Thinking of Starting Your Own Business? Tips, Myths, Risks, and Rewards

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My father came off a farm, a difficult business in its own right, increasingly capital intensive with small farmers almost unable to make it work any longer. He started a little construction company. My three brothers and I worked for him. I did everything from washing trucks and driving a backhoe to putting in an accounting system when I was in college. After a long career in many different jobs, I want to share some advice with those of you thinking of starting a new business for yourself.

Let’s begin with some common myths about what it means to have your own business:

Debunking the Myths

1. Founders are their own bosses. It’s a half-truth, if not a myth, that entrepreneurship will put you at the helm of your entire existence such that you’re never accountable to anyone. As put by Neil Patel, one of the more successful entrepreneurs, “Nobody is their own boss. Everyone has someone they report to.”
2. The founder should be able to do every job in the early days. It’s too easy to get busied-up with so much you aren’t putting enough time into customer development or content marketing. Better to focus on how you plan to delight your customers and delegate and outsource as many other time-consuming routine tasks as possible.
3. Starting a business is the best way to get rich. With the long hours and the likelihood that you won’t make much money in the early stages of your new business, if getting rich is your goal, best to find a job that pays well.
4. You need to take a lot of risks. The opposite is true. The risks you do take should be small and hedged as well as possible, for taking outsized risks could result in destroying new business in its infancy.
5. Spamming people on social media is a good marketing strategy. You get attention by creating value for those you are targeting with your marketing pitch; you will be ignored if all you have is another advertisement containing questionable claims about your product.

Here Are Some Tips

1. Determine your business concept.

• Create a short list of potential products or services.
• Define and research your target customer.
• Measure the market potential for your products or services.
• Check out the competition to make sure you have your own competitive edge.
• Write your business plan that includes financial projections (financial backers will ask for this).
• Draw an org chart to identify people and resources required for execution.
• Put together a simple marketing and promotion plan.
• Get legal advice—very important—lots of legal land mines today.

2. Research your competitors and market. (See SWOT graphic below.)

• What are their strengths and weaknesses?
• Can you beat them on some aspect such as cost, function, quality or fulfillment?
• What do you expect will be their reaction when you’re in business? (e.g. price cuts?)

3. Choose your business structure.

• Sole proprietorship?
• Corporation?
• Partnership or limited liability company (LLC)?

4. Register your business and get licenses.

• Form your business entity.
• Apply for an Employer Tax Identification Number.
• Determine which license(s) you need and apply for these business licenses.
• Shop for business insurance.

5. Get your finances in order.

• local bank loan
• crowdfunding
• relatives
• credit cards and savings
• taking on partners who will invest
• fund your business

Source: Rodd Mann graphic created in Apple Keynote version 14.1 [7040.0.73]

There Are Risks

Chiefly, the financial risks are where your business is either thriving or perhaps breaking. If you didn’t properly scope the amount of capital needed to keep the cash flow operational, paying bills and payroll, payments to vendors and other providers such as rent and utilities, without cash any business will fail. Bankruptcy is the “game over” for your business and your dreams, so work diligently on your business plan and the portion that deals with cash coming in and cash going out and where you can go when additional cash is going to be needed.

Competitive risks can be researched at the outset, but competitors may alter their own strategies in response to how they perceive the threat of you coming in as another competitor. Competitive risk is the potential for actions of a competitor to negatively impact your business. In a healthy competitive market, competitive risk drives improvements such as cost reductions and quality improvements. That is why it is important for you to define early in the new business what will be your competitive edge, what advantage will you have over the competition.

There are other risks that must be considered and planned around to avoid having a problem when it comes to environmental risks, political and economic risks, and reputational risks, but the greatest risk overall is that your new product or service doesn’t really solve any problem for your intended customer. There must be demand, there must be a need, and if you’re inventive and creative, you just may be able to get your customers to want your product and service even if they didn’t know they would want it in the first place. This was the brilliance of Steve Jobs and the products he created at Apple. None of these resulted from marketing research, they came solely from the creative mind of Jobs.

But There Are Rewards

Finally, there are clear and compelling rewards for a well-structured and successful business. The satisfaction and fulfillment that comes with running your own business is sometimes even more valuable than the money you make. You have autonomy, the flexibility to move the pieces around in such a way that everything works well for you as a system. You can control where you are going to take the business, how you will grow it, and what you hope it becomes three to five years down the road.

You are also likely providing jobs and helping people and their families, bringing to your community an important part in the lives of those you touch with the jobs, the products and the services—this too can be rewarding! And last, but certainly not least are the financial rewards that come with running your own successful business. The recognition and legacy, perhaps leaving the business to your children, relatives or friends to keep that legacy going as long as possible while enjoying the fruits of your labor in retirement.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.