Editor’s note: This article was first published in October 2021, although the answers from entrepreneurs it quotes appear to be several years older than that date. The people quoted may no longer be at the companies named.
What business lessons would you give your younger entrepreneurial self?
The Young Entrepreneur Council (YEC) got in touch with leading business figures to ask them one question: “Knowing what you know now, what lesson would you teach your younger self about entrepreneurship and business, so that new entrepreneurs can learn from business people with a solid track record?”
We’ve gathered some of these tips that can help any entrepreneur improve their path in business. Here are the best business lessons:
The 10 best business lessons for entrepreneurs
1. Avoid analysis paralysis
Making decisions recklessly is never a good thing, so we take it for granted that we should study and analyse the viability of our business idea, our market and so on. But entrepreneurs sometimes fall victim to what is known as analysis paralysis: we end up analysing so much that in the end we do nothing, or there’s nothing left to do because someone else did it while we were still mulling over the idea.
“Decision and action are always better than indecision. This is particularly important for a business’s early success. Execution moves things forward, and you don’t have time to deliberate over small decisions. Sometimes even a great deal of analysis won’t give you the answer, and you’ll have to do what you think will work best.”
This business lesson comes from Jesse Pujji of Ampush.
2. Embrace change
“When I started out, I thought success meant everything working out the way it had been planned. But that isn’t really how entrepreneurship works. Some things work out much better than I imagined, some things don’t happen, and other things look like epic failures but are really just part of the learning process. Embracing change and enjoying the adventure is a big part of the fun.”
Excellent business advice from Elizabeth Saunders of Real Life E.
3. Surround yourself with the right people
“There are many important principles of good business: best practices, success strategies and so on. But none of them are universal. You can run your company at your own pace. You can do things your own way and you can make it work.
“But the people you choose to surround yourself with can make you or break you. When I have ambitious workers, motivating peers and mentors I can learn from, like-minded people, I make rapid progress. When I don’t have those people around me, I stagnate. You need a strong support network around you.”
See also: 16 things you should know about life, success and happiness
Cody McKibben of Digital Nomad Academy.
4. Test before you invest
“Entrepreneurs have ideas every day. The sooner those ideas are tested against reality to see whether they’re viable, the faster we’ll get to the idea that works. For example, I once had an idea for an iPhone app. I made the wireframes. I went to a developer.
“I paid the developer about 20 percent of my savings. And I lost all my money because I had an app nobody wanted. If I had tested the app idea with my potential customers without any investment, I would quickly have found out that my idea wasn’t good. Get out of the building and test before you invest.”
Brett Farmiloe of Internet Marketing Company.
5. Start with your strengths
“Research shows that the best leaders do one thing differently: they know their strengths and work on them almost all the time. That sounds simple, but what I didn’t realise was that our society isn’t set up that way.
“From our first days at school we’re taught to concentrate on improving our weak points; that never leads to greatness. First, you have to discover the things that make you unique. Next, find a big problem the world is rightly outraged about. And finally, use your strengths to solve that problem.”
One of the best business lessons, from Josh Allan Dykstra of Strengths Doctors.
6. Accept that some mistakes are good
“You have to accept that getting 80% of things right is fine. Being a perfectionist and an entrepreneur can often cause a number of problems, among them micromanagement, which will drive you crazy. Accept that mistakes will happen and that they are, in fact, part of building a great business and a great team.”
Ilya Pozin of Open Me.
7. Talk to your customers
“As a younger entrepreneur, I always wanted to build or start something that I wanted. Part of what makes entrepreneurs great is that they’re often so passionate about a solution to a problem because they have that problem themselves. But the reality is that just because you have a problem, that’s not enough to build a company around it.
“So talk to your customers… a lot. After realising how much you learn from customers, we built that feedback loop between customers and our employees.”
Eric Koester of DCI.
8. Generate sustainable revenue
“Focus on generating sustainable revenue. Entrepreneurs thrive on ideas and opportunities. Some ideas take longer to turn into a profitable business, and in some cases the opportunity takes longer to materialise. Whatever the idea or opportunity, I would focus on smaller increments that can start generating revenue sooner rather than later.
“This is a critical success factor for new technology companies, given that I can easily end up being more of a thinker than a revenue generator. It also helps you see what works and scale it up, instead of going with the big-bang theory.”
Raheel Retiwalla of Fuzed.
9. Don’t get distracted
“As an entrepreneur, lots of shiny new ideas and new ventures grab your attention day to day, but focusing on a single mission can make the difference between success and failure. As the saying goes, ‘If you chase two rabbits, both will escape.’ Sometimes focus and a relentless attitude can outweigh the greatness of the idea itself.”
Richard Lorenzen of Fifth Avenue Brands.
