So You Want to Start a Business…

mocha momentsFreedom is the one word that motivates many to at least day dream about starting their own business. Only 13% of employees worldwide are engaged at work, according to Gallup’s recent 142-country study on the State of the Global Workplace. In other words, about one in eight workers – roughly 180 million employees in the countries studied – are psychologically committed to their jobs and likely to be making positive contributions to their organizations.

In his article about Gallup’s recent study, Steve Crabtree shared “People spend a substantial part of their lives working, whether in a high-tech startup in Singapore, a financial institution in Australia, or a garment factory in the Dominican Republic. As a result, the quality of their workplace experience is inevitably reflected in the quality of their lives. Gallup’s finding that the vast majority of employees worldwide report an overall negative experience at work is important when considering why the global recovery remains sluggish, while social unrest abounds in many countries.”

I think it’s important for employers to look at ways that they can increase employee engagement. Improved engagement would mean more productivity and growth not just for the company but for communities and ultimately the country.

It’s equally important for those disengaged employees who are contemplating starting their own businesses to do so in a way that allows them to test themselves and the market and determine with the least amount of risk, whether owning their own business is a practical solution.

In his paper -THE IMPACT OF ENTREPRENEURSHIPON ECONOMIC GROWTH – Dr. Ercan Ekmekcioglu says that entrepreneurship affects economic growth in various ways…creation of new business opportunities through entrepreneurship, productivity and innovation leads to economic growth.

By far, this is the best advice that I’ve seen to date on starting your own business. It’s provided by Mark Ford, a serial entrepreneur, who from the age of 20 started founding and running businesses. Some soared, some tanked, and at least one of them is worth a billion dollars today. Here’s Mark’s core methodology:

1) Limit Your Preparation:

Before you start your business, make sure you understand what is required in terms of time and money. And understand too how you are going to discover your “optimal selling strategy.” Do that but not too much more. Most small businesses fail because they never get started. Ready. Fire. Aim.

2) Be Frugal but Not Foolish:

Spend as close to nothing as you can on all the nonessential aspects of the business such as office space, furniture, business cards, and—most importantly—branding. Use 80% of your cash for discovering the optimal selling strategy.

3) Get Operational Fast:

The longer you spend planning your business, the less likely you are to succeed. That is not always true, but it’s still a good rule to live by. Don’t feel the need to perfect everything—including the product—before you begin. Your goal is to get operational quickly so that you can figure out how to bring in the cash. Don’t be afraid to imitate the marketing strategies and product ideas of other successful companies. But always be sure to have some element in your business that is uniquely your own. In starting your business, you are in a race: Can you develop sustainable cash flow before your capital disappears?

4) Cash Flow First:

Once cash is coming into your business every day, all other problems are soluble, because cash flow gives you the time to solve them. Cash flow is the oxygen of every small business. Do as the flight attendants advise: Get your own oxygen mask working before you do anything else.

5) You Are the Team:

Don’t hire a big team at the outset. One or two partners/employees are more than enough. Keeping salaries low in the beginning has two important benefits: It keeps you alive longer, and it allows the core team to learn every important aspect of making the business successful.

These 5 points should keep you focused and on track but you MUST take Mark’s advice seriously. Don’t dismiss what is being shared because of its simplicity. We love to leave the simple and head for the complex. I’m not sure why. Perhaps it’s because simple reeks of “anyone can do this” and we just want to be the only one who succeeds.

business1I’ve found that most businesses fail because the owners lose focus. You first have to generate a sustainable cash flow BEFORE anything else. And don’t get excited prematurely when you do start to make money. According to another extremely successful business man Steve K. Scott, “by definition, your most important mission MUST be accomplished!” He says “We live in a day when it’s politically correct to pat people on the back for just “showing up.” As well-meaning as that may be, it’s counterproductive.”

He shares this interesting story “My partners and I started a new company 18 months ago that launched a newly patented nutritional supplement. In this brief time, our little startup has grown from a handful of sales associates to nearly seventy thousand. Six months ago, I received an email from a member of our management team suggesting we throw a party to celebrate our first year in business. I rejected the idea, because reaching the one-year mark is not a significant accomplishment. Our company has become one of the fastest growing companies in business history. Our associate ranks and sales volume will soon reach a major milestone. We will have over one hundred thousand associates creating sales of more than $10 million per month. When we have achieved THAT, then we will throw a party. Our mission was never to simply survive our first year- so celebrating a one-year anniversary is NOT a significant accomplishment. On the other hand, one of our missions IS to provide our product to as many families as possible as fast as possible, and when we hit sales of $10 million per month, that will be a major step in achieving our mission. THAT will be an accomplishment worth celebrating.”

And most of all – please don’t quit your day job UNTIL your new business is putting more cash in your pocket than your day job. Starting your own business is not a bad idea, but make sure that you first build a solid foundation BEFORE hastily leaving your job.

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Image from http://www.abigailhern.org
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