece of paper. Do yourself a favor, and sit down and think about what it would truly cost to get your idea up and running. Challenge your assumptions as well – does it truly need a brick-and-mortar storefront from the get-go? Or is it something that could be done in a mobile setting – a food truck, a mobile acupuncture business, a mobile vet, an on-site yoga instructor that gives private lessons, etc.? Your business doesn’t have to look like every one that went before it, and in fact, it can be a major competitive advantage when it doesn’t! Once you have a ballpark idea of what it will cost, think about different ways to come up with the money. It can be the obvious (savings), but could also be a variety or combination of a number of other sources, such as personal loans from family/friends, bringing in a partner to run the business with you, a small business loan from a financial institution, finding investors, or even something like selling an asset to generate the required cash flow. Just because you don’t have the money sitting in an account right now does not mean your idea is not feasible – it is all what you’re willing to do to get the business up and running.
Now on to the next step of the financial side of things – can I make enough money doing the business to survive? The first step is to define what “enough” is (not what you’re dreaming to make someday…..what you NEED to survive/pay bills/put shoes on your feet). After you’re clear on what enough really looks like, then put pen to paper (our mouse to Excel – I suppose that would be the modern-day equivalent!), and figure out what level of business you would need to do to make that minimum threshold (what we would consider your breakeven point). How many clients/week? How many meals/day? How many hours of dog walking/week? This exercise is where the rubber truly hits the road, so to speak. I have had many clients go through this exercise, and come out on the other side saying “Oh wow – that’s actually totally doable!” It’s important to draw the distinction at this point between making ends meet, and achieving the lifestyle you are shooting for. For most of us, the end goal is to do more than break even, so think about how much more you would need to do to expand that revenue number, and whether that would be feasible. If your breakeven calculated seeing two clients/week, then you probably have room to grow and allow for more income. However, if your breakeven calculated at 50 clients/week, you may need to assess the feasibility of expanding beyond that point….and keeping your sanity intact at the same time.
Obviously, the approach above is a very simplified version of assessing your breakeven point, as it doesn’t take into account the cost side of things. It is intended to be a starting point, and if the business you’re considering starting tends to be overhead heavy (i.e. lots of costs to do business – such as a storefront, lots of employees, etc.), go online and see if you can find a typical gross margin percentage (also known as a gross profit percentage) for the type of business, and apply that to your revenues to help you get a better idea of what kind of gross revenues you need to have to breakeven at the end of the day. For example, if you find that your type of business typically has a gross margin percentage of 10%, that means that when it is all said and done, the business will profit about 10% of the gross revenues. So, if you have revenues of $100,000, you will walk away with $10,000. Again, for many new businesses, it isn’t necessary to start with this level of detail, you can typically do a “back of the napkin” calculation to get an idea of whether your idea might be feasible. At this stage of the game, keep it simple.
If you go through this breakeven exercise, and come up with the answer that no, unfortunately, you cannot realistically get to the point of a reasonable income, start challenging your assumptions again. Is there a way to tweak the business to make it more efficient/profitable? Can you charge more for your proposed service/product? Perhaps doing group yoga sessions at someone’s house (who naturally gets a break on the cost of THEIR session), or walking multiple dogs in the same neighborhood at the same time, marketing to a different (and higher end) group that will pay more for services, etc. Or maybe it is something that looks a bit different, such as layering in a complimentary service, expanding your service offerings to include a higher margin service/product, or even partnering with someone who provides services closely tied to your own to generate referrals or sell packages where you split the earnings. There are a lot of possibilities, so don’t be too quick to throw your idea out the window!
In addition, it is important to remember that depending on the type of business you’re looking to start, it may be possible to start it as a side gig, or as an additional role that layers on top of your existing job. This helps a lot of entrepreneurs take more of a gradual approach, and a more calculated risk, rather than pulling the old Jerry Maguire and walking out the door, blind as to what is on the other side. Many people start side businesses, invest a little, and test the waters to see what kind of traction they will get. This is a solid, and more comfortable, approach to entering the world of entrepreneurship. A word of caution, however, if you decide to take this approach. Life is busy, and it can be easy to neglect whatever is “not on fire”, so it becomes easy not to devote the time, attention, effort, and resources to the new endeavor. If you decide to take this approach to assess the viability of the pursuit, make sure you put your heart behind it, and give it a determined attempt!
But what if it doesn’t work? What if I fail?
Going cliché here, but what if you never even try? If you looked back five or ten years from now, would you be pissed at yourself for not at least giving it a try? Let’s be honest – businesses fail on a regular basis, and of course that hurts. And there are absolutely NO guarantees. But just as there exists the possibility that you will fail, equally as strong is the possibility that you will blow your expectations completely out of the water. Your mind will automatically go to the negative side (i.e. failure), because we are hardwired to respond that way, but take a moment and consider the flip side (i.e. finding a life that is even more than you could have dreamed of). If you take calculated risks, and invest the time and effort up front to consider what you’re doing, as well as how you’re planning to do it, you will be ahead of the game, and shifting the odds so that they lean more towards the positive and further from the negative.
If you aren’t sure whether there is actually a market for your business, find some different ways to evaluate interest among your target market. Go out and talk to people – ask friends and family who will be honest with you (and who would be in what you would consider to be your target market – asking people without a dog if they would hire a dog walker isn’t going to give you much insight of value), find connections in related industries and solicit their thoughts, consider starting the business off of the side of your desk (if that is an option), and look for other lower risk ways to enter the market (like a mobile option vs. starting a brick-and-mortar location, as discussed above, or renting a space at a farmer’s market for six months, or setting up an online store, etc.)
If you’re concerned that the business might fail because of your capabilities or the product/service you’re selling, some of these might sound familiar: “What if no one buys it?”, “Why do I think I am the right person to do this?”, “What if someone sees through my façade and realizes I am not an expert??” Let me assure you, these are absolutely normal thoughts to have! When you have these thoughts, take a moment and pause, and step outside of yourself for a moment. Is there a reason you have an elevated degree of knowledge in the service/product you’re thinking about selling? Why are you getting into this area and what do you know about it compared to the “average Joe”? Starting your own business doesn’t mean that you have to know every single thing there is to know about the service/product, but what it does mean is that you should have some degree of familiarity, and resources available to access if you aren’t an expert. This could be resource guides, professional association resources, a peer, or a person such as a mentor or someone who is an expert in the area who you can go to on an as needed basis with questions (if you plan to do this, please don’t take advantage of their time – offer to pay them a monthly retainer, or an hourly rate as you call on them, otherwise they will burn out quickly and you will lose your resource, and possibly a friend/mentor). Let’s be clear – no one walks in to a new business knowing how to do everything. Just like with any new job, it is a learning process, and it takes time to get your feet under you. Do what you can up front, and be prepared to course correct and adjust as you go along…learning from every inevitable mistake you make along the way.
Becoming an entrepreneur is definitely a daunting undertaking, but similar to leaving the nest and moving out of your parent’s house, or starting high school, people do it every day, and you can do it too! You’re familiar with the old adage “How do you eat an elephant? One bite at a time!”, and the same logic applies when starting a business. You will NOT know everything before you start, and you won’t know everything a year after being in the business – go into it with that expectation, and realize it is okay! Starting and running a business is challenging, exhausting and sometimes overwhelming….but it is also exhilarating, amazing, wonderful, empowering and liberating. So, with all of this in mind and armed with the knowledge that people do this every day, I have one final question for you: Why not YOU?
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