This week, Fortune Magazine (as part of their Leadership Insider network series) asked me “What advice would you give someone looking to start their own business?” You can read the edited version here, but as it happens, I had a bit more to say on the subject than Fortune’s format would allow. I’ve posted my full length response below:
The dream of starting your own business, of being your own boss and becoming financially independent is more within reach today than at any other time in history. Today, many businesses can get started with little to no capital thanks to the Internet and thrive without outside investment. Business are seeing barriers to entry crumble—from product differentiation, distribution and access to analytics—as new low cost cloud-based services emerge.
Yet, even with risks lower than ever and rewards closer in sight, the idea of starting a business of your own is a daunting one. There comes a dizziness of freedom with the very thought of striking out on your own: what to do first, what to do next and what if I fail? That alone is enough to keep most people on the couch.
In my years working in big tech and consulting for businesses large and small, I’ve found that there are six basic principles that successful entrepreneurs know. Of course, there is no ready-paved road to success, but anyone hoping to start their own venture will be off to a good start with these values in mind.
Know your customer. To put it simply, there is nothing more important in business than to understand who your customer is and how you can serve them better than anyone else. That seemingly simple insight is far more critical than the most eloquent business plan, the best location in town or an overabundance of startup funding. It might be because it’s so obvious that is so often overlooked. When I hear a business pitch that says “our target customer is every adult in America,” or the like, I know trouble is ahead. Your customers will never be everyone and will likely not be most people. Understanding exactly who wants, values, can pay for and will choose your service over another’s is hard work. It will require understanding (or great intuition) of your customers psychology coupled with honest introspection on who you are as a provider of service.
Some entrepreneurs are seduced by the idea that knowing their competition is just as good, and far easier, than doing the work to truly know their customer. This shortcut puts them in the role of perpetual follower and pins their success on how fast they can follow instead of how well they can serve. In my experience it’s a highly unrewarding way to do business, at best, and an outright recipe for failure at worst. The flip side is to go beyond just knowing your customer to loving your customer. The ups and downs of running your own business is taxing. Loving what you do—and who you do it for—can make all the difference in the world when it comes to getting through challenging times.
Know what planning makes a difference. Everyone starting a business should have a business plan—that’s a given. But knowing how much to plan and when to just dive in can be tough. You will never have a 100 percent clear view of your market, total confidence in economic trends or certainty on your returns. Don’t let that be an excuse for your failure to launch. Know your customer, understand your costs, lay out reasonable financial projections and get moving. It’s doubtful that there will ever be a vastly better time than now to make your dream happen.
Know when to be flexible and when to stand firm. This is after all your dream, not the bank or the venture fund’s dream. It will be your hard work to make it a success and ultimately your responsibility if the venture fails. If you’ve done your homework on who your customer is and how you can uniquely serve them, don’t give up on that idea quickly. That said, if you’re hitting brick walls with every pitch you make, there’s a possibility that your idea may need major tuning. While I wouldn’t recommend that you blindly follow every piece of advice you’re given, you should take in every input and consider it closely. Being able to listen, be persuaded and adjust your plans accordingly is a good sign that you’re mature enough to lead your venture to success.
Know what to worry about. Naysayers, on the other hand, are in a category of their own. They aren’t giving advice, they are stealing hope. The number of naysayers that you’ll come across when starting your business will be surprising and who they are will often be disheartening. Your parents, siblings, close friends and trusted coworkers will all chime in on your plans. If they’re only radiating fear or negativity, you have no option but to ignore them and move ahead.
I’m not suggesting that you won’t worry—you’ll worry a lot. You might spend some nights crying yourself to sleep or not sleeping at all. Your business will likely stress you out more than anything else in your life. You can however, get aggressively clear on what you can control in your business and what you can’t. If it’s out of your hands, toss it aside like the voice of naysayers and focus on what you can impact with your attention. Make lists, ruthlessly prioritize and practice blocking out the noise.
Know where to get help. Just because you can start a business with no capital doesn’t mean you should start your business with no capital. The power of the Internet to lower barriers to entry is incredible, but it also enables you to half-commit. Don’t mistake timidity for thrift. If your business plan calls for investment, do the work to find that investment. That exercise will also help you hone your strategy, test out your assumptions and it will give you a ton of confidence moving into the next stages of getting started.
In running your own business, you’ll wear many hats. On any given day you’ll act as CEO, CFO, CMO, CTO and more. In many cases, finding great technology partners will be even more valuable than finding seed money. You’ll need a dynamic website and listings, professional email, connected scheduling and productivity tools, basic CRM and marketing tools, online advertising, deals, offerings and payments, bookkeeping and more. Look for technology that is priced to grow with you as your needs grow. If you look closely, you’ll find technology that can leverage predictive analytics to provide insights so you don’t need to be an expert in every role. With cloud-based services, it’s now possible to offload much of your marketing, financial and technology work to brilliant algorithms. With the right technology partners, managing your business, even if you’re doing it alone, won’t be as lonely as in the past. It’s a smart move and one that you can get up and running for just a few dollars a month—which will be important in the early stages of your business while your books are all still in the red.
Know yourself. Are you a self-motivated individual? Are you resilient to long stretches of taxing and seemingly unrewarding work? Are your buoyant against angst and despair? Do you have the time to invest in yourself and your dream? Can you afford to work for no pay for the foreseeable future? Do you know why you want to start a business and is it a noble reason? These are just a few of the questions you need to ask yourself and honestly answer before you strike out on your own.
You don’t need to be superhuman to start your own business, but you do need to be super honest with yourself. If you are looking for a fast way to get rich or a way to look impressive to your peers, it’s unlikely you’ll find success at the end of your journey. The businesses I’ve seen succeed are ones fueled by creative ingenuity, passionate about their ideas and focused on delivering exceptional service in their community.
As our world becomes increasingly automated, I believe we’ll see a growing segment of our population start small, independent ventures that tap into their passions and creativity. For anyone thinking of starting a business today, I hope these six principles get you thinking about—and moving toward—your goals.