Starting a New Business - Do You Have What It Takes?
Starting a New Business – Do You Have What It Takes?
Are you thinking of starting your own business, but you’re afraid, concerned…actually, you’re freaked out? That puts you in good company with many others who have come before you and asked the same question: Do I have what it takes? According to the dictionary, an entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise. That sounds pretty straight-forward, doesn’t it? We all have some degree of organizational skills. How’s about management skills? Were you dressed when you left the house this morning? Then somewhere along the way you managed the process of picking out clothes and putting them on your body, right?
Congratulations! It appears that you qualify as a bona fide entrepreneur…or do you? Read the definition again – I think it says something about “assuming the risks of a business or enterprise”. That is precisely where most potential business owners consider themselves unprepared, mainly because they have never had to assume such risks. Never had to make a payroll, never had to escrow money for quarterly tax payments, never had to borrow a large sum of money (and then start paying it back whether their business was profitable or not). Notice that I did not use the word “unqualified” – I used the word unprepared, which could be exchanged for the phrase “not ready”. The good news is, through mentoring and education, potential entrepreneurs can get themselves prepared and ready to assume such risks.
In my 25 years of business management and being a consultant for business owners (and want-to-be owners), I have learned much about what it takes to operate a successful, profitable business. My views on the characteristics of a successful entrepreneur come from my own personal experiences (managerial successes and failures both), observations, continuing education, and in interviews with business owners on what characteristics they feel make for a successful entrepreneur. Let’s explore these characteristics together with hopes that you find yourself within. Although these traits are numbered, it is not implied that one is any more important than the others…they are all critical.
1. Work Ethic
Actually, this one is listed first for a reason. As a young boy my father instilled in me a tremendous work ethic. He had the means to shower me with money, with possessions, with all the things I saw my peers getting from their fathers; however, he chose to teach me to work for what I wanted, to earn it. At the time I resented that and I didn’t understand his method. It wasn’t until I was through college and out on my own that it hit me in the face like 100,000 tons of bricks: in the real world, one must work if one hopes to eat, and those who work harder and smarter eat better and more often than those who don’t. I am talking about being able and willing to actually get your hands dirty, hitting the ground running and using a little elbow grease if that is what it takes to get the job done. At the age of 15 my first real paying job was as a dishwasher in a pancake house. Every Saturday and Sunday morning my mom would wake up and drive me to my 6:00 AM to 3:00 PM shift. Let me tell you, this wasn’t a job with two 15-minute breaks and a nice 30 minute interlude for lunch (apparently, there were no enforced labor laws in Oklahoma in 1976). I am talking about 9 hours straight through, washing some of the nastiest dishes imaginable – and this is back in the days when you could still smoke in restaurants. I never actually saw a sign to this effect, but I have to believe that this pancake house had some sort of rule that EVERYBODY was required to smoke and they were required to flick their ashes onto their plate. They also must have been required to stay and smoke for no less than 2 hours – sitting there smoking and flicking – because by the time I got those plates the ashes, the cigarette butts and syrup had become chemically sealed to the plate.
So here I am, a 15-year-old kid living in one of the most expensive neighborhoods in Oklahoma City, in a beautiful 5 bedroom home (my parent’s) right on the 18th fairway of the country club golf course I find myself scraping other people’s filth from plates and racking them up and running them through a commercial dishwasher. The only break I ever got from that task was when I had to wash the pots and pans that the cooks would bring over and stack at my feet. What the heck was I doing working this awful job making minimum wage? The answer is simple: I was earning my spending money and learning the value of a good, hard day’s work. Again, at the time, I would have welcomed someone just giving me the spending money I needed. But when I look back over my life it is clear to see that that job was one of a series of significant events that helped mold me into the person and businessman I am today.
