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