9 Ways to Avoid Rookie Mistakes When Starting Your Own Business
Lots of people are dissatisfied with their careers and believe they'd be better off braving it on their own. After all, the "new normal" we all live in is not so pretty: job uncertainty, financial uncertainty, pay cuts, furloughs. With the jobs picture so bleak, many people tell me they'd rather get paid in happiness. And that might mean jumping ship to start your own thing.
But there is one thing to know before you take that proverbial leap: You are probably going to fail.
That's why, in the beginning, it's better to have low expectations -- so you can exceed them. Just because you're a small business owner doesn't mean you know how to be a boss. A great chef doesn't necessarily know how to run a restaurant. An internet whiz doesn't necessarily know the ins and outs of marketing. That's why it's important to know what you don't know, then find creative ways to learn it and/or work with others who have that knowledge base you're missing.
The dirty little secret is that no one has it totally figured out. But every day it gets better. We all fake it to some extent . . . until we make it. However, there are some steps you can take to ensure you don't make too many rookie mistakes (because you will make some, believe me) and do get on your way to creating a successful business.
1. First, have a plan.
A business plan is a playbook for what you’re trying to create. The subject of business plans could fill a book (and it has, hundreds of them), but basically it’s a description of your company, your proposed product or service, the market for that product or service, whom you’ll be competing against, how you’ll find your customers and a financial analysis of how you expect things to go. Yes, a lot of these details will be an educated guess, but you can run them by your nearest and dearest for a quick market test.
Invite family and friends over, load them up with yummy eats and drinks and seek feedback about your idea. Be specific, but make sure that your questions are open-ended, and listen carefully. Better to learn of your weaknesses and glitches in the comfort of your own home than at a meeting with an investor, or, worse, after you launch.
2. If you can produce your product easily, make samples, find vendors and build from there.
Lara Merriken, the creator of LARABAR, made her original snack bars in her own oven after mixing the ingredients in her (sanitized) bathtub. It wasn’t until years of bathtub baking later that she acquired a professional bakery operation (and eventually sold to General Mills).
3. You don't need an MBA to complete a financial analysis.
Just figure out what your costs are and whether you can make money. Jennifer Fleiss, the woman who started Rent the Runway (the "Netflix for fashion"), and her cofounder, Jennifer Hyman, both went to business school. I asked them, “Do you need a business plan?” Maybe not, they said -- assuming you have a clear elevator pitch. Try having both a paper plan and a pitch plan. They will work for different audiences, but you never want to have to answer, “I don’t have one” if someone asks.
4. Know the jargon.
Most new business owners don’t have the handle on their industry jargon, or the numbers, as much as they should. You should know the differences between revenue versus profits versus valuation. Improperly using the lingo, or avoiding it altogether, is an immediate giveaway that you are out of your league.
5. Put it down in writing.
You might be wide-eyed and excited to start a new adventure, but get everything in writing and a clear agreement in place, even if that feels uncomfortable. Contracts are for worst-case scenarios. You might hate them when you are first signing them, but you will be endlessly thankful for them if things don’t go as planned.
6. Dream with your eyes wide open.
Yes, dream big! But know that you can’t achieve greatness in the first six months -- and be at peace with that. Have one-, three-, five- and ten-year goals, as if you are already accustomed to creating.
7. Don’t be a dictator.
You want people to want to work for you. You also want people to root for you. By being a dictator, you might get people to do the work, but they won’t like it. And if they don’t like it, if they don’t believe in you or your purpose. They won’t give you their best. So be respected. Be liked. Don’t be feared.
8. Maintain your relationships.
Burning old bridges, or failing to keep up with your contacts from your previous career, can be the end of your next career. If you totally fail in this new endeavor, you want to have a fallback plan. Don’t dismiss all of your former colleagues, even if they aren’t in your new industry. You never know whom you might need to employ, who your future clients may be, who might make a career change just like you and end up in a position to hire you or work with you. If you were assistants together, don’t dismiss them just because you were elevated to the next rung first. You never know when your past might come back to help you, or to haunt you.
And finally . . .
9. Eat a slice of humble pie.
You don’t know everything. You have to take the time to understand all aspects of the business. The dirty little secret is that no one has it totally figured out. Every day it gets better. Every day you feel more comfortable in your own skin. We all fake it to some extent. . . ’til we make it. And once you're truly prepared, you can quit waiting. A year from now you'll wish you'd started today.