This concept of having a strong work ethic truly manifests itself in the world of business ownership, where you will find that a successful business is run by someone who is proficient in most/all of the tasks associated with operating that business, and will be able to do them well. When your employees see you working in the business and exhibiting consistent energy and a “roll up your sleeves and do it until it’s done right” attitude, they will adopt the same attitude and you will inspire a sense of team pride. There really is something to the phrase “early to bed and early to rise makes a man healthy, wealthy, and wise”. I believe it refers to preparing yourself for a productive and diligent work day- there is no getting ahead in the entrepreneurial world for those who compromise the important tasks at hand in favor of slothful behavior or a lazy, “that’s not my job” attitude.
2. Goal Driven – but keep life balanced
As people look to start a business, they will always have one particular goal, or maybe a set of goals, associated with the endeavor. I have never known anyone who just woke up one day and thought it might be a good idea to start their own business, but don’t know why they are doing it or what they want to do. Here is a short list of some of the goals I hear my clients talk about as they look to ramp up a new business:
*To bring a unique idea or product into the business world;
*To work for themselves and be in charge of a business;
*The business is something they want to do with another family member and aspire to pass it on to their children;
*To prove to themselves that their product is as good as people tell them it is, and that people will actually pay for it ;
*To conquer the sheer challenge of getting a business started;
*To have a business that will grow equity over time and provide future wealth and retirement stability;
*To earn a comfortable or above average income;
*To have a more flexible work schedule, creating more family time.
As you can see from this list, some of these goals are wrapped around a sense of accomplishment, some of them involve purely economic reasons, and some of them have to do with more personal aspirations. I feel it is important to define what your personal goals are while you are dreaming up your new business endeavor, and then mold your business operation in such a way that it feeds into your personal goals. Take caution if the expectations you have for your business only include feeding your financial goals – this may cause your personal life to become unbalanced. Your new business should make possible the achievement of other important goals that are not financially motivated: family and social commitments, spiritual growth, community involvement, your own health and wellness, etc. Trust me, you don’t want the only time you see your children to be when they are already asleep because you are always working late, or that you don’t take time for a routine date night with your mate, or have a night out with friends on a regular basis. Schedule and follow-through on those important things – in the end you will be glad you did, and your business will be better off for you doing it.
Hopefully I have made my point that I believe in not focusing simply on money and financial gain while developing your goals in the world of business ownership and entrepreneurship. I tried that as a young manager and it did get me the promotion I sought, but it also left my personal life very much out of whack. The key message from this section is that successful entrepreneurs are goal-oriented – they wake up every day and have their to-do list to get accomplished and they work hard to finish that list before the end of the day, because they know tomorrow will have its own list. To be a truly successful entrepreneur and to sustain that success over a period of time will require you to have a well balanced life. Yes, I see the how television and movies portray the hard driving, smart and cut throat businessman who runs five different businesses and makes tons of money, and they then show what a romantic they are and a sophisticated socialite – but I am talking about the real world, not Hollywood. Since you and I live in this real world where there are only so many hours in the day and we all possess only a finite amount of energy, we must allocate that time and energy appropriately. Set your goals carefully and with balance, budget your time and energy well, and you will find that your entrepreneurial project will be much more rewarding and profitable in the long run.
Entrepreneurs strive to be on top, to be successful, and to win. They are typically competitive by nature and this competitive drive is one thing that can lead them to the top of their industry or trade. They want to win the negotiation process; they want to win the sales contract; they want to win in the hiring process in landing key employees; they want to be the most profitable; they want to win customers away from their competitors. This competitive nature will also sustain them through the process of getting a new business venture off the ground. There are so many things that need to be accomplished just to get a business started and a lengthy list of tasks that require stick-to-itiveness and continual accomplishment. For the less competitive person it is easy to give up along the way, as the road can be rough and bumpy when it comes to writing business plans and securing financing, for example. Of course, I am not saying that if you lack this competitive drive that your are doomed as an entrepreneur – what I am saying is that most successful entrepreneurs possess some degree of competitiveness which drives them to be successful. If you have an internal stirring that is driving you to start-up a new business, that can be construed as being competitive in nature. I find it interesting that three of the most common synonyms for the word competitive are gung ho, spirited and ready for action. I think we can all agree that anyone who takes on the tasks and responsibilities of starting up and running a business would possess these qualities to some extent.
