Editor’s note: This article was first published in December 2015. Its data is from 2015: Facebook is described as worth more than 200 billion today, and the reader is addressed as starting today, 10 December 2015.
Ever since entrepreneurship started being sold as a way to solve all our problems, or as a way to get ahead in life when so many people have little chance of finding a job, more and more entrepreneurs have been starting their own business for the wrong reasons, unaware that starting a business isn’t as easy as some make it out to be, but isn’t as hard as others would have us believe, either.
That’s why we often turn to business owners who have already travelled this road and ask them: “What do you know about business today that you wish you had known before you started?“
And the truth is that most of them agree on a few points. When I published the article The secret price of starting your own business, we described a very extreme scenario, but it was no less real for that. With that article we set out to show that entrepreneurs are made of very special stuff, and that anyone who decides to venture into the business world has to be ready for a breaking-in period until they grow a thick skin.
Then there are the people for whom business success seemed genuinely easy, though such cases tend to be very rare and, often, success only looks easy in hindsight.
Most new entrepreneurs throw themselves into business with an extra dose of motivation after reading a few business books or websites like this one. As a result, they build up a false sense of confidence (others are very sure of themselves to begin with) and believe they’re ready to take on whatever comes their way. But the truth is that one of the first things business owners wish they had known before starting is that you can do much less than you think you can.
So focus on one thing and try to do it better than anyone else. Your business’s first results will come from what you yourself are capable of doing. As the business grows, you can delegate other areas to people who have fully mastered them.
If you’re not ready to fight monsters in dark alleys to protect your business, don’t start it
Building a business is genuinely hard. And it’s not just the building: in Spain, even legally setting up the company is complicated. All the nonsense and bureaucratic hurdles will drain every ounce of your energy.
You have to accept that a business, until it can run on its own, is an obstacle course. When you clear one obstacle, another appears, and then another. When you think there are no more obstacles, the fatigue from the ones you’ve already cleared catches up with you, and just when you think you can’t go on, new obstacles appear.
The fact that eight out of ten new businesses fail explains how hard it is to start one, and in the end it’s not so much about the type of business as about who you are, what you’re made of and how mentally strong you are.
If you’re the type who spends three days in bed when problems pile up, entrepreneurship is not for you.
(See: 5 ways to be mentally strong)
Forget much of what you’ve read, and don’t start without a business model in mind
We’re bombarded with stories of successful entrepreneurs showing how Mark Zuckerberg started something (Facebook) as a pastime, without a solid business model. Before he knew it, he had a company valued at 1 billion. Today it’s worth more than 200 billion.
But cases like Facebook are the exception, not the rule. If you start a business the way Zuckerberg did, and you start today, 10 December 2015, you’ll most likely have failed before Christmas.
You need to know where the money you’re planning to make is going to come from long before you start putting your business idea into practice.
Costs are always higher and income is always lower
On this point, every single business owner agrees. When we draw up a business plan, we tend to be optimistic. When we do market research, we always inflate the number of potential customers. We have to understand that a potential customer is not the same as a customer, and that you’ll always have fewer customers than you expected.
Costs will arrive sooner than you imagined. They often rise more than expected, even before the first income comes in. And income usually turns out lower than expected.
That’s why, even though we prepare a business plan and market research in order to raise funding, we should prepare another business plan and market study for ourselves in which we are very pessimistic about the numbers. Because the real picture will most likely be even bleaker than our pessimism could imagine. The next question is: if that scenario came about, could I withstand the loss, or would I feel like jumping out of the window?
(Recommended: Why doing market research could be useless)
Don’t start a business just because you can’t stand having a boss
I’ve never liked those motivational speeches along the lines of “Stop putting up with your boss and find freedom in your own business.”
First of all, never imply that being an employee is worthless, because if your business works you’ll have to hire employees, and I doubt you’d like them to think of you as a jerk to be got rid of in order to gain their freedom.
Besides, in a company you might have one, two or 20 bosses. But if you start your own business, every customer will be your boss. You’ll only succeed in business if you serve your customers well, and that means being employed by your customers. Ultimately, the customer has the power to fire you and shut your business down.
Paying customers are God. Late payers are a casino
Running a bar or restaurant teaches you this lesson. I’d rather have the customer who orders a coffee and a slice of toast and pays for it than the group that orders 20 mixed drinks and asks you to put them on their tab. And the headaches each of them gives you are in a completely different league.
When we start a business, we tend to negotiate far too much with customers who may never pay, and they also tend to demand more attention than the customer who buys less but pays religiously. Many businesses go bankrupt because of unpaid bills, so we should treat paying customers like God, and once the business is up and running, we can decide on a policy for customers whose payment is doubtful.
First and foremost, we’ll help the paying customer in every way we can, because that’s the type of customer who will build our business. There will be time later to gamble our goods and money at the casino.
Don’t offer what you think customers want, but what they really want
If you’re not Steve Jobs, and none of us here is Steve Jobs, forget the idea that “people don’t know what they want until you show it to them”, because that’s another exception, not the rule. Talk to your customers and let them tell you what they need. Innovation in business is a risk, so we’ll leave it for when our business is established.
Looking for a cofounder or partner? Fine… but with conditions
The truth is that most entrepreneurs start a business with someone else for the sole reason of sharing their fears. In other words, I wouldn’t go into the haunted house in the woods on my own, but with company, why not?
The ideal number of founders is an odd number lower than 3, that is, just you. But if you do look for a cofounder, they must share your values and have a similar vision, plus complementary skills. If we look for someone who can do the same things we can, we don’t need them.
If you’re good at management, production, office tasks and so on, your partner should be good at sales and distribution. That’s what real synergy between cofounders looks like.
Once again, take Steve Jobs and Steve Wozniak as an example. The true genius of Apple was Steve Wozniak, because without his skills Apple wouldn’t exist today. But Apple wouldn’t exist either if Wozniak hadn’t had Steve Jobs’s vision on his side.
Business is sales
And finally, this is the part entrepreneurs most often forget. If you want to succeed in business, you’ll have to learn to sell or find someone who knows how to negotiate and sell.
You may have the best business ideas in the world, but if you don’t know how to sell them, you’ll have nothing. Without customers there’s no business, and a business today can’t afford to wait for customers to walk through the door. You need to develop different strategies to win new customers every day, whether out on the street or online.
See also: Michael Bloomberg’s 6 tough tips for business success
Featured image: Mathieu Thouvenin, CC BY-SA 2.0, via Wikimedia Commons.
