If you’re looking to coast through life, avoid stress and minimize your risk, I don’t suggest you start a business. Being an entrepreneur is not for the faint of heart: it requires patience, hard work and perseverance. And even then, you’re not guaranteed success.
I find that a lot of first-time business owners are simply unprepared for what to expect their first year, and that leads to their own demise. But if you can survive the first 12 months, you have a decent shot at long-term success. Here’s what you need to be aware of if you’re planning to launch a business this year.
Truths About Starting a Business
1. You Need People
Now, I know you probably think you can do it all on your own. After all, you’re smart enough to start a business! Surely you can manage it all by yourself as well.
Let me save you some heartache: relying on people — the right people — will make your work so much easier. You’re good at some facets of running a business, to be sure. But there’s a lot I’m willing to bet that you’re less good at, like maybe accounting or designing your website. This is where bringing in a professional skilled in a particular area is a huge asset.
If you’re going to run a store, you need people to interact with customers so you can focus on administrative work and brainstorming on business strategy. And it’s always nice to have a mentor with experience in your field who can guide you to avoid making mistakes.
So leave the ego at the door and surround yourself with people who are as smart — if not smarter — than you.
2. If You Don’t Know Your Customers, You Will Fail
Another common mistake I see is entrepreneurs thinking because they have a genius idea (in their minds, at least), they automatically have a business that will thrive. But the problem is: they don’t do any research to understand who would actually buy their products or services. They don’t bother to understand who their customer base is. And so the business limps along until it collapses.
Look, friend, your business is nothing without customers. You need to know them as well as you know yourself so you can deliver exactly what they’re looking for. That’s the key to your brand’s success.
3. Profit’s Not Guaranteed
I know you don’t want to hear that, but it’s the harsh reality. Not planning for this will mean certain financial demise. In your first year, you will be pouring money — more than you budget, likely — into launching and gaining a foothold in your market. If you’re lucky, you can throw a little your way for salary. But those dreams of mountains of cash? Don’t plan on them coming true right away.
Smart hustlers find other sources of income to cover their first years of personal expenses so that they aren’t stressed out trying to pay their bills while growing their businesses. If you’ve got savings, great. If you’re taking out a loan, build in your own income to that budget.
4. Only 69 Percent of Businesses Make it Past Year 2
Here’s another hard-to-swallow reality. Think of the businesses that have shuttered in your own community, maybe before they even really took off. Imagine how many more online businesses disappear without warning. As I said in the beginning of this article: running a business is hard. Running one successfully — especially up to and past Year Two — is uber challenging.
I’m not saying this to deter you from trying, but rather to prepare you for the odds against you. If you know what you’re up against, you can arm yourself and fight becoming just another failed business statistic. You can develop a plan that will safeguard you against some of the risks you’ll face. I’m not saying there’s a magic formula for success, but I find that the businesses that invest more time and energy into planning do end up sticking around long-term.
Furniture Designer Photo via Shutterstock
I couldn’t agree more. It’s really important to understand fundamental marketing approaches especially when it comes to start ups. Here in the Philippines, I’m planning to start my own SEO company and the feeling is hell especially when I have to swallow these harsh truths – answering the question, “How will you get past 2 years?” – which remains unanswered. Nevertheless, thank you very much for sharing this. It’d really help those young entrepreneurs like me find their path towards success through startups! Kudos!
Ramon: Has the success rate of 69 percent making it to the second year of business, increased or decreased during recent times? What is the number for the third year?
It is not so much about knowing customers but knowing how to expose your business to them enough to get them to buy and become loyal to you.
The first year will be tough. But it is also a year filled with learning. So be happy that you are there. It may seem like the longest but it can also be the most fulfilling.