It is important to point out that truly successful entrepreneurs also focus on achieving these “wins” by staying within the guidelines of accepted rules and practices…maybe bending them a bit…maybe even finding new and legitimate ways around the rules, but doing so with a great degree of integrity. Victory gained through unscrupulous means will lead to short-lived celebration, as no business entity can successfully exist for the long haul while cheating and breaking the rules. At some point those businesses and their devious practices are always exposed. Raise your hand if you have ever heard of Enron! We will address these points more in depth in just a moment.
4. Multi-Task Ability
The job functions required to operate any business can be broken down into two categories: technical and managerial. The successful entrepreneur understands the relationship and dynamics between these two and how each depend on each other, and will be able to multi-task his or her attention to both and understand that at times they are equally demanding of attention. However, there will be times when one will dominate their time and focus. The technical side of the business is the production of the goods, the performing of the services, the (I am not fond of this phrase, but will use it this one time) “blue collar” side of the business. To operate a business there is almost always going be technicians painting a home, making a widget, operating a cash register or flipping a burger. The managerial side of the business focuses more on sales, financial records and analysis, employee oversight, and process improvement. One does not laud over the other because they depend on each other to exist. A successful entrepreneur will understand the relationship between the technical and managerial responsibilities within the operation, which means they are balancing the needs, successes and challenges of each of them.
As you venture into your new business start-up, you must determine whether you are planning to focus your day-to-day involvement predominantly on the technical side. I have worked with many clients who started a business and planned on being the repair person, the delivery driver, or the cashier in the shop full time. There is nothing wrong with being an owner/operator and putting yourself in the role of lead technician in your business – but you must understand that if that is your business model, it will usually prevent you from growing the business past a certain point. Most new businesses must begin with the owner as lead technician, but the business model is for the owner to vacate that position by hiring someone to fill that role once the financial statements prove that the business is ready for such a transition. In making this transition the business owner is now freed up to concentrate on the “big picture” and is better able to balance her time in overseeing both the technical and managerial sides of the business, which ultimately will drive the growth of the business. A truly successful entrepreneur will plan for this transition in their pre-opening financial projections and will strive to make it happen at the appropriate time.
When we talked about being competitive, the phrase “win at all costs” was never mentioned. A truly competitive person in the business world will persevere based on their superior skill, their cunning intellect and their managerial prowess…those are the true components of victory and success. I will refer to the grand old game of golf to provide an excellent example: You are playing a round of golf and during the course of your game you allow yourself a few “re-do” shots (mulligans), you miss a really short putt – then decide to “give” that putt to yourself, you conveniently choose not to charge yourself a penalty stroke for hitting a ball out of bounds…so your results are greatly enhanced due to your own generosity in scoring. At the end of the game, you add up your score and it looks pretty decent, doesn’t it? Later that day a friend asks you what your score was for your daily round of golf and you proudly proclaim to him the score you totaled on your scorecard. The problem is that deep down you know that your scoring system was flawed and you cut corners – you really did not score as low as you bragged about to your friend. A successful entrepreneur will only take pleasure in winning above board, beating his competition fair and square in a pure capitalistic environment. A true entrepreneur can take no pleasure in saying he shot an 84 when he knows deep down he really shot a 94. To take it a step further, the next time he plays golf with his friends they will expect him to perform at a level that he is not accustomed to, his reputation will be tarnished and future bragging about his artificially low scores will be written off as falsehoods. The same goes for the business world: if you make false claims about your business’ goods, services, or capabilities, and fail to deliver what you promise, it won’t be long before customers see right through your false claims and they will not take your business seriously. Once you compromise the integrity of your business and damage your brand name, you begin its downward spiral. I believe this principle with all of my heart.
Always operate your business with the utmost integrity; gains achieved through unscrupulous means will ultimately spell your demise. Your good name is priceless, and you must protect it and enhance it – in each sales transaction, with every service provided, every single day. It will be your biggest asset for years to come, and will increase the equity in your business more than you can imagine.