10. Understand there’s more than one way
“I came into the world of entrepreneurship timidly, for years even feeling uncomfortable saying I was a real entrepreneur. What I didn’t understand when I started was that entrepreneurship is less about how many investors you have, your job title or how many companies you’ve sold.
“What entrepreneurship is really about is freedom, and using your power of choice to do business and serve others in ways that empower, liberate and do good in the world. There’s no single way to do it; the journey is what we make of it.”
Dave Ursillo of The Literati Writers.
Now let’s move on to some more pragmatic business lessons that we should always keep in mind.
7 more practical business lessons for entrepreneurs
A while ago we published 12 business lessons from Mark Cuban. This time, let’s look at the business lessons we can offer entrepreneurs who are planning to start their own business or who already have their company up and running.
I should say this isn’t a filler article. I’d advise you to print it out and look over it so you can follow these lessons when you’re turning over a business idea or about to launch your company. This advice is a mix from several brilliant minds in the business world that I’ve gathered over time from various business books, interviews with successful entrepreneurs and articles by business people.
1. One of the most important business lessons
Test your business model before taking significant risks
All too often, entrepreneurs risk everything they have to start a business. Some people quit their jobs or mortgage their homes to take the plunge because of a conviction that hasn’t been properly tested.
Sometimes it works, and if the entrepreneur succeeds we’ll hold them up as an example and there’ll be hundreds of articles along the lines of “Entrepreneur risks it all and wins: the power of believing in yourself”. But if they fail, nobody will talk about them, and among family and friends they’ll be “the idiot who bet everything without a clue”.
In business we should have contingency plans so that, if everything goes wrong, we’ve seen it coming.
Still, even though nothing in business is certain at the start, we can improve our odds of winning if we do things properly. How can we increase a business’s chances of success?
Testing the business model
A business model can be tested in many ways. The typical business plan won’t do the job, because a business plan is nothing more than an act of faith you set down on paper, hoping that something similar to what you wrote will actually happen.
So we’re better off with some homemade ways of testing our business model.
If our business idea is a physical product, the best business plan there is is to make the first 10, 20 or 50 units and work out a strategy to sell them. If we get rid of those first units quickly, there’s a good chance we have a business, so when it’s time to risk money on investment, we’re stepping onto the field with a proven system. The risk is lower and the chances of success are higher.
You don’t even need a product
You can test your business idea even before making the first units, using Google AdWords or Facebook Ads and studying your landing page analytics. In other words, act as though you already have the product on sale and see whether people would really be willing to buy it. Let the customer go through the whole purchase process and, at the very end, take them to a screen saying “units are temporarily unavailable, please come back in a few months”.
Personally, I prefer the first option. Spend some money on the first units, and that way we’re already up and running if sales come quickly. If they don’t sell, we cut our losses on the investment and move on to another business.
When Tim Ferriss gave advice on how to find a profitable product to sell, he told the story of how, whenever he asked a friend whether they’d buy his product, they almost always said yes. But the moment he said, “As it happens, I’ve got a couple of units in the boot of my car. Do you want to buy one now?”, the excuses started. So test your business model or product thoroughly. Among the best business lessons, I think we could include some of Tim Ferriss’s advice.
See also: 12 business lessons from Tim Ferriss
2. Believe in the business and in yourself
When you have a business idea, lots of people will tell you it won’t work. That’s when you need to stand firm. But careful: we’re not saying you should be blinded by your idea and ignore useful advice from others who can see things you might miss. Once you’ve studied the viability of your business idea and you believe, or are convinced, that you can make it big, it’s time to take the risk and not be left wondering.
When that moment comes, remember that everyone will have advice for you, and that many of the people telling you it won’t work aren’t really talking about you and your future company, but about themselves. If they don’t see themselves as capable of getting a company off the ground, they’ll think you can’t either.
Everyone has advice, but not everyone has what it takes to start a company, grow it, and make it profitable and scale the business. Talk is easy and cheap, but taking action is what marks out the person who has a chance of succeeding.
See also: How to validate your business idea in 5 minutes with a pen and a napkin
3. Among the best business advice: know your numbers inside out
For first-time entrepreneurs, numbers are a headache. And sometimes it doesn’t matter whether you’ve studied business administration. You’ll find that theory is one thing and practice is something very different: facing the numbers of a real business, with the added bias that the business in question is yours. Everything changes in that respect.
Fixed costs, variable costs, gross margins, cost of goods and so on are sometimes pieces we know, but once they’re applied to our own business, we struggle to see the final picture when we put all the pieces together so they make sense.
If we don’t fully understand what these numbers mean and how they interact, we probably won’t be able to react in time or make changes when they’re needed. To a first-time entrepreneur’s eyes, there may be profits, there may be a profitable business that’s growing; but to the eyes of someone who understands certain numbers, there could be a snowball that’s about to set off an avalanche that will bury us.
