What Must An Entrepreneur Assume When Starting A Business?
If you’ve spent any amount of time on the internet, then you’ve more than likely seen some of those videos that feature some hotshot walking around his Beverly Hills mansion and showing off his Lamborghinis.
They’ll usually tell you that all it takes for you to be successful is for you to step out of your comfort zone and “sign up for my program.”
Here’s a quick newsflash; even if the $5 million dollar mansion is actually theirs and the Lambo isn’t rented, they had to work incredibly hard to get to where they are. A multi-million dollar business doesn’t just build itself overnight. The odds will always be stacked against you, and you’re going to have to do a lot if you want to be successful.
We’re not saying this to discourage you, though. Financial and personal success can certainly be achieved through entrepreneurship if you are willing to put in the necessary work, to begin with. The safest way to figure out exactly how much work that you’re going to have to do is to make a list of assumptions to factor into both your budget and your personal life.
What To Assume When Starting A Business
One of the reasons why so many entrepreneurs give up on their business is that they went into the whole thing with a false assumption of how business was going to go and their own personal delusions of grandeur. It’s little wonder why the ceiling caves in on them within the first few years of owning their business.
The smart businessman, however, has a far more realistic view on how the first few years are actually going to pan out. Yes, it may be depressing to face some of these facts. If you want to be prepared to weather the coming storm, however, it’s always safe to assume the worst. This way, you’ll never be disappointed and you’ll always have a plan of action should things go wrong.
It’s Going To Cost You Money
One of the easiest ways to shoot yourself in the foot before you even get into the race is to underestimate how much money that starting and running your business is going to take you.
At first, this may seem like common sense. However, a quick drive around your local town will prove otherwise. Look at all of the unfinished restaurants, hotels, and residential homes that have been in a perpetual state of “construction” for as long as you can remember. Most of these are the results of the project managers running out of funds before they were even finished.
Unless you want your business to end up like one of these derelict buildings, you need to account for every single cost down to the last penny. Simply rounding to the nearest thousand on a handwritten sheet of paper isn’t going to cut it.
You should take an excel spreadsheet, make a clean and easy to read layout, and then fill it up with every possible business cost that you may come across in the course of your first two to five years.
Here are some items that should appear in any financial list:
- Building down payment, rent, upkeep, taxes, and renovation
- Bills (electric, water, internet, phone, software subscriptions, etc.)
- Equipment (computers, printers, phones, projectors, etc.)
- Office furnishings (chairs, tables, toilet paper, coffee makers, fridge, etc.)
- Insurance costs
- Business licenses
- Emergency fund (something to last you through the cold months)
Obviously, depending on your business you may have a shorter list, or it could be far longer. The important point to remember is to never, ever, ever underestimate. It’s far better to overestimate your costs by 25% and be happily surprised than to undercut yourself, have no way to pay employees and watch clients walk out the door.
Your Friends And Family Won’t Always Support You
Your friends and family are always going to want what’s best for you. Sure, they’ll be there to cheer you along when you’re doing well, but when the going gets tough, they will be your biggest doubters.
While having your friends and family doubt you can be far tougher than having some outsider doubt you, you need to realize that their doubt comes from a position of caring and not jealousy or envy. The reason that they doubt you are because they don’t want to see you fail, and they would rather “keep you safe” by encouraging you to “get out while you can.”
It’s important that you remain firm in your resolution no matter how hard that they doubt you. Maintain frame, tell them that you’re going to chase your goals no matter what their opinion is. Once you make it, they’ll take back everything they said.
The Competition Is Going To Be Tough
Yeah, you might think that your idea is original, but there is going to be somebody who will be your competition. If you open up the only cafe in town, the bakery next door will start serving coffee just to steal your customers.
Competition is good though. You should welcome it in all of its forms. It will push you to constantly grow and improve your business instead of stagnating and being forgotten after the first couple of years.
You’re Going To Have To Do A Lot Of Marketing
If you think that you’re business is going to just “blow up” because of your pretty sign, your fancy business cards, or your charming smile- you’re wrong. Sure these will help you out along the way, but marketing is the only way that you’re going to truly overcome the competition and become relevant in the minds of your customers.
You should be in your customers’ face several times throughout the week if not on a daily basis. Send coupons via mail, get their email address and send them useful and interesting newsletters, text them about upcoming sales and deals, sponsor social media ads so that they can’t even open their phones without seeing your name.
You Won’t Make A Paycheck For A While
In your initial balance sheets, you should have accommodated for enough money to pay your bills and maintain a minimalist lifestyle. The smaller that you can make your personal life during the beginning stages of starting your business, the easier everything will be.
It will be tempting to take one of your first large checks and make a down payment on that car you’ve been eyeing for years. Don’t do it. Take only enough money to live spartan, and invest the rest back into your business. That $5,000 will go a lot farther in your business than it will in the club with your friends. Save the VIP club nights and fancy cars until you’re making so much money that you don’t even have to think twice about them.
An Encouraging Note
Don’t get the wrong message here. We’re not trying to tell you not to start a business. Becoming an entrepreneur is one of the most rewarding things that anybody can do in their life. Even if you fail several times before you actually succeed, each failure will serve as a valuable lesson and make you a leader, worker, and innovator.
By assuming the worst, overestimating your budget, marketing, and competition, you’ll greatly minimize the risk of failure in the first place. You’ll be going full steam ahead, ready to take on huge obstacles, so when the small ones get in your way, you won’t even have to blink.
Hustle hard, stay motivated, and your dreams will one day play out before your eyes.
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