5 Lessons Young Entrepreneurs Learn the Hard Way While Starting a Business
Starting a business can be an exciting undertaking. Perhaps you have an idea, product or service and are confident at the prospects of success and all the benefits and rewards that will potentially follow. Many entrepreneurs starting a business have drive and ambition fueling their dreams, but it takes a lot more to get a business off the ground and running.
Unfortunately, many entrepreneurs learn valuable lessons in starting a business the hard way. Luckily, you won’t have to repeat the same mistakes if you take the following five key lessons and advice into consideration as you prepare to start your own business.
1. Have a Plan
Starting a business takes a lot of hard work. Business owners and entrepreneurs need to make sure that they do their research and due diligence right from the start. There are no shortcuts to success and there’s a lot to do before you can get to the business of actually doing business. One very important step is choosing the right business entity, whether it will be a limited liability company (LLC) or an S Corporation.
Curtis Merriweather, a small business consultant and Chief Executive Director of Emergent Inc., recommends that “young entrepreneurs should consult a certified public accountant or tax attorney familiar with their industry to determine the best corporate identity vehicle based on their long-term goals.” This will help ensure that the right business entity is set up to suit the needs of the business owner.
Merriweather also advises that new entrepreneurs look into everything from having the right insurance, accounting software and payroll processing support to setting up a bank account dedicated to the business. Merriweather notes that “many young entrepreneurs have been guilty of co-mingling their personal and business expenses. This becomes problematic when young entrepreneurs need to secure financing for business growth needs.”
One way to get started on the right foot is to have a business plan and to also seek out guidance and support from people and companies that are familiar with what’s required to get a business off the ground the right way.
2. Be Patient
Dylan Gallagher, from White Wolf Private Tours, has learned many lessons as a young entrepreneur, but there is one that tops them all: patience. Dylan likes to remind himself and others that “the biggest tree in the forest didn’t grow overnight.” When it comes to business, it can definitely take time to get a company off the ground and on a trajectory of growth.
According to Dylan, he expected that White Wolf Private Tours would take off once he started operating his business. “I thought I would begin a company and become a millionaire in a month. In reality, convincing others to fork over their hard-earned cash for a service was harder than I thought. So many pieces needed to be in place before the tours began to make money.”
The fact is that businesses do not strike it rich overnight. Some businesses have a growth period, while others may be stagnant. Many businesses even flirt with the possibility of failure. Take Apple as an example. The company has been around since the late 1970s but barely made it out of the 1980s. Today Apple has over 100,000 employees and annual sales that exceed $100 billion.
Sometimes a slowdown in business may not be your fault but a result of larger market moves or a global problem. (Think of all the damage the previous year has brought to many industries.) Make sure to have a backup plan to work through and survive the lean times and be able to make it to the other side of any negative cycle.
3. Stay Focused
One important lesson that many new entrepreneurs have learned the hard way is to stay focused on their business and avoid distraction. Keep your eye on the ball. It is important to know your business, clientele and competition.
For Brandon Monaghan, co-founder of Miracle Brand, his focus concentrated on making a profit. “I see far too many companies in the eCommerce space raising money without actionable steps to profitability.” According to Brandon, one way that he focused on the profitability of his company was to “budget accordingly, put in long hours and focus on conversions over fancy design and branding.”
For Jordan Smyth, the CEO and founder of Gleamin, which specializes in natural beauty products, the focus was product quality and the structure of the organization. Taking a long-term view and working on a business that he was passionate about also helped Jordan keep his focus on his business. “Throughout my career, I’ve made a few little mistakes which have caused large problems. I have learned the importance of slowing down, making decisions wisely and thinking about the long-term.”
4. Listen to Others
Whether it comes from your clients, colleagues or the market in general, it is important to listen to others and gain feedback. This will help you acquire insights that you would otherwise have missed and will allow you to tweak and improve your product or service. For a business to succeed, it must meet the needs of the customers and also keep track of changes to those needs. There are a number of avenues that new business owners can follow to gauge their market and connect with clients, including tapping into social media groups and forums and providing customers with a way to share feedback with others. This can be done with a satisfaction survey or a service rating.
Curtis Merriweather advises investing in a customer relationship management (CRM) system. “An effective CRM system will help entrepreneurs to better position the organization to attend to customer-specific needs. … When purchasing CRM systems, start small if necessary. CRM systems prices range from inexpensive to truly expansive, so pick carefully.” Utilizing a CRM system can help you manage your customer interactions and stay connected in order to retain customers and improve relationships.
5. Know When to Let Go
Building a business takes a lot, including money, commitment and a fair amount of luck. Most business owners start their company envisioning that they will do well and succeed in their chosen market. Sometimes, however, things do not go as planned, forcing businesses to close. But there are many examples where businesses succeed and thrive, even offering an ideal opportunity to sell and reap the riches. This also gives serial entrepreneurs the opportunity to move on, start the process again and build a new business.
According to Alexandre Douzet, owner and CEO of Pumpkin Pet Insurance, “first-time entrepreneurs often struggle with knowing exactly when to sell their business and they end up holding on for too long. The key is to sell when your business is still in growth mode, before reaching maturity.” Alexandre also acknowledges that for most entrepreneurs, the process does not occur overnight and advises that business owners “must have good business relationships that you nurture years ahead of a potential sale. Developing a partnership with one of these strategic buyers is ideal to help trigger an exit or acquisition conversation.”
For many entrepreneurs, the process of building, establishing and selling a business is ongoing. Each entrepreneur has their own motivations, whether it’s the thrill of creating a business or the monetary reward that follows. For Jordan Smyth, the effort of creating a business “is a combination of a values-aligned project, along with something I can build to support myself and those around me.”
With all this in mind, starting your dream business is within reach. Incfile can partner with you to form your new entity and walk you through any lessons you may learn on your own, no matter how easy or hard.