Have you ever wanted to start a small business of your own? Do you hate working for “The Man”? Well you are not alone. Most people I talk to are envious of the fact that I own my own business that I get to call my own shots. After they express their amazement, I often tell them: “Yea, it’s great. I get to work whatever 80 hours a week I want.” In reality it is not like that for me now, but it always gets a laugh.
I have been my own boss for the last 15+ years as well as running a painting business in college for four years. I have worked for myself so long, I forget what it is like to punch a clock, ask for time off, or attend an all-day training class on new software. To be honest, I don’t know how big corporates stay in business. I see so much inefficiency in most companies. If I had anything close to it in mine, I would have to shut the doors.
Starting a small business can be a scary thing, but it does NOT have to be. If you plan well it can be the most rewarding thing you have ever done. But there are some big pitfalls that I have seen over and over that can derail your dream, and make it into a nightmare.
Top THREE things to avoid when starting a small business:
- Don’t bet THE FARM. I have seen people do this time and time again. They are working a corporate job, and they quit to start a totally new venture, in a field they know nothing about, AND borrow way over their head to make it happen. I met a guy once who lived in Hawaii. He fell in love with cream puffs. He thought they were amazing. He went to a French cooking school, learned how to make them, and opened a cream puff shop in my little town, based on the income demographics. Spent all his families’ savings. A year later, he had lost it all.
- Don’t Build the Space Station. You want to start a business, you don’t need a 200 page business plan. This will be advice that others will encourage you to do: Make a detailed plan, and stick to the plan. Most of the successful business owners I have talked to on our podcast started with one idea in mind, and went in a totally different direction after they bought some equipment, and got feedback from other people. If you forecast out 5, 10 years, and research everything from vendors to customer profiles, you will waste a lot of time. You will learn what the market wants as you move forward. If you have an idea, it should be simple, at least to start. The business plan should fit on one page….double spaced! Then, figure out your marketing plan. Take a family run business out of Pleasant Grove, UT, Costume Craze. The business was started to be an internet SEO software company, and ended up being a multi-million dollar online costume retailer. Good thing they didn’t go with plan A.
- Don’t borrow money. This will upset a lot of people, but if you want to sleep at night, don’t borrow money. You don’t even know if you have a real business yet. Have you heard of the concept of the minimum viable product? Everyone will tell you that you have a good idea. You may have a horrible idea. The only way you will know you have a good idea, is if people will PAY YOU MONEY for what you are selling. And that goes for a product or a service. I interviewed Adam Olalde who started a business where he has people pay him to race Ferraris, Lamborghinis, and Corvettes around racing tracks, and even he sold his service before buying what he needed to run his business. He was cash flow positive in the first month. When you borrow money, you make stupid purchases and buy things you don’t need.
There are all sorts of types of businesses out there to start, and if you avoid these common mistakes, you will go a little slower, but you will make better decisions. Starting a small business is not for everyone, however, just like purchasing a home is not for everyone. I think it is better to purchase your home and to work for yourself, but not everyone can. Either they cannot afford to do it, don’t have the resources, or want to. Across the street from my last house that I lived in for 16 years lived a family that moved in the same month as my wife and I, and they rented the whole time. They just decided they did not want to worry about the maintenance and headaches. Though I feel like it is a little short sighted, it was their choice. Just like this family, I know lots of individuals that work for companies and love doing so.
No shortage of entrepreneurs out there. I’ve been one since the age of 18 when I started my first painting business in college and hired all my friends. I didn’t know what I was doing, and most people don’t. It’s okay! Don’t be scared. The biggest problem with people that want to start their own business is that the NEVER START. Start small and grow it. Take steps toward owning your business…your dream. Lots of rewards can come from owning your own business. Stick around, we share lots of them on the show, and I will try to share some of them here in the Small Business NAKED blog.