Here are some lessons I learned while attending the Business School of Experience.
Keep in mind, "experience" is really just another word for mistakes. Learn from my experience so you don't have to learn from yours.
Do Your Homework
Bright ideas are common; people who can turn them into a business are not. Don't let your enthusiasm keep you from doing your homework.
When starting a business, ask yourself:
- Is there a real market? Can I really create this product/service?
- Can I win? Can my company and product be competitive?
- Will it be worth it? Will it be profitable? Will it support my philosophy, strategy, goals, and objectives?
Build three different models in your spreadsheet: low, likely, and high, and then do some sensitivity analysis. If start-up or roll-out takes longer and costs more than estimated (it always does), what effect will it have?
If you think what you have is unique, think again. Dig around on Google and find out what else is out there that's similar to what you're contemplating. Learn what works (or doesn't) from others who have tried it. Indirect competitors can be as fierce as direct ones.
Find an association that covers what you do, then join it and wring out their reports and statistics. Order a franchise package for a company or product similar to what you have in mind. They're required by law to tell you the downsides and upsides of the business. Ask for advice; you'll be surprised how willing people are to help.
Think It Through
It's very easy to become enamored with an idea and focus on the product, not the market. Spend more time thinking about the market than on developing intricate details for your product/service. Who are you going to sell to? What do they look like? Where are they? How will you reach them? Will they buy? What will they be willing to spend?
Keep in mind that you are a bad market sample; if you like it or your family likes it, it doesn't matter. Will other people be willing to spend real money to buy it?
Do the Numbers
Figure out what your budget realistically needs to be. Contrary to your gut instinct, if you don't have a lot of money, a viable solution is not to spend less on development, production, promotion, or staff. If you don't spend enough, then quality, market awareness or distribution will suffer.
Ignore what you have in the bank, define an accurate budget, and then compare what you think you need with how much you have to spend.
Make a List
Create an action plan. List the things that need to get done and then make sublists for all the big things. Put them on a time line.
This mental process allows you to think through what it would really be like to run the business. Who's going to answer the phone? What if you need more cash for supplies or raw materials? Who will be the company spokesperson for TV interviews? Involve other people who will be working with you so they can help think it through too.
Test, refine, test some more, and then build. Remember, when you test, a "no" answer is as useful as "yes." Few ideas are perfect right out of the box and many successes are discovered by accident. If your idea works and the market likes it...go! If people don't, make some changes, big ones if you need to. If you can't or won't...WALK AWAY.
Entrepreneurs are notorious for not taking no for answer. But two thirds of businesses fail within 10 years.
Success isn't just about products and markets, it's about making sure people know you have a product that will solve a problem for them, it's worth the money, and you can be trusted to deliver it. Publicity is cheaper than advertising, so do something (tastefully) outrageous.
Share your enthusiasm, dedication, and knowledge with your employees. Then hire people who are smarter than you are.
If you don't like the people you're working with, or if you don't trust them, something's wrong. Start by taking a careful look at yourself. Are you trustworthy? Are you a hard worker? Are you fun to be around?
Measure performance based on results, not attendance. It doesn't matter where, when, or how people work as long as they get the job done. If you can't define what acceptable results are, how can your people possibly be successful?
Look Both Ways
After implementation, look back at where you've come from and ask yourself what you might have done differently. Learn from mistakes and successes, and look ahead--the road may have changed while you were busy starting up. Make changes if you need to, be agile, and adjust.
You only have one life to live, so enjoy it. When you have a little success, celebrate! Make sure the people who contributed have a chance to enjoy your success too. You couldn't have done it without them.
“All who would win joy, must share it; happiness was born a twin.” — Lord Byron
"Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared." — Siddhartha
Tom Harnish is a serial entrepreneur. Always on the bleeding edge of technology, he learned what works (and what doesn't) leading projects, products and companies to success (mostly). He can't play a lot of musical instruments.