Q. I’m thinking about starting a business. Do you have any tips that could improve my probability of success?
A. As we are sure you know, launching a new business is risky. The odds are stacked against you, but following the five tips below will significantly increase your chance of success.
1. Make sure you are committed and prepared to work very hard – We joke that one of the nice things about being an entrepreneur is that you only have to work half-days. You can do anything you want with the other twelve hours. This is funny, in part, because it’s true. Starting a business is hard work and most don’t succeed. Before you begin this journey, make sure that you have what it takes to succeed and that you are willing to commit completely.
2. Know how you will get the primary work of the business done – This may sound like remedial advice. Unfortunately, we have seen it too many times. Would be entrepreneurs launch a start-up or buy a franchise only to discover they don’t know the first thing about doing the primary work of their business. You wouldn’t apply for a job as an accountant if you hadn’t studied accounting or at least worked in the field, because you’d never get the job. Trust us; the market is much more discerning than most prospective employers.
3. Be sure you know how you will sell your product or service. Selling is a critical, but often overlooked, part of almost every business. It is wonderful that you are a great widget maker, but it won’t do you much good if you can’t sell the widgets. Whoever said, “Build a better mousetrap and the world will beat a path to your door,” was simply wrong. If people don’t know you have a better mousetrap, no one will be knocking on your door. When planning your business think through how you will sell. If you are going to succeed selling is essential. It’s best if the person you are counting on to sell is highly motivated and has experience. It’s not that it’s impossible to succeed in a field that is new to you, but you will make already long odds even longer.
4. Have a plan to perform ancillary functions. We have said for years, “If you love to bake cakes, don’t open a bakery; get a job as a baker. Open a bakery because you want to run a business and you happen to have a good cake recipe.” The moment you go into business, you will discover the need to do a large number of tasks that have nothing to do with the core of your business (e.g., accounts payable, accounts receivable, invoicing, accounting, managing inventory, setting up computer systems, building websites, etc.). You don’t need to do all of these functions yourself, but you do need to have a plan for getting them done.
5. Answer the three questions every business must answer. If you follow our column, you’ve read these questions before. Every successful business must answer these key questions:
• Why should a prospective customer buy your product or service rather than a competitor’s?
• Is there a segment of the market that values the thing that makes your offering different and is it large enough to support your business?
• How will you reach this segment with your marketing message?
Make sure you know the answers to these questions before launching your company.
Starting a successful business is difficult. Following the five tips above will tip the odds in your favor.