The guts, the glory, the risks. It's all there in the world of entrepreneurship. The trick is to figure out if you're ready to handle not only the thrills and chills of starting up, but the long-term challenges of keeping one step ahead of your customers' needs.
In Low Risk, High Reward: Starting and Growing Your Business with Minimal Risk (Free Press, $27.50), author Bob Reiss, along with co-author Jeffrey L. Cruikshank, methodically explains what you need to start a business, from entrepreneurial traits and numeracy (dollars-and-cents sense) to managing risk and getting your first order. We've asked Reiss, who's also the founder of his own company, R&R Recreational Products in Englewood Cliffs, New Jersey, to share some of the knowledge he's gleaned from his real-world entrepreneurial experiences.
Entrepreneur.com: What are some key attributes of a successful entrepreneur?
Bob Reiss: The first one is passion. Of all the attributes, this is the only one I don't believe you can teach. Everything else is learnable; passion is innate. If you don't have a really strong passion for your idea, don't go ahead because you're gonna have to put way too much work into this thing and it'll feel like work. If you have passion, it doesn't seem like work. It's fun.
I think another attribute is curiosity. Curious people are much more creative. Asking questions really triggers innovation, and as you know, not only in small business, but even in large corporations, innovation is key.
Another interesting attribute is a high energy level. I interviewed about 27 entrepreneurs for this book, and almost everybody had very high energy levels and they all seemed to work out. I always thought I was crazy because every time I traveled in the early days before hotels had health clubs, I'd run around the parking lot at night, and people would look at me like I was a little bit crazy. But I'm convinced now that the better shape you're in, the better your mind works. You need less sleep. And particularly in a small business, you're the key person and you have to take care of that engine.
I think flexibility goes without saying. You have to be flexible because things change so fast, and in the new Internet economy, that's even truer. The only caution I have with flexibility is you want to be flexible, but you do not want to be flexible with your core values. Whatever your true beliefs and your mission are, you don't want to deviate from that.
It's good to have a little bit of an ego as long as it's under control because that will give you the self-confidence you need. You have to be mentally tough because you're going to have lots of setbacks. When you get a setback, you got to come right back and do better.
One of the things I'm big on is integrity, and you've got to start that from day one in your business. People love to do business with and will help people they trust. In the book, I list 35 ways you can build trust, just to give people an idea. Listen to people you deal with. People trust you more if you listen to them. You want to admit mistakes right away. Another thing I'm big on is paying your bills on time. Like a maniac, pay your bills on time and suppliers will take care of you. Don't steal people's ideas. Never BS. If you don't know anything, tell them you don't know anything. These are the little things that will build trust over time.
Entrepreneur.com: Why is creativity so important for an entrepreneur?
Reiss: You're going to have to innovate if you're starting a new company. A lot of people think the word "creativity" has to do with being naturally good at art and design. You need to be just as creative in every phase of the business. You have to be creative at raising money. [You have to decide] what your product is going to be. After all, none of us really ever reinvent the wheel. We're [just] coming up with new ideas and trying to do something a little different. We have to differentiate ourselves from the other person to get started.
To have an organization that's creative, you have to work at it. One of the things you don't want do is to hire [people who are similar to you,] which we tend to do. You want to hire people who are different than you because you want to have people speak freely. You have to be able to listen to what you think are hair-brained ideas because sometimes there's a good one. And you want to encourage all the people you buy from to give you their ideas.
Many people say they have an open-door policy. Yeah, but the doors are always closed and most employees don't believe you have an open door. So you've got to work and convince them you're open to all their ideas because their ideas can create all kinds of new products and ways to do business that are profitable.
Entrepreneur.com: In your book, you dispute the idea that a business idea has to be totally original.
Reiss: That's a myth that stops a lot of people who really want to be in business and are probably very qualified. They think they have to have this brilliant new idea. It's really hard to do. Look at it like a Scrabble game. You're playing Scrabble and you have a five-letter word that you got credit for. All I do is add one letter to it, which changes the meaning of the word, and I get credit for all the work you did also. It's the same thing in business. Come up with something a little different. Take an existing idea and sell it to a new channel that no one ever thought of before. So you need to look at different ways but you don't need earth-shattering ideas to get started because you could wait a long time for that.
Entrepreneur.com: You say that knowledge, confidence and experience can mitigate risk. What else can mitigate risk?
Reiss: There are two kinds of risk. One is risk to the business and the other is risk to your personal ego, which is mainly risk of rejection, and a lot of people confuse the two. I'm not so concerned about the risk of rejection. Many people will not go ahead because they're afraid their idea will get turned down or someone will say it's stupid. Those kinds of risks are really opportunities to learn.
[The risks I'm more concerned with] are those that can damage and hurt the whole business. And when you look at those risks, it's kind of like beauty: It's in the eye of the beholder. Two people look at the same exact situation. One person sees calamity, and one person sees a great opportunity to make a lot of money. And the difference is one person has the experience and knowledge base. They understand the business, see how things can happen and can solve the problem.
The other way to reduce risk is to think of ways [to lessen the amount] of money your original plan called for. For example, let's look at a lot of the expenses you probably put in your initial business plan: I'm gonna hire salespeople. Why hire a sales force to start in a small business? Why not use sales reps? You don't have to pay them the salary or benefits. You pay them strictly commission based on production. If they have no sales, you have no expense. Instead of buying a fax machine and other office equipment, why not lease it in the beginning? Instead of going national with a new idea, why not test it in a small locale? Work out the kinks before you put all your money in it.
Entrepreneur.com: For someone past the start-up stage, what are things to take into account for planning the future of the company?
Reiss: I'd like to see two titles in the company: vice president of today and vice president of tomorrow. The problem is that small-business owners can't afford that, so the same person is wearing two hats. While you're putting out fires and trying to survive, you [also] have to think about tomorrow and that's a difficult thing. But you do have to plan for tomorrow or it's gonna come up at you unexpectedly. You're gonna need new product.
You've got to work hard at getting out of your day-to-day environment where you're dealing with all these immediate problems. Get away for a weekend. Talk to other entrepreneurs. Try to go to trade association meetings. I like to go to other trade associations. I like to go to department and chain stores and shop areas of business I'm not in to see how they package here, how they do things there. Go to the apparel area and see what the colors are. What are the next colors for this fall? Try to make contacts with people who can tell you that. See what other people are doing. One of the best ways to plan for tomorrow is to sit down with your customers and say, "What do you see as your problems [in the future]?" Or, "If I had a magic wand, what kind of product would you like?" And you get a lot of stuff that way. And that's what you have to do when you're small and you can't afford to hire research teams to do expensive surveys.
If you're selling a product in stores, go into the store and talk to the clerks who sell. Go in at 10:30 in the morning when it's not crowded, and they will give you so much information about your product, about the customer, about your competition. And they just love to talk, but nobody ever asks them.