Never miss a new episode of Shark Tank? Invented a revolutionary evaporating kitty litter that you’re itching to debut to the world?
Continue Reading Below
You’re not alone.
Every month, some 543,000 new businesses are launched—but the hard truth is that only seven out of 10 survive the crucial first two years to stay in the game.
To help you get your own big idea off the ground with your expectations in check, we asked Trisha D. Scudder, founder and principal of Executive Coaching Group, Inc.—a pioneer in the field, with over 25 years of experience—to outline the unexpected sacrifices, the rookie mistakes, and yes, the perks of being the big kahuna during the tricky early years of owning your own business.
LearnVest: What’s the first bit of advice you’d give to someone who’s thinking of starting their own business?
Trisha D. Scudder: First and foremost, get the facts! From research to talking to people in your new industry, make sure that you have a real, complete view of what it will take to launch your business and be successful. Most entrepreneurs fall in love with their idea—reality and details be damned. That sets up a lot of suffering and sacrifice later, which could be avoided with an informative plan from the start.
Second, consider a business partner. The right choice in a partner–maybe someone who has different strengths than your own–will help you succeed faster, and not feel so burdened and overwhelmed in the early years.
How much money should someone have saved up before launching a business?
Enough! This question is impossible to answer in generalities. Some start with $5,000 and a great idea. Some require millions to launch. That’s why you must research and forecast what it will take to get your business up and running–plus fund your daily living expenses.
It takes time to build a business, set up a location, hire staff and attract a client and customer base. And during all of this, money is going out, not coming in. In most cases, you should double whatever you project you will need in time and money to start your business. The world isn’t waiting for your idea or business—it is doing just fine, thank you, without it. So it takes great persistence and resilience to have the world finally see you–and want to work with you.
What about quitting a day job to launch a business–good or bad idea?
Many entrepreneurs jump into a new business without first laying a strong foundation, and as a result, those businesses fail within the first year. Before you quit your current job, make sure to spend nights and weekends researching your market and competitors, and developing a solid business plan.
Next, line up funding, and begin to build your team. At the same time, make sure you’re operating with integrity and at full value to your current employer. When you can’t do both, that’s when you have a decision to make.
What’s the most common misperception people have about being business owners?
That they will be their own boss. They think, “Wow, I’ll be free and not have to answer to anyone!” Yes, being a business owner gives you flexibility, and over time, a sense of designing your own life. But until you reach that point, you’ll actually have many bosses: Your clients and customers, the bank, your investors, even partners.
Let’s talk skill sets: What’s crucial for a budding entrepreneur?
There are so many: resilience, imagination, being unstoppable, integrity, the ability to create relationships easily, the courage to ask for help and make big requests, a commitment to face the financial facts, and the ability to excite others about your dream just as you are excited. Need help? Find mentors who know the industry–who are themselves entrepreneurs–and consult people who will hold you accountable, like a business coach.
Can a hobby ever translate into a business?
The two are distinct. A hobby is an interest, or even a passion. And that can sometimes blind you. Your business should exist to help fund a great life for you (and your family), including professional fulfillment and financial peace of mind. But often people who turn their hobbies or causes into a business overly sacrifice. For example, they don’t charge enough for their service because they love what they do so much. In those cases, they end up giving so much to the business, but the business doesn’t give enough back to survive.
If you’ve never managed people before, how do you build a valuable team?
Starting a business quickly transforms you. You must learn to be and do what you’ve never been or done before–or your business will fail. If you’ve never hired or managed teams before, you will learn by failing several times.
Surprisingly, first time business owners often make these mistakes while interviewing: Talking more about their plans for the business than asking challenging questions of the candidate; getting inspired by the interviewee vs. checking references and experience; hiring friends and family who need jobs and then not holding them as accountable as they would a qualified stranger they hired.
What’s an unexpected way to grow your clientele?
Give it away by offering a free consultation, sample or trial coupon. You must make people aware of you early in your business, and get them talking about your product or service. That’s more important than charging full price–but just in the first few months. This can also work to grow existing businesses that have stalled.
So what’s the key to happy clients?
Integrity. That means honoring your word, delivering on what you promise and when–and even cleaning up quickly when you or a member of your team messes up. You have to take 100% responsibility for all aspects of your customer’s experience with you, your product and your company representatives.
Why is the risk of starting your own business worth it–no matter the outcome?
Having your own business is to be coached by a master–yourself! If you aren’t committed, you will fail. If you don’t listen to what your customers and the industry is telling you, you will fail. If you are arrogant, you will fail. If you don’t face facts–financial and otherwise–you will fail. If you are stingy and selfish, you will fail. If you don’t talk straight with your customers or your employees, you will fail. And if you can’t bounce back, you will fail.
In short, what an amazing journey of self-discovery and re-invention this will be!
LearnVest's mission is to help people feel amazing about their money.