6. Persistency – Embrace Rejection!
Never give up, never say die. If you have ever been employed in a sales capacity, or in the marketing field, or if you intend to own and operate a business – a never give up, never say die approach to everything you put your hands to is absolutely, positively imperative. Close your eyes and imagine for a moment that you are a door to door sales-person: you knock on 5 doors and make zero sales…are you going to get discouraged, pack it up, go back home and crawl into bed? Or are you going to trust your statistics that tell you that you need to knock on 25 doors to find 3 people who will allow you to offer them your 4 minute sales pitch? Do you cling to your research that tells you that for every 3 sales pitches that you present, you will get one sale? Can you see where I am going with this? A successful entrepreneur understands that not everything comes easily or on the first try. But if you knock on 5 doors and no one will allow you to present your sales pitch you can rejoice because that means you are one door closer to that one who will listen to your sales presentation, that will buy your product or service. Embrace rejection, for with each rejection you know that you are just that much closer to a success. That is a characteristic of a successful entrepreneur. In starting up a new business there will be successes and failures along the way, not everything runs as smooth as silk the first time around. If you are destined to be a successful business owner, you will stay with it and keep plugging away, keep working on every aspect of your business until you have things operating the way you want them to operate. Never give up, never say die.
7. Self Motivated
If you still depend on your mother to wake you up every morning and help you get your day started, please close this book and put it down – then go find a job working for someone else. There is no shame in needing others to motivate us – it just doesn’t bode well if you are going to organize, manage and assume the risks of a business or enterprise. A successful entrepreneur and/or business owner will be a self starter, someone who makes a to-do list each day and completes it before the day comes to its conclusion. Nobody has to tell them what to do or to motivate them to start doing it. Successful entrepreneurs are self-driven and set goals for themselves, and they work diligently until they achieve those goals. Taking that concept a step further, you must strive to complete the tasks of each day on that day. Procrastination in running a business can be compared to the poor little frog in the pot of boiling water – you usually won’t realize the negative effects from putting things off until you realize you can’t pay your bills because you never sent out those invoices to your customers (cash flow woes), or when your employees don’t show up for work because their paychecks are late in being disbursed – because you didn’t submit their payroll sheets until the day after the deadline. Getting your work done on a timely basis requires self-motivation and discipline and is an important characteristic of a successful entrepreneur. Successful entrepreneurs take pride in taking care of responsibilities quickly and efficiently, while not having to be told to take care of them – they do it from an internal motivation.
8. Forward Thinker…..the Great Chess Master
I clearly remember my early days in sales and marketing – including one particular job that required me to start out in the telemarketing department. In training me to be successful in that particular job, my boss taught me the art of thinking one step ahead – he likened it to a great chess match. Great chess players, or Chess Masters, are always thinking one, two, three moves ahead: I will move this piece here, and if I do he will move here, then I will move there…or if he moves there, then I will do this. A successful entrepreneur will manage his business like a great Chess Master, always calculating how any move or decision he or she makes will affect the business’ profitability, or the market in general, or how it might affect their relationship with a customer. This is a very important concept when it comes to making financial decisions in your business.
This Chess Master mentality is also engrained in the most successful of sales people and usually manifests itself in the phrase “overcoming objections”. This is important because with few rare exceptions a business owner will also wear the hat of salesman in his or her business – at least for a period of time. This salesman role may be actually writing and processing sales orders, or it may be answering customer’s questions while running the cash register in the store. It may mean attending the local chamber of commerce meetings for the old “grin and grip” sessions with other local business owners; or it may mean preparing and submitting bids for customers. Whatever the sales process may be in your prospective new business, it will serve you well to learn the ways of the Chess Master. Becoming a forward thinker in all areas of you business will pay huge dividends, especially when your competitors are not “playing chess” while running their operations.
