Before I started teaching future entrepreneurs diligently earning their business degrees, I thought most entrepreneurs were performing super hero acts in order to be successful. After all, I proudly wore my super hero cape through fifteen years of risk taking, innovating, stumbling and expanding before selling my business in 2012 for a very nice profit.
For the last several years, I’ve been on the other side, dutifully studying what entrepreneurs actually do from a practical and academic perspective. To my surprise, it’s different than what I thought it was when I was head down and knee deep in my own venture. That’s why my current mission to share what I have learned from both sides.
Don’t worry, you’ll still need your cape!
If you want to be an entrepreneur or expand your existing business in 2019, consider the following 4 basic principles that outline what most entrepreneurs do to get their business started on the path to success.
1. Start with your Means.
You don’t need a boatload of capital or cash to start every business. Start with your means, meaning: Who You Are, Who You Know and What You Have.
Consider your experience in and out of a work environment, your expertise, education and training. Add your abilities, special interests and preferences or tastes. Write them down. You will be surprised. Then, add to that list your social and professional network and your network’s network. Now you are getting somewhere.
Last, consider what your network has in terms of things you can use, borrow or rent. This includes connections, equipment, space and knowledge. What do they have, what do they know and who do they know that can help you? This includes introducing you to folks that may turn into your first big “sweet spot” client.
I was in my early 30’s and had a house, a degree and a very nice neighbor when I started my business. I used the equity in my house as my down payment, my work experience and education to convince the SBA lender I was worthy of the loan and my neighbor to introduce me to the franchisor who eventually agreed to sign me up after also personally guaranteeing the loan for the first year. Those were my means to get started.
2. Know Your Money Numbers.
The answer is not the most you can borrow or get investors to contribute. The answer is not even dependent on the industry you want to be a part of. The answer is how much you are willing to lose. Is it $1,000 or $10,000? If it’s $5,000 then that is where you start. That’s your first number.
With bootstrapping, you make it enough by tapping into your means and leveraging the heck out of that $5,000 to start your business. You don’t need your own industrial kitchen to start a catering business when you know someone that knows someone that has one and would gladly rent it to you by the hour, half day or full day. If you come up empty-handed, go back to your means list. You will be surprised how far your money will go.
Money number two. Know how much you need to make and by when. I do not usually recommend that anyone takes the plunge. In most cases, a toe in the water is the way to go. Your second money number is highly dependent on the other income you have access to. In other words, start slowly. Until you can produce revenue and profit to meet your second money number, you should not cut off or quit your primary source of income. No matter how bored or confident you feel. Your money numbers will motivate and drive your success. Be patient and persistent.
I recently read that John Legend, the Grammy winning singer, song writer musician did not quit his full time job until long after many of us were singing along to his songs.
3. Embrace Surprise & Leverage Disappointments.
Most tenured entrepreneurs, when pressed; can recall at least one very positive significant shift in their business that occurred because they chose to embrace or leverage something that was unexpected or difficult instead of shunning or ignoring it.
I was turned away by several realtors because my offers for the various locations I wanted to build on was not high enough. I wanted and thought I needed a corner lot for my early childhood academy. Frustrated, I eventually ‘settled’ on a non-corner lot. To my surprise, rather than being inconvenienced, my growing client base appreciated that I was not on a busy street corner.
Later, that lot I didn’t want, but could afford was big enough to allow for a substantial expansion which led to being able to offer services that my competitors could not.
In the early stages of growing your business, this principle can reap great rewards. Listen to what your clients and prospects say; especially those that are willing to work with you. Be prepared to embrace surprises and adjust accordingly.
4. Form Partnerships.
In some cases, such as an expansion, I am referring to a formal agreement, but for start-ups and newer businesses, I’m referring to informal working relationships with other entrepreneurs that appeal to and target similar clients. Informal partnerships can help you grow your business without spending your precious cash.
Similar to your means list exercise, write down other local businesses that have a client list you envy. Yes, this does involve some homework. For example, if you have started a social media company and have focused on small business service companies, what other professions target these clients? Commercial insurance agents and wealth management advisors come to mind because they have close client relationships that includes clients who value their opinion of other companies.
Next, target your best potential partners, invite them for coffee or glass of wine and see if you have the makings of a partnership that should include a systematic way to make professional introductions for your mutual benefit.
One of my target partner groups were independently owned restaurants. I would provide educational coloring sheets (with our logo and other information imbedded) and crayons that the hostess would provide to families with young children as they were being seated. For my part, I distributed weekly invitations and dining coupons to my clients for those restaurants that partnered with me.
One final note of advice before you put on your super hero cape, these are general guidelines. Only you know your niche, your plans and the opportunities and hurdles you will face this year. There are many paths to success and I’m confident you will find yours in 2019.
Now go get your cape.