I’ve said it time and time again: Entrepreneurship is hard and it’s not for everyone. If you take a realistic personal inventory of who you are and what you want to do, and you decide you’re ready to start a business, below is some advice that I always give to first-time entrepreneurs.
- BE PRACTICAL ABOUT YOUR MONEY
The first and most important thing that I tell new entrepreneurs is the importance of practicality with money. Too many “entrepreneurs” that start businesses don’t realize the importance of generating money and managing profits. Instead of focusing on the present financial needs and building an actual company, they dwell on how much money they could make in four years. It is a complete lack of practicality.
Cash is oxygen. How much money do you have to stay afloat and for how long? Do you have one year’s worth of rent and overhead? First-time entrepreneurs always make this detrimental mistake. You have to make sure that your actions can respond to the bleeding of cash that occurs before you even turn a profit.
I also often see first-time entrepreneurs make one of two mistakes at the start:
1) They do not have a funded business; therefore they haven’t raised venture capital (or any other capital). They only have six month’s worth of money to make their business goal come true. While they dream up every perfect scenario that can help achieve their dream, the “entrepreneurs,” quickly realize that nothing goes perfectly and they run out of cash.
2) They are so well funded that they don’t build up the necessary muscle to generate revenue. They are so used to the idea that losing $150,000 in burn rate is “fine” because they have a funded company. Most of their attention and behavior is focused on raising their next round instead of building an actual, profitable business.
Regardless of the situation, starting a new business—particularly one that requires an upfront financial investment and not just your time—drains money. You need to financially understand the cost of necessities like rent, supplies, and inventory (and that doesn’t even include your personal expenses). Practicality and consideration are necessary for success.
- REALIZE THAT BUILDING A BUSINESS IS A HUGE TIME-COMMITMENT
The next thing I remind first-time entrepreneurs is that by starting a business, you made decision that does not allow you any time, in your first year, to do anything but build this business. No more binge-watching “Game of Thrones.” You are not allowed to watch The “#AskGaryVee Show” anymore (well maybe…). No more late-night parties with your friends. You are in such a Code Red zone that every minute (let’s call it 18 hours a day if you want this to be successful), needs to be allocated for your business. This even includes time with your family. It’s a substantial sacrifice that you must commit to.
Also, I was trying to be very kind in the first year because I know we live in a politically correct world where leisure, “me” time, and family time are so imperative. However, if you have the ambition of building a business, you have to make the mental commitment. Then, any time you have for family or leisure time is just added bonus. You also have to ask yourself how big of a business you are actually trying to build: the bigger the business, the more years you’ll need to tack onto year one.
- HOLD YOURSELF TO YOUR WORD
One of best pieces of business advice I’ve ever received (and one I instill upon anyone entering the business world) is that your word is bond. My dad told me this at an early age and it has shaped how I’ve conducted business ever since. He told me once that if I commit to buy 100 cases of wine for the store, but change my mind the week before it arrives, I would have to drink it all because I made a commitment.
If you make a commitment, you always have to deliver. Not only is your business’ brand at stake, but your personal brand and reputation are also in jeopardy. Poor business decisions will put your entrepreneurial status at risk.
While various sources have said this, it’s often stated that most businesses fail within the first 18 months. The number one reason why I think so many businesses fail so quickly is because they don’t realize how hard it is, how “all in” you have to be and how much talent it takes to be a successful entrepreneur. I’m not promising that this advice will guarantee your business to survive year one, but without at least considering them, you are setting yourself up to fail.
PS: This post may just be words on a screen to you, but I beg you to read this very carefully. Read it and make sure it sinks in. We are absolutely living through the greatest generation of fake entrepreneurship that we’ve seen in a long time. Unfortunately, many people will be hurt both financially and emotionally because of this era. I implore you to take these words seriously.
Image Credit: CC by The Next Web