I quit my corporate job to start my own business. In fact, I started 4 different businesses. That experience taught me many valuable lessons on how to start your own business successfully. I took the leap, I loved it and enjoyed it. But it wasn’t a success and I ended up going back into corporate. Three of those businesses failed but one continues today.
Out of that experience I learned many lessons about the mistakes I made. It was one of the best times of my life where I learned the most about myself and business. If I turn these mistakes into lessons about what I would do differently it may help someone on the same path.
I have the utmost respect for entrepreneurs who start their own businesses successfully. It is a level of responsibility like no other. Everyone talks about how wonderful the freedom is. But no one will tell you about the responsibility that you carry on your shoulders. You carry the can for everything, all the decisions good and bad, the choices, the direction, everything. I still carry these lessons with me today.
None of what I tell you here is a secret or unknown. You will find all of it in any decent business strategy textbook. Problem is that we think this stuff isn’t relevant and get caught up in the emotions of our ideas. Well I will show you how it is relevant and if you want to be successful then pay attention.
Don’t be scared to try
Despite having failed I have never once regretted trying. Just trying and failing is reason enough to do it. You will never know until you try. I always had a burning desire to forge my own path and I still do. I have so many ideas that it can become overwhelming. A combination of career disillusionment and wanting to follow my passion led me to start my own business.
I was in my mid 30s just at the time that my career could have accelerated and I quit. I followed 2 passions, the internet and mountain biking. The main business was a mountain bike touring business. The secondary business was website development for me and others. I created 2 websites www.landyonline.co.za and www.mtbonline.co.za . During this time I was also involved with starting and running a Sandwich Deli and a small chemical manufacturing business.
When I quit, I never imagined that I would find myself back in corporate. But that is the lesson that learned. You never loose the skills and knowledge that you already have. If anything you grow them. You can always go back to doing what you used to do and you will probably do it better. So don’t be scared to try if it doesn’t work you will find a way out.
Research and understand your market
The amount of research and understanding that you have of the market is directly proportional to your chance of success. To start your own business successfully do thorough research and testing before you start. If you can’t wait to start, then be prepared to fail. Or else be prepared to adapt and change, but this will take longer, and you may miss something.
I failed to do this, I had an idea and I stuck to that idea without taking a step back and looking at the industry. The consequence was that I failed to understand the mountain biking industry properly and missed two big shifts happening. I started a mountain bike touring company, at the time touring wasn’t big and it still isn’t big.
However, what is big is mountain bike trail parks and multiday mountain biking events. Instead of doing small private tours, people rather go to trail parks themselves or want to do larger events that are competitive and challenging. Today there are several successful companies purely focused on large events hosting thousands of people.
I was in the right place at the right time, but I didn’t see or misread what was emerging in the industry. Had I done more research in the industry with potential customers I could have picked this up. This leads to the next point, your idea is not dood enough, you need a market for it.
Ideas need markets
No matter how good your idea or product is you need a market. Many successful entrepreneurs will tell you that you first need the market and then you figure out what they need, and what you can sell to them. Either way the idea or product is intricately linked to the market.
Just having a fantastic idea without a willing sizeable market is guaranteed to fail. This is the dilemma with following your passion. You lose objectivity and put your own needs and wants first rather than understanding what will work. I tried to make something work that suited me. Instead of understanding what was needed or in demand and doing that.
So, make sure that you quantify your market and test your products acceptance. This will help you to refine what will allow you to start your own busines successfully. Do this by talking to people, testing products etc.
What demands will this business place on your family life
Understand the demands and nature of your new business on you and your family, be prepared for the long run. It is easy and exciting thinking about your dream business. You will love it and enjoy it but what demands will it place on your family. The hours, the time, and the travelling? Does it fit in with your family life, is your family on board with you?
I started a mountain bike touring business that was my passion. I loved riding bikes and travelling around. Often I would be away for a few days at a time on tours. The busy time was was during the holiday periods and on weekends. I never thought about all of this until I was in it. Only then did I realise the time demands of the business that I had chosen.
But at the same time I was just stating a family. I realised that as much as I loved doing this I would be missing out on events with my family. This would be a problem. To start your own business successfully be prepared for the time demands and sacrifices initially and ongoing.
Understand the capital and financial requirements
You need to have a proper robust financial business model. So that you can clearly understand profitability and how much capital will be required to start properly. It is easy to just start small, spending little and think that you will figure it out as you go along. That may be a good idea to keep initial costs low and not overextend yourself. But at least start with the end in mind and know what you will need.
