Owning your own business has long been an important part of the American Dream. Every year, thousands of people take a chance at entrepreneurship and launch their own business.
Many experience remarkable success. Small businesses account for 64 percent of new private sector jobs and almost 43 percent of all private sector payroll, according to the Small Business Administration.
But the failure rate also is high, with about 80 percent of all new small businesses failing within 18 months. The reasons range from not knowing the target customers to not differentiating product or services from competitors and or not properly managing cash flow.
How do successful entrepreneurs avoid the snares and pitfalls of business ownership? The following tips can help steer you to the right path.
Get Educated
People wouldn’t try to be a doctor, lawyer, engineer or high school history teacher without receiving the proper education and training, but many entrepreneurs rush into business ownership with no knowledge about the details involved. Many colleges offer programs on entrepreneurship. Some, like Touro University Worldwide, offer online bachelor’s degree programs with a concentration on entrepreneurship. Nothing will substitute for taking the time to acquire the skills and knowledge needed for business ownership.
Know Your Market
Not understanding how your product or service adds value to customers is one of the serious issues that plagues unprepared entrepreneurs. Much of this can be solved by drawing up a detailed business plan. It’s time consuming and sometimes tedious, but having a detailed plan on who your potential customers are and how you plan to reach them is critical to success. If you’re looking for a place to start, the Small Business Administration offersfree tools to build a business plan.
Have A Financing Plan
Not having a financing plan represents another significant pitfall for entrepreneurs. This can prove especially troublesome for those who worked in the corporate world and had a paycheck deposited into their bank account every two weeks. Nevertheless, it doesn’t work that way when you own your own business.
The time gap between the expense of creating, marketing and selling a product and getting paid for it can be many months. This cash flow issue likely helps explain the high failure rate within 18 months. Before launching a business, have a very detailed plan on how you will cover expenses until the money starts flowing in (and be very conservative about both income and expenses). Wishful thinking about money will land you in the 80 percent failure rate category.
Communicate Well
There’s a reason communication comes up whenever leadership or business ownership is discussed. Communicating your plan and goals to your managers and employees – as well as clearly communicating the value of your product to customers – is another critical component of entrepreneurial success. The best product in the world will gather dust in a warehouse if people don’t know about it. Also, the best business plan cannot be properly executed without everyone involved knowing the business strategy and goals.
Focus On Sales
In a free market economy, sales people work on the frontlines of business. For many entrepreneurs, it’s an area where they do not excel. If sales skills do not come easily to you, then it’s important to hire someone with success in sales. Sales are the lifeblood of any business. You not only have to sell products and services, but also sell your business concept to investors. You need someone on your side with expert-level skills in this area.
Stay Flexible
People tend to focus on the success of business people, not the years of blood, sweat and tears that were behind that success. Successful businesses are constantly testing new products or making changes to existing ones. They invest heavily into those that do well or quickly change course when failure happens.
This area also includes the concept of failure management. Business does not favor those who dwell on past mistakes. It favors those who strive for continuous process improvement and who put mistakes behind them quickly. Apply any and all lessons learned to your next product rollout.
Manage Stress
Stress is no joking matter. It can lead to variety of health issues and result in you not managing your company well. Find ways to manage stress with exercise and a healthy diet. For entrepreneurs, it’s also smart to make friends within the entrepreneurial community and to surround yourself with people who have an upbeat, positive outlook. It also helps to read a lot about successful entrepreneurs, if for no other reason than it keeps your spirits up and your eyes on the goal.
Focusing on these areas can help you better manage the ups and downs of entrepreneurship. Of everything mentioned above, getting an education is likely the most important – a good degree program will cover all the other issues mentioned and give you the best chance for success in your business.
As an entrepreneur with extensive experience in business ownership and a deep understanding of the challenges and strategies involved, I can attest to the critical importance of certain key concepts mentioned in the article about owning your own business.
1. Education and Training: I couldn't agree more with the emphasis on education and training. My own success in entrepreneurship has been significantly influenced by my educational background in business management. Pursuing programs specifically tailored to entrepreneurship, such as online bachelor’s degree programs from reputable institutions like Touro University Worldwide, can provide invaluable insights into the intricacies of running a business. This knowledge forms the foundation for informed decision-making and effective problem-solving.
2. Knowing Your Market: The article rightly points out the significance of understanding your market. I have personally experienced the impact of a well-constructed business plan, which delineates the target audience and outlines strategies to reach them. The Small Business Administration's free tools for building a business plan can be instrumental in this regard. A detailed plan not only guides day-to-day operations but also serves as a roadmap for long-term success.
3. Financing Plan: The mention of a financing plan hits close to home. One of the main reasons businesses face early failure is the lack of a comprehensive financial strategy. I've learned firsthand the importance of meticulous planning to cover expenses during the initial phases when revenue might not be steady. Entrepreneurs need to be conservative in estimating both income and expenses, avoiding wishful thinking that can lead to financial instability.
4. Effective Communication: Effective communication is the linchpin of successful entrepreneurship. From articulating your business goals to conveying the value of your products or services to customers, clear communication is non-negotiable. In my entrepreneurial journey, I've found that a shared understanding of the business strategy among all stakeholders—managers, employees, and customers—facilitates smoother operations and fosters a positive business environment.
5. Sales Focus: Sales are the lifeblood of any business, a truth that I've seen play out in my own ventures. Entrepreneurs need to recognize the importance of sales and, if necessary, bring in experts with proven success in this area. Whether selling products, services, or the business concept itself to investors, having a strong sales strategy is essential for sustained growth.
6. Flexibility and Adaptability: Flexibility is a trait shared by successful entrepreneurs. The ability to adapt to changing market conditions, consumer preferences, and internal dynamics is crucial. I've learned that constant innovation, testing new products, and quickly learning from failures are key components of long-term success. Embracing a culture of continuous improvement positions a business to thrive in a competitive landscape.
7. Stress Management: Entrepreneurship is inherently stressful, and managing stress is vital for both personal well-being and effective business management. Regular exercise, a healthy diet, and building a support network within the entrepreneurial community are strategies I've personally employed. Additionally, staying positive and learning from the experiences of successful entrepreneurs through extensive reading has been instrumental in maintaining focus and resilience.
In conclusion, these concepts encapsulate the essence of successful entrepreneurship. While each aspect is critical, it's the synergistic application of these principles that lays the foundation for sustained business success. As someone deeply entrenched in the entrepreneurial landscape, I can attest to the transformative power these principles hold for aspiring business owners.
