Okay, so you’re ready to start a business. You’re tired of the 9–5, you’re pretty much about to kill your boss and you want to build something of your own. The bottom line is you’re ready…
I’ve started many businesses from scratch over the years (at least 10+). I’ve bought existing businesses, I’ve sold businesses. I have some that did well and some that tanked…HARD. Take it from me there are a lot of things you CAN do when starting a business and some things you SHOULD do but as this here is a cautionary tale let’s go with; the 5 things I would NOT do (if I were you).
I would not start a business without already having my first customer.
My favorite business start-ups are ones that have a guarantee of sorts. Nothing in business (or life) is certain but you can always stack the deck in your favor. I spoke to a guy once who whilst working for an electrical contractor got a call from his friend who’d just got a contract to build new stores for a big-box retailer. He asked his buddy if he’d like to be the preferred electrical contractor on the deal. He said he’d be there in a jiffy and dropped everything and started his own business. He already had his first big customer. That’s gold right there.
We can’t all get that lucky in business but starting something by saying, “I’ll start my business and then I’ll find that first big customer” is the wrong way to do it. Another guy I know got a contract to provide catering services several times a year for a big oil and gas company and built his business off of the back of that.
I would not start a business unless 9 of the first 10 people I explain it to say, “Oh heck yes, I need that”.
Would you rather have 10 customers on your first day or 1,000? If I owned a restaurant, I would rather have 10 customers the first day that raved about my food than 1,000 customers that just though it was “okay”. The second restaurant will be out of business in a few months but the first one will be around as long as the food continues to be out of this world. We live in a referral-based society. Just look at all of the options to read reviews online. I would rather have a small number of insanely passionate fans than a thousand people saying “meh”.
I would not start a business that I couldn’t get out of.
This sounds a little shady like I would want to sneak off in the middle of the night if things went poorly but I don’t mean that. The primary goal of a business owner should be able to exit the business successfully at some point. You will NOT live forever (sorry to break it to you) so therefore, you will have to exit the business eventually. Either at death or by selling or by automation and delegation. In any event, you have to be ready. If you start a business that will always rely on your presence, you’re nailing your feet to the floor. You’ll be stuck. You have to envision (and then design) a business that you can leave at some point and that will run without you.
I would not spend any money on ANYTHING in the first year.
Unless you are ridiculously well-capitalized and can afford to splash some cash and “do it right” then protect your money. I recently wrote an article on why businesses fail and the primary reason is usually “running out of money”. You have to protect your cash. Let’s take a look at some of the main things you can spend money on as a business in the first year and I’ll list an alternative that doesn’t cost as much (or anything):
Rent? — Start your business in your bedroom. But I want to open a store (says the newbie)… then start selling your product online first to see if anyone wants it. But I’m opening a restaurant (says the guy binging MasterChef on Hulu)… then start by cooking in your kitchen and delivering samples to people to see if they can swallow it without gagging.
Employees? — Start by doing it all yourself (literally). But I want to start a Landscaping business… great, find your first customer yourself (you don’t need a “sales guy” yet), go bid the job (you don’t need an estimator), order the materials and go take care of it (you don’t need a procurement specialist, a team of laborers or a horti-fricking-culturalist). It’ll take you a week but hey, you’ll know everything there is to know about the process and you won’t have $5,000 in payroll.
Advertising? — Use free sources. How will people find me though…? From your free listings online, your social media posts, by answering the phone when you give them a ringy-ding…
And on and on. Your default answer to any question involving spending money should be NO. Or HECK NO, depending on your mood that day.
I would not start a B2C business
I don’t like people at the best of times. In fact, business would be easy if it wasn’t for customers. So if I were starting a business tomorrow I would choose my customer wisely. In my opinion, other businesses are just easier to deal with. They typically don’t penny pinch like Mrs. Archibald down the street does. They typically pay their bills on time, unlike Mr. Jones from around the corner, who doesn’t employ a full-time bookkeeper. Finally, they’re relatively loyal. They’re in business themselves so they understand the rules of business, unlike young Ms. Millenial who just bought her first house and can’t even count to 20 with using all her fingers and toes. B2C (business to consumer) is out. B2B (business to business) is in. Period.
So there you have it…but you won’t listen to me anyway, us entrepreneurs are impulsive, we’re know-it-alls. It’s okay, all the best lessons are learned the hard way…