What do you need to know before you to start a business? It’s a good question and one I get asked a lot.
In general, if people are asking this question, they tend to be looking for encouragement or validation of an idea, which is understandable. Often, however, when people hear the practical realities of what is required to get a business off the ground, most quickly lose the sparkle in their eye. It’s a shame to see, but the reality is that is not easy to start a business, nor is that business guaranteed to succeed.
I always feel better having some real-world context before I venture into the unknown. Therefore, here are six practical realities to be aware of before starting a business.
1. It will take much more effort than you could ever imagine.
Seek out anyone that has started a business. Ask them how much effort was required to get their idea off the ground and they will say something like “double what you image, and then square it”. This is particularly true in the world of ‘tech start-ups’.
It can take years of hard work before companies start to show signs of product adoption, scaled growth, or profitability. It can be a hard thing to endure and it will take an emotional toll on all facets of your life. This needs to be understood before you start.
2. You must know WHY your business should exist.
This can be difficult to articulate, and it is something that founders often miss entirely. Founders often know what they will do, some know how they will do it, but few really know why. Logically, without knowing why your business should exist, there is little to inform how and what your business will do. Further, if you don’t know why your business should exist, then your customers certainly won’t either. This concept is what Simon Sinek describes as the ‘golden circle’ and itis a concept worth googling before you start.
3. Decide what you can realistically lose and stick to it.
All new businesses require start-up capital but not all businesses succeed. As such, when you start a business you need to be comfortable with the potential of losing any investment you make. This includes the opportunity cost of lost salaries or other paid work while you pursue your business. As negative a sentiment as this might be, especially at the start of your journey, it is important to think about before you start. Knowing what you are comfortable to lose, and agreeing with yourself, your family, and any investors, what the limits are is crucial.
4. Keep your money in the business
The best advice I ever got was that people that matter don’t care how big your house is or how fast your car goes. They will, however, care about how successful your business becomes.
The temptation to take earnings out of the business, especially early on, will occur. This is a good thing, as it means your business is doing well. If you’re faced with this temptation, always remember that cash is the life blood of a small business, and the business must come first. i.e. use your earnings to grow your business, not your ego.
5. If you succeed, don’t believe your own hype!
So many factors will determine your success or failure. You need to remember that it’s not all about you. Early success can happen by chance, and if you don’t understand why you’ve succeeded, it can lead to bigger failures in the future.
6. There is never a perfect time to start a business
Starting a business is much like starting a family. Some happen by accident and work out great. Some are planned for years and fall apart. There are millions of examples of everything else in-between.
In conclusion, starting a business can be one of the most rewarding and challenging things you can do. Being realistic about what you might face before you start is only going to help in the long run. As such, if this article has intensified that ‘sparkle in your eye’, rather than extinguish it, then take that as a sign that you might be up for the challenge.
About the author — Aidan Kenealy
My mission is to help those with high growth businesses realise their vision for success. I draw from the unique lessons learned growing EMGN to help founders and CEOs get the best out of what their businesses can be.
If you would like to discuss how I can help you and your business — please reach out via LinkedIn or email firstname.lastname@example.org