One of the biggest risks of starting the business is investing a lot of money upfront and then not being able to recover it. It is a good idea to limit initial investment, but you do need to balance that with growing the business. No matter what business you start don’t think that your business doesn’t need investment. Apply your mind to what it would look like once it is running properly and consider the investment required.
You need to be fully aware of all the start-up costs and how you would be able to recover them. Know what volume of business you can expect and how much revenue you will make. What expenses will you incur to make that revenue? What will you need to spend on marketing, advertising, insurance, training, travelling, salaries etc? All of this needs to add up to give you a reasonable profit margin and net profit that will make the business viable.
Once again it is too easy to get caught up in how exciting the business will be and how much you believe in it. Many people starting businesses are not financially inclined, so they shy away from this. The reality is that it all needs to work on paper before it can work in real life. Don’t expect it to magically happen. The more you can model it the better you will understand the vulnerabilities and what you need to do to make it successful.
To start your own business successfully you need to have a good grasp on the financials. I would say that this is one of the most important success factors.
Loving what you do vs being good at what you do
It is important to understand the difference between loving what you do, being good at what you do and following your passion. The primary objective is to make money so that the business can sustain itself and sustain you. Just because it is your passion is not enough.
The challenge I experienced following my passion was my objectivity in looking at it as a business. I loved the idea so much and often said that I would do this for free. But that is not sustainable. If it is supposed to be your source of income, then it needs to be profitable. There are many people who do follow their passion in their businesses. Many are successful but many don’t make enough money.
I also realised that doing my passion as a business and charging money for it was vastly different to doing it for fun. Doing it as a business meant that I needed to be responsible and deliver value. It was not about me enjoying the activity it was about the clients enjoying it. It was great sharing my passion and that worked well. But inevitably I did not enjoy it as much as I normally do. At times it became like a job.
There were also other more important elements of the business that I had not thought through. The tours were less about the riding and more about the hospitality and the entertaining. I was great at riding and guiding but not with the hospitality. In the end I was doing stuff that I didn’t really like and wasn’t particularly good at.
Setup systems that can run the business and have an exit plan
One of the biggest lessons that I learned was the importance of building a business vs creating a job. My experience was no different from many entrepreneurs. Many people starting their own businesses do so because they need a job. They are creating a job for themselves and not starting a business. There is a subtle but important distinction between the two.
When you start a business by yourself you are the only one in the business at least at the beginning. You know everything and everything depends on you. As the business grows it grows around you and you learn how to do everything. Once again if you don’t have a plan or an end in sight then worst case you will work yourself to death or best case become trapped in your business.
A good saying to keep you on track from day one is “Work on your business, not in your business”. From the start you should have a plan of how this business can be setup to grow and evolve. If you start with end goal of building something that you can walk away from or sell, then you will be on the right track. That may not be your plan but that type of thinking will help you.
If you don’t do this then all that you are doing is creating a job for yourself. One day when you decide to stop or leave you won’t have something that you can hand over. The business will be completely dependent on you and without you there will be nothing. You may think you have something valuable to sell. Unless it has systems and can run by itself it will be of no value to someone else.
You will also have missed one of the biggest value creating opportunities that exists today. If you can build a business that with systems that runs by itself then you have created a revenue making machine that you can sell. The ability to sell a business like this is what makes entrepreneurs fortunes. If you start with this end in mind, then can achieve success.
I spent 6 years of time and effort building something that I just had to close without realising any value for my effort. Had I created a sustainable business it may have been more successful and I could have realised value from it.
How to start your own business successfully
These lessons are just some of the reasons that many businesses fail. Trial and error is a common feature in successful entrepreneurs. They are very seldom an overnight success. It can take a few failed attempts until you work out what can work and what can’t. Once you can work that out then your success rate will increase.
Out of the four busnesses that I have started just one continues today and has grown. It is a chemical manufacturing business producing tyre sealant and lubricant for the cycling industry.
The reasons it has done well are the following
- The market is large and the products are in demand
- The profit margins are sustainable
- The business is bigger than just myself
- Kept startup costs low and allowed the business to grow and fund itself
- Put systems in place for manufacturing and distribution
- We never gave up despite several problems and setbacks.
Starting your own business is not for everyone with majority of people being employed and not self employed. That said don’t let anyone stop you starting your own business. If you never try you will never know. If you have a burning desire then you need to act on it. But at the end of the day a business needs to make money and be sustainable otherwise it is just a hobby.