By Paul Burri
Paul Burri is a Santa Barbara SCORE Counselor, a serial entrepreneur and has published about 300+ business-related articles for the Noozhawk for about 6 years. This article was published in June of 2006 and is still very relevant for those considering starting their own business.
So you think you'd like to start your own business. Good idea/bad idea. Let's examine the pros and cons.
First of all, according to Stanley & Danko, authors of The Millionaire Next Door, two thirds of the millionaires in the US are self-employed so maybe it's worth looking into. You will be your own boss (you think), you can set your own hours (you think), you will reap all the profits (you think) and best of all (you think) you will have people working for you to do all the work. More about this later.
On the other hand, statistics vary but in general tell us that 50% of first time, new businesses* fail in the first year; 90% within the first 5 years. That's a tough statistic to confront. These odds are better than winning a lottery ticket but then again, a few lottery tickets cost only a few bucks and none of your time is invested in buying them. Starting a business and then failing in it will mean a lot of your time and money will be lost - not to mention the emotional cost. And it will mean not just the money you (or your other sources) have lost but you should also consider the wages you lost had you continued working for someone else.
Over the years I have created and operated about a dozen businesses so you know where I stand regarding your wanting to start your own business. Like you, I hope to be a millionaire some day. Some of those businesses of mine were just barely successful, some never got off the ground and few have been very successful. And when I say successful, I mean more than monetarily. You will reap enormous personal satisfaction if you develop a successful, growing business.
So what does it take? It takes more than just being an expert in whatever field you choose. Michael Gerber, in his book The E-Myth, says that in order to create your own successful business, you will need three different personalities or characteristics - The Technician, The Manager and The Entrepreneur. I'd add one more, The Salesman.
Most people are who want to start their own business are experts at what they do. They are the Technicians. For example, you are the unquestioned best Toyota mechanic in the county. You've been working for the Acme Toyota dealership for the past 14 years and you figure it's time you started working for yourself. Okay, you are a Technician. One down and three to go.
Who is The Manager? The Manager is the person who is the organizer, the records keeper, the accountant type who knows exactly how many 1/4" bolts are in the inventory, how much they cost, how frequently they need to be ordered and how much profit your business makes when they sell one. You need him. If you don't have those skills, you will need to find someone who can do those things for you because if you don't - I can almost guarantee it - your business will not succeed.
And who is the Entrepreneur? The Entrepreneur is the individual who is the visionary. He is the one who sets goals, looks to the future, thinks about how to grow the business, thinks of ways to beat the competition, gets the bank loans, and in some cases thinks about your exit strategy - even when you're just starting the business.
And last, the Salesman. Without sales, you will have wasted all of your time getting organized and opening your doors. Sales are surely not the least of these four talents.
In order to be successful in your new business, you will need to wear all four of these hats. Or hire someone who can do those jobs for you. Or get a partner or associate who has those skills.
* Since these stats apply to first-timers, there is the implication that they are also inexperienced business owners.
© 2006 Paul Burri
#1 for the week of 06/10/2006 on Noozhawk