9. Open Minded
This is the one characteristic that usually surprises people when I mention it in describing entrepreneurs. You might think that an entrepreneur is supposed to already have everything all figured out. He has already made his plans and is ready to carry them out. Well, this may be true, but anyone who is venturing into a new business will seek the input of others – if they are smart! There are so many angles and responsibilities associated with starting a new business – few people are able to tackle them all alone, and tackle them with the expertise necessary to ensure that they are done well. There will be contracts to review (leases, employment contracts, sales agreements, etc.), there will be marketing plans to create and implement, and there will be strategies to forge. A successful entrepreneur will leave their ego at the door and seek the advice and ideas of others – even if they think they have the best idea already. It doesn’t hurt to hear what someone else thinks or believes…after all, since you are the boss you don’t have to take their advice once it is all said and done. The importance of accepting help, insight and mentoring from others more experienced than you will be covered in more detail in Chapter 5.
10. People Skills
When I was fresh out of college, I got a mid-level management job working for a large company in the food service industry. It was decent pay and it had a great deal of potential for advancement. Although I had studied accounting and finance in college, and this job wasn’t exactly in my field, I was ready to take on this position and work my way straight to the top. The first few weeks in the new job were a transition, and I tried hard to apply my accounting prowess and financial skills to the job on a day to day basis. The more time that went by, the more I realized that I was dealing with managing people much more than I was managing numbers. I was never trained to manage people: what to do when someone calls in sick, how to handle disputes between employees, how to motivate people who are making near minimum wage to perform at a high level in order to make ME look good. At that job, I was very fortunate to work for a man (I will call him Carl) who was extremely gifted in the area of managing people. Carl was very firm but very fair, and people loved to work for him. He got the best effort that they had within them – and he ran a very successful operation because of that. I watched and learned from him, oftentimes mimicking him as I handled employees. In essence, I did what he did. Throughout my three years of working for Carl and watching his outstanding people skills, managing people successfully became more and more natural for me. As time went on I was able to blend the people skills I learned from him with the financial management skills from my education, and in doing so I was indeed able to advance up the ladder during my early years in food service management.
The people skills and employee relations skills I learned early in my career were a huge asset to me later as I transitioned out of food service management and became successful in a sales position, then as a sales manager, and finally as the general manager of a large operation. Being able to work well with people, understand people, motivate people, and manage people is such a huge part of being a successful business owner and a successful entrepreneur that I advise individuals going into business that if they don’t possess those skills, hire someone who does and learn from them. The business will be much better off for you doing so.
11. Education: how important is it?
Of the 10 previous characteristics of a successful entrepreneur that we have looked at in this chapter, some of the traits within these characteristics will be ingrained in you, and some must be learned. In that regard education usually plays a role in becoming a successful entrepreneur. This education will either take place in advance of your “Big Idea” – meaning you went to college and learned the skills necessary during the early 20’s stage of life – or you acquired the skills and abilities once you realized what it is that your new business required. It is important that you possess as many of the characteristics as possible that we have covered here, so it is incumbent upon you to know what skills and traits are required for your new business start-up and to make sure you possess them, or hire someone who does have them.
These days education and training are available from so many sources (online classes, colleges and universities, trade schools, working in an actual business, local SBDC classes) that there really is no excuse not to acquire the skills and abilities necessary to open and operate your business. I have counseled many people who did not have practical training in the industry they were looking to open a business in and have suggested they go get a job in the industry to gain some real, working experience. This suggestion is usually greeted less than enthusiastically – as a matter of fact, NOBODY wants to do that, and very few ever take my advice. Here’s a little hint: banks and investors really don’t like to loan money to people or invest in a business venture where there is no perceived “expert” involved in the proposed endeavor, and they hate loaning money to people who have no working experience in the industry at all, people whose first exposure to the trade or industry is their new business start-up. So don’t be too proud to get out there and flip a few burgers or run a dry cleaning machine, and don’t be so impatient to start your own business that you forego getting the necessary skills and training that will ensure that business’ ultimate success. You won’t realize the importance of this concept until after you have ignored it, and find yourself struggling to keep your new business afloat.
Now Get it Done!
Are you ready to take “the plunge” and move on to the next step – to actually start your own business? I suggest you buy my book for some sound advice – “How to Turn Your BIG IDEA into a New Business”.