Thinking about starting a business? What is your business background? Do you understand and I mean, really understand basic business? You know, things like general management, marketing, communications, advertising, sales management, sales, human resources, business planning, systems analysis, accounting, basic business law and contracts, technology & systems management, taxes and compliance issues and the like?
Most people who are starting a business for the first time may know some of these issues but not all. And just being somewhat familiar with the terminology is not the same as actually knowing what is required of each discipline.
Too many people who start a business only think about doing what they love to do, like making candles, repairing equipment, baking or whatever floats the boat. This is referred to as "the technician mentality" when people see themselves performing the task they are specialized at. Let me clarify: every business owner has to wear (and be good at) three different tasks: 1. The technician—you have to intimately familiar with your product or service. 2. The administrator—you must have well-rounded knowledge about the business issues indicated in the first paragraph and 3. The entrepreneur—you must have the ability to see (realistic opportunities) in the market and have the spirit to weather the risks and rewards of your vision for the future.
Most people are pretty good about getting fired up about their idea or project but lousy at finishing the task. Why? Burn out. People who launch a business based on hope, guesswork and fantasy burn out under the diversified load of responsibilities required of starting a business. Especially when the business has no inertia, no forward movement, and every spoke of the wheel has to be reinvented from the bottom up before you can begin marketing and selling. This is made more difficult when you are overwhelmed with learning on the fly while inventing every element related to your business.
Just thinking through the business systems of a new venture can cause burn out. Everything in business must be systematized for efficient operation. Either you have a system or you don't. If you don't have systems then your business will be chaotic with a different response to every event. And where is the starting point of your systems? That depends on your business but for most it starts at the point of acquisition of your raw materials (supply) all the way through the business process to eventually delivering a product to a customer and also has to contend with a system for potential returns. Everything must be thought through and everything must be systematized. If you have done it, you know what I am talking about. If you haven't then take what I am saying factually, developing business systems is difficult and gets worse with the complexities of your business model.
I don't want to be a buzz killer about starting a business but I do want people who are thinking about setting up a business to think intelligently about the quantity of details that must be worked through to help increase the skinny chances for success. I said "skinny chances for success". Here's reality: The SBA statistics indicate that 80% of businesses fail within the first two years.
That means 8 out of 10 business won't make it. Why?
1. Poor business planning.
2. Lack of management skills.
3. Lack of accounting skills.
4. Lack of marketing or sale skills.
5. Over estimation of sales and under estimation of costs.
6. Insufficient financial resources.
7. No market.
You can avoid many of these pitfalls by getting educated quickly. And remember; knowledge is power and applied knowledge is powerful.
Copyright © 2006 James W. Hart, IV All Rights reserved
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Date Published :
Jun 5 2007