As a business advisor, I meet many business professionals and aspiring entrepreneurs who are anxious to be their own boss, or have an innovative idea to start or acquire a new business. I have to tell each of you that starting and growing a new business is a long hard road, but can be very exciting and satisfying if you find the right match, and do your homework before you start.
Over time, I have assimilated a list of high priority considerations that I recommend to everyone starting down this path, to mitigate the pain and cost of false starts and failed efforts along the way. Unfortunately, in my experience as an angel investor, about ninety percent of new business efforts fall short, leading me to believe that many of you may be better off staying where you are.
In any case, here are the steps I recommend for all, even if you have already convinced yourself that the new role and opportunity is attractive, and the risks are minimal:
- Align with your personal goals and interests. If your mission is to change the world or help the disadvantaged, another dating site or online gambling may not be for you, no matter how financially lucrative. Also, initiating a startup is quite different from taking over a thriving business, where the focus is on repeatable processes and quarterly profits. For example, when Yvon Chouinard founded Patagonia, a successful outdoor products company, his real goal was building safe products to help the environment. He also still gets excited to donate one percent of sales to environmental groups around the world. ?
- Document and communicate a solid business plan. The days are gone when you could just declare your plan with such passion that qualified team members and investors will line up to jump in with both feet. Plan to spend a couple of months on this effort, and then allocate at least 50 percent of your time presenting and selling it the first year. The real value of a written business plan is that it forces you to think through all the elements of a new business in specific terms, to balance your focus on aspects you love, perhaps technology, and not overlook the ones you dislike, such as financials and hiring.
- ?Select your destination to land after the start. Some people love starting companies, while others enjoy scaling them. You should pick an idea that you can hand off quickly to investors, or one you can grow as a legacy for your family. Innovative technologies require iterative development, while other ideas are primarily marketing and financial.
- ?Assess who you can get for value and mentoring. You need advisors to help you tackle tough challenges and be advocates for your potential and progress. These may evolve from an advisory arrangement to a board of directors. These directors add value, but they also become your boss, and critics for everything you do to grow and survive.
- ?Be ready to network for investors and team members. You may start a business alone, but you need an employee team plus investors, vendors, and partners to scale the business. These relationships must be nurtured over time, balanced against your personal life, and grow to include major customers, competitors, and potential acquirers.
- ?Acquire skills to implement good business processes. Every sustainable business has repeatable processes and management systems in place to assure smooth growth and vitality. That means you need to be open to continuous learning and keeping up with change in your area. There is no business where you can just relax and enjoy the spoils.
- ?You make decisions from data, or from the gut.? You may be comfortable driving your future based on vision and emotion, or have long been a stickler for details and metrics. Disruptive technologies require the vision and willingness to take a big leap, whereas incremental changes to existing competition must be managed with data and finesse.
- ?Devise a strategy for your long-term role or exit. Many business owners get pushed out of their business as it matures, while others plan for their own exit to start another company or retire to enjoy family life. Be proactive to set up the required organization, groom the right people, and enjoy the success of your labor, rather than be disappointed.
?Overall, I’m happy to report that new business owners and entrepreneurs who do their homework are happier and healthier than other business professionals. Even if you don’t decide to leave your current position, I encourage you to follow the same principles in your current role, including finding the work you love, striving for a higher purpose, and building a plan for a better future.
?*** First published on Inc.com on 09/14/2023 ***