Starting a Company: Be afraidPosted: March 14, 2012
People will tell you to “Follow your dreams!” and “Life is what you make of it!” and “You never know unless you try.” etc. etc.
But those sayings are only partially true. It is true that you can’t win if you don’t play the game. I’m reminded of that old joke about the man who pleaded with God every day to help him win the lottery. So – every day he prayed – but no lottery winnings were ever pocketed – and on the day he died – he went to Heaven where he met God and said, “Lord, every day I prayed that I’d win the lottery, but you never made it happen! Why not?” And the Lord said – “You never bought a lottery ticket.”
With that said, business is considerably more than just going out and “trying.” True, you can get lucky, but think about this — approximately 50 percent of new businesses fail in the first year. This number has also been held to increase dramatically in the first five years of running a business, when the number is claimed to rise as high as 90 to 95 percent. Those are some long odds!
If you’re considering starting a new business, I highly recommend reading “The E-myth” by Michael Gerber:
Don’t get “The E-Myth Revisited” as the message is watered down. “The E-Myth” explains why and how most new businesses fail in the first year. This is absolutely CRITICAL reading for entrepreneurs! And, no, I am not getting paid a commission for recommending this book. It’s a good read, and the money you invest in this book is a drop in the bucket compared to what you can lose by going into business in the wrong way. I know from experience.
The second piece of advice I have for you is this — either get really good at accounting, or hire a fantastic numbers guy. The biggest killer of businesses in my experience is hidden costs – i.e. you think you’re making a profit, but you’re not — and you bleed yourself to death. A great numbers guy or gal can alert you to all kinds of problems BEFORE they kill you.
And the best piece of advice of all should be the 11th commandment – “Know thy customer, as thee know thyself.” Find a problem the customer has – find a habit tied to the problem – create a system that solves the problem consistently – tie the system to the habit – your product should provide a reward at the end of the habit – manage key indicators – service the customer – and own thy numbers.