So you’ve confirmed that your business idea could be an actual jobby, not just a hobby, and you have 6-9 months’ worth of expenses squirreled away to get you there. Sounds like you’re ready to take the plunge…but you’re not in the clear just yet! Starting your own biz is full of pitfalls and setbacks. Here’s how to avoid some of the most common:
1. Have a plan. A business plan is a playbook for what you’re trying to create. The subject of business plans could fill a book (and it has, hundreds of them), but basically it’s a description of your company, your proposed product or service, the market for that product or service, who you’ll be competing against, how you’ll find your customers, and a financial analysis of how you expect things to go. Yes, a lot of these details will be an educated guess, but you can run it by your nearest and dearest for a quick market test. Invite family and friends over, load them with yummy eats and good drinks, and ask them about your idea. Be specific but make sure that your questions are open-ended, and listen carefully. Better to learn of your weaknesses and glitches in the comforts of your own home than during a big meeting with an investor, or after you launch.
If you can produce your product easily, make samples and find vendors for it, and build from there. Lara Merriken, the creator of LÄRABAR, made her original bars in her own oven after mixing the ingredients in her (sanitized) bathtub. It wasn’t until years of bathtub baking later that she acquired a professional bakery operation (and eventually sold to General Mills).
As for financial analysis, you don’t need a MBA for this. Just figure out what your costs are and whether you can make money. Jennifer Fleiss, the woman who started Rent The Runway, and her cofounder, Jennifer Hyman, both went to business school. I asked them, “Do you need a business plan?” They said maybe not—if you have a clear elevator pitch. Theirs was “the Netflix for fashion.” Try both: have a paper plan and a pitch plan. They will work for different audiences, but you never want to have to answer “I don’t have one” if someone asks.
2. Know the jargon. Most new business owners don’t have a handle on their jargon or their numbers as much as they should. You should know the difference among revenue and profits and valuation. It’s easy to beef up your financial jargon; for starters, check the back of this book for some key financial terms that will help you talk the talk. Improperly using the lingo, or avoiding it all together, is an immediate giveaway that you are out of your league.
3. Put it in writing. You might be wide-eyed and excited to start a new adventure, but get everything in writing and a clear agreement in place, even if it feels uncomfortable. Contracts are for worst-case scenarios. You might hate them when you are first signing them, but you will be endlessly thankful for them if things don’t go as planned.
4. Dream with your eyes wide open. Yes, dream big! But know that you can’t achieve greatness in the first six months—and be at peace with that. Have one-, three-, five- and ten-year goals, like you are already accustomed to creating.
5. Don’t be a dictator. You want people to want to work for you. You also want people to root for you. By being a dictator, or, let’s be honest, a dick, you might get people to do the work, but they won’t like it. And if they don’t like it, if they don’t believe in you or your purpose, then they won’t give you their best. Be respected. Be liked. Don’t be feared.
6. Maintain your relationships. Burning old bridges, or failing to keep up with your contacts from your previous career, can be the end of your next career. If you totally fail in this new endeavor, you want to have a fallback plan. Don’t dismiss all of your former colleagues, even if they aren’t in your new industry. You never know whom you might need to employ, whom your future clients may be, who might make a career change just like you and end up in a position to hire you or work with you. If you were assistants together, don’t dismiss them just because you were elevated to the next rung first. You never know when your past might come back to help you, or to haunt you.
7. Eat a slice of humble pie. You don’t know everything. You have to take the time to understand all aspects of the business. And don’t be a douchebag. Period. The dirty little secret is that no one has it totally figured out. Every day it gets better. Every day you feel more comfortable in your own skin. We all fake it to some extent…’til we make it. And once you’re truly prepared, quit waiting. A year from now you’ll wish you’d started today.