If you can’t measure it, you can’t manage it
It’s also important to measure everything that can be measured. We can’t manage what we can’t measure. If there’s one thing I’ve learned in business, it’s that you have to become paranoid about measurement, both in terms of the business’s financial management and in measuring the time we spend on certain customers and activities that don’t actually produce that many results for us.
If you can measure it, you can manage it. The good news is that all numbers can be measured, and so we can manage anything. It’s not a bad idea to hire an outside accountant or adviser to handle the most complicated matters for us, but at the very least we need to know the basics so we aren’t fooled by them.
4. Trust is vital to success in any field
We mean trust in every sense. First of all, a customer will buy your product because they trust you, your company and your product. Make sure everything is designed to inspire trust. Sometimes it’s better to sacrifice a little of your profit margin if it means the customer will trust you even more. The prime example of sacrificing profits in favour of trust is undoubtedly Jeff Bezos of Amazon.
But we’re talking about the most necessary kind of trust, which is:
Confidence in ourselves
If you don’t believe in yourself, you’re lost. I understand that a lot of doubts come up and a lot of fears appear, especially if you feel you’ve never done anything big in your life. It’s hard to be confident before getting results, but the truth is that it’s even harder to get results if you don’t have that confidence.
See also: Richard Branson’s 10 best tips for success in business and life
5. Work-life balance is a utopia for entrepreneurs
If you’re going into business thinking you’ll be able to juggle it with your family life, honestly, I don’t think you know what you’re getting into. There are exceptions, but as a general rule, in the early days the business will swallow up practically your whole life. And you need to be ready for that. Your work will become 24/7 for months, probably for the whole first and second year.
The second time there’s no balance between family life and work is when your business is in trouble, which is perfectly possible and quite likely to happen. Sometimes, before a business gets better, it tends to get more complicated.
A business is like a hungry puppy
Some business people have described a company as a hungry puppy. When it needs to eat, it needs to eat, full stop. It doesn’t understand family problems, work-life balance and the like; it demands your attention regardless of what’s happening to you personally. And you need to be absolutely clear about this, because this is the point where many people realise they aren’t cut out for business.
That’s why, when I hear some motivational speakers sell entrepreneurship as “freedom from a life devoted to work: work whenever you want”, I can’t help feeling sad about the message. Of course one day you might run your business from a hammock on some exotic island, between one massage and the next, one mojito and the next, but you’ll have to sweat a lot, put in a lot of hours and go through what we call “the master of pain”. And that master is the one who does the most weeding out among the candidates for business success.
6. Ask for help and delegate
Pride can kill an entrepreneur. I’d go as far as to say that every single one of the business people on the Forbes list of the world’s richest has asked for help at some point. As the saying goes, nobody succeeds on their own.
On the other hand, one of the main mistakes of business owners who come to a bad end is not knowing how to delegate. Many tasks take up a large part of our time without producing results in proportion to the time we put in. Learn to delegate so you can focus on the few activities that genuinely require your attention and core skills. Believe me, for most of the tasks your business needs, there are thousands of people just around the corner who will do them better than you.
And success in business comes precisely when we work with people who are better than us
Also, if your business gets to the point of needing money from private investors, I’d say that entrepreneurs who see investment as the end goal for continued growth don’t usually fare as well as entrepreneurs who see investment as the start of a partnership.
What I mean is that it can be very tempting to take money from the first investor or group of investors (especially if we really need it), but one of the least-heard pieces of advice is not to take money from just anyone. Make sure that the investor who comes into your business, intending to invest in it and take a share of your profits, also has something to contribute to your company’s growth, not just money.
7. Be negative for a moment
“Carlos, what on earth are you talking about?!” This advice may sound counterintuitive, but the reality is that in business things tend to get worse, and once they’ve got worse, they tend to get a bit worse still. So it’s one of the most important business lessons every entrepreneur should keep firmly in mind.
When you start out, you should always assume, and I’ll repeat it, ALWAYS, that the expenses you planned will end up higher and the profits you expected will end up lower. And the time you thought it would take to become a profitable company will always turn out to be longer than you calculated.
So be prepared for this, plan ahead, and that way you’ll avoid surprises. We could list a thousand reasons why businesses fail, but the truth is that the main one is usually that they run out of money.
That’s why we insist once again on the need to have a fallback plan.
And these, basically, are the business lessons I consider vitally important and that should never be forgotten. I don’t think we need to fall back today on the usual advice about training for a marathon rather than a sprint, being patient and persistent, building resilience and so on. We’ll assume you all know that kind of advice already.
Featured image: Startup Mena, CC BY 2.0, via Flickr.
