Entrepreneurship: A Risky Business!

How many times have you had a great idea that you just knew was going to be the foundation of next multi-million (billion?) dollar company? If you’ve had the idea(s) but don’t see the beginnings of that fortune 500 company yet, don’t worry because you’re certainly not alone in that big-idea-big-dreamer’s club. I have had a number of those ideas – and believe me – they’re still coming, and I’m still working with each one in its own allotted time.

Having said that, there are a few owners of multi-million/billion dollar companies whose ideas did materialize. But the path from great idea to huge success evidenced by enormous assets is often a long and difficult one. The key is to recognize the uniqueness and potential of the idea and commit to working with it.

The “spark” for many entrepreneurs is seeing an opportunity that doesn’t yet exist. Ted Turner, for example, launched CNN because he perceived that people wanted more television news than they were being offered. It took a lot of patience on Turner’s part to realize the vision, but he had read the market in a way that few “experts” did at the time.

In realizing the promise of CNN (the idea), Turner demonstrated another facet of the entrepreneurial spirit. Persistence! There are a lot of bright ideas that never reach fruition; taking a “raw” idea and converting it into a successful business model is, to restate the point, very hard and time consuming work.

And that work never stops. No matter how innovative your idea, the competition is always just behind you. With anything less than constant creative effort on your part, they may not stay behind you. If you’re still with me, here is where I want to elaborate a little on a few thoughts I had as to why everyone isn’t an entrepreneur.

No opportunity is a sure thing, even though the path to riches has been described as, simply “…you make some stuff, sell it for more than it cost you… that’s all there is except for a few million details.” The devil is in those details, and if one is not prepared to accept the possibility of failure, one should not attempt a business start-up.

It is not indicative of a negative perspective to say that an analysis of the possible reasons for failure enhances our chances of success. Can you separate failure of an idea from personal failure? As scary as it is to consider, many of the great entrepreneurial success stories started with a failure or a number of failures, and more often than not the latter was true.

Some types of failure can indicate that we may not be entrepreneurial material. Foremost is reaching one’s level of incompetence; if I am a great programmer, will I be a great software company president? Having the wrong attitude can also be fatal, such as excessive focus on financial rewards, without the willingness to put in the work and attention required. Addressing these possibilities requires an objectivity about ourselves that not everyone can manage.

Other types of failure can be recovered from if you “learned your lesson.” A common explanation for these is that “it seemed like a good idea at the time.” Or, we may have sought too big a “kill;” we could have looked past the flaws in a business concept because it was a business we wanted to be in. The venture could have been the victim of a muddled business concept, a weak business plan, or (more often) the absence of a plan.

When small businesses fail, the reason is generally one, or a combination, of the following:

  • Inadequate Financing – often due to overly optimistic sales projections;
  • Management Shortcomings – such as inadequate financial controls, lax customer credit, inexperience, and neglect, and;
  • Misreading the Market – indicated by failure to reach the “critical mass” required in sales volume and profitability, usually due to competitive disadvantages or market weakness.

In a recent Wall Street Journal article titled “Why My Business Failed,” Ken Elias cautions that “even if the concept is right, it won’t fly if the strategy is wrong.” Still, on being asked whether he would start another business today, he answers: “Absolutely. The experience is fabulous, exciting and the possibility of success is always there.”

Tips For Setting Up Your Own Business

Are you thinking about setting up your own business? Do you have an idea for a new business but you are unsure about how to proceed? If you have answered yes to either of these questions, this article could be of benefit to you. It covers various aspects of how to plan and create a successful small business.

Many people are looking at ways in which they can become self-employed as they have had enough of being dictated to, and they’re fed up with long and frustrating commutes to work. They want the freedom of being their own boss and to be able to choose their own hours of work.

It must be said however, that leaving a full time career can be quite a scary prospect. The security of having a regular income and other benefits such as a pension and a shared savings scheme can seem hard to let go. I am sure many people, whether rightly or wrongly, have opted to stick with this security and to merely keep their business plan as a back-up idea, which they never see through or use.

On the other hand there are people who are willing and happy to take the risk and see it as a way of getting out of the “rut race” (that’s not a typo!).

When you have an idea for a new business you then need to think of a name to call it. It would help to keep this name quite short as it makes it easier for people to remember. It obviously needs to have something to do with the type of business you are entering.

You will now need to work out how much money you will need to set up the business. This can be quite daunting but is essential. In the short term it would be wise to keep these start up costs as low as possible. You can always buy or rent better machinery in the future, as only on example of keeping costs low in the beginning.

Once you are aware of how much money you need, you then have to find it. You may have enough yourself via savings or a redundancy payout, however most people are not in this position. If you do not have enough money, you could try and raise money via the family, by seeking a partner or by tapping into the equity from your home. There is also the option of a business loan.

The next stage is to market your product or service. There are many ways of doing this including:

  • The Web via a website you create
  • An ad in your local newspaper
  • Direct marketing in the form of flyers & business cards
  • An ad in the local yellow pages and B2B pages
  • Exhibitions
  • Trade fairs and other advertising methods.

It is advisable that you find out where other people from your industry advertise as they will have tried and tested many of the above options.

You will need to work out how much to charge for your product or service. A good practice is always keep these charges fairly low in the early going so as to attract as many people as you can and to get some income in. Then you look forward to the time when word of mouth (and your other promotional efforts) take over after a few months you will be in a position to increase your fees.

It is also important to realize that you, like many new business owners (and some veterans) will make mistakes along the way. When this happens you’ll need to think positive and not to beat yourself up. Consider it an experience you can learn from.

Always have belief in yourself. Any business will go through a rocky period from time to time, but during these times is when you need to be strong. In my opinion the more work put in, the more rewards you are likely to reap; and this, ultimately, is the reason you’ve opted to start your own business in the first place. The rewards for you and your family!

Self-discipline is one of the keys to your success. Being able to choose your own hours of work may seem like a dream but it can prove to be the downfall for many people. Business owners and entrepreneurs have to ensure that we work the required amount of hours. It is far too easy to stay in bed for that extra hour or to arrange yet another game of golf. These things are fine once you are established, but this is a long way off in the early stages.