The important business about Your Own Business (Part 2)

There are so many resources such as books, blogs, podcasts, videos etc on starting a business, running and marketing a business. Some good, some bad, some great. Picking the right reference or guide can be challenging.

I can tell you what I have read or listened to in the past, what sort of marketing I did, how I made contacts and sold product etc, but a lot that stuff is out of date now, not all of it, but a substantial amount. However, because I have been there and done it in the past, and figured out ways to to run and market a business, and sell product over the course of 3 decades, means that my brain has had three decades of training to think outside the box and come up with marketing ideas relevant to the period at that time. As such, I can look at business problems today, and troubleshoot them and work out solutions to overcome issues because I have had experience in this area - my brain has been trained (or rewired) to handle such challenges.

So, if you are looking to start a business, by all means, I encourage you to read, watch and listen to all the information you can. HOWEVER, remember what I said on the Homepage of this site:

"Only listen to, and learn from people that have already achieved what you want to achieve"

In other words, if you want to be a good investor, then seek out teachers that are good investors. If you want to run a profitable and successful business, then seek out teachers that have have created a profitable and successful business. Seek out those that have created a successful business in Categories 3 and 5 discussed in the previous lesson.

Avoid advice from those that have created a failed business and never created a successful one, (those that have failed multiple times before succeeding will be in Categories 3 or 5), Avoid advice from the creators of unprofitable businesses or zombie businesses that are strangled by permanent debt with no extra profits or growth, such as those discussed in Categories 1, 2 and 4 in the previous lesson.

They have nothing to teach you other than what NOT to do! The problem with listening to the owners of such businesses in Categories 1, 2 and 4 is that they have no idea why they are in the strife they are in, and they will blame many different external factors, when the simple truth is found in a simple quote by Tony Robbins: "Your income right now is a result of your standards, it is not the industry, it is not the economy".

In other words, they have no idea what they are doing - which explains why you may have several competing businesses in a space, competing in the same industry, with the same type of products, in the same economy, and yet only one is successful and profitable, while the rest are just unprofitable zombie businesses - basically dead, but don't know it.

One has the formula right, while the rest do not.

I cannot tell you if you are suited to creating, running and growing a business. This is a decision for you to make. The decision needs to be based on some key questions about what your goals are, what you want out of life, and what you are willing to do to achieve it.

So, let's start by looking at some of the things you need to consider, but before you go further in this lesson, I think it would be a good idea to reread the lesson: "Keys to Success #11: Why/ Why? Why? (link appears at bottom of this page). The concept discussed in the lesson "Why? Why? Why?" really applies to this lesson, and the questions I will ask. So please be sure you understand that previous lesson.

Just one further suggestion for you - I would recommend you WRITE your answers/thoughts down on on paper so you can refer back to them, trust me, it will be helpful.

Ok, here we go, and remember, there are no right or wrong answers, just YOUR answers....

1. Why do you want to start your own business? Is it because (You can have multiple answers)

   1. You want to earn a higher income?

   2. You want to create something?

   3. You see an opportunity that nobody else does?

   4. Someone asked you to join them?

   5. Other reasons?

2. What benefits do you expect to get from the business? Write out a "Pros and Cons" list of owning this business, and keep adding to the list as you answer the questions below.

3. What do you expect the business to earn? Are you expecting to

   1. Draw an average salary?

   2. Draw a good salary PLUS profits?

   3. Employ people?

   4. See business earnings growth? If so, how much?

   5. What other earnings expectations do you have?

4. Why do you want the business to earn what you have stated above? In other words, what is the purpose of money that the business will generate? Investing purposes, donate to charities, other?

5. How long before the business generates enough income and profit to pay the following and how can you demonstarte this on paper (or a spreadsheet)?

   1. Loan repayments,

   2. Rental of premises,

   3. Salary for you,

   4. Profit for reinvestment for growth of the business?

   5. Salary for employee(s),

   6. Profit for repayment of initial "seed capital",

   7. Profit for shareholder(s),

6. How many employees do you expect you'll need? Also, what are the associated costs with EACH person employed (salary, insurances, superannuation, etc)?

7. Will you need a premises? If so, how big and what are the expenses of such a premises?

8. Will you be borrowing money to start the business? If so how soon will you pay back the loan?

9. What is the product or service you are looking to provide? Why is it a good idea and why will you succeed?

10. What is the competition doing? How many competitors will you have in your target space? If you will have competition, what will your "edge" be? How will you beat the competition?

11. What sort of marketing options do you have and how will you reach your target customers? Now before you say "I will create a website and market my business through that", consider this... there are over 1,700,000,000 websites in the world today, so how will yours reach it's target market ahead of the competing sites? How much do you know about website marketing? What about website design? To put it differently (by referring to the "Why? Lesson",

    1. Why do you think you can do better than your competitors?

    2. Why do you believe in your answer to "a."?

    3. What do you know that gives you and "edge"?

    4. When will the marketing effects show results (how long)? How hard and expensive will this be (estimate a cost)?

12. Assuming the business takes time to become profitable, then how will you manage the following?

    1. How long can you fund yourself while growing the business, before you need to draw a salary?

    2. How long before you have enough profit to cover the following business expenses such as power, rent, water, inventory, labour, marketing etc.

13. How many hours per week do you think you will need to spend on the business?

    1. During the start-up phase?

    2. During the growth phase?

    3. During the day-to-day normal running of the business?

14. Do you know how to create a simple break-even-analysis of your business? If not, you MUST learn how do it. Personally, I made NO decisions without putting the "numbers" into my simple spreadsheet to see what impact any added expense would have on my bottom line, and then calculate what sales I would need to do to be able to cover the extra costs. The spreadsheet included fixed costs (power, rent, salaries, leases, insurances etc), variable costs (travel, stock), and of course income to offset the costs. I knew my average margin and from that, the spreadsheet would calculate the expected actual profit at the end of any period based upon the sales.

15. What will you do if the following happens?

    1. You miscalculated and run out of money before the business is off the ground?

    2. Your business fails for any number of reasons after (say) a year?

    3. You business is off the ground, you are drawing a salary, but it is the same or less than you would earn as an employee?

    4. It takes much longer to get the business up, running and profitable than originally planned and budgeted for?

    5. It turns out your business idea was not as great as you initially thought?

    6. You become unmotivated and lose focus?

    7. You find yourself working 60+ hour weeks to get the business running?

    8. You discover (as I did), that you cannot manage all the parts of the business on your own? How will you over come this and fund the solution to the problem? In other words, you find that your strengths may be in one aspect of the business (day-to-day operation, sales and marketing) and you suck at other aspects such as the financial side, logistics and office administration - which is what happened to me.

Anyone that thinks owning a business is a fast track to success and wealth is an idiot.

The truth is that owning a business may be a faster track to succcess and wealth, but the success rates of businesses are statistically low and it takes a lot more inner strength, conviction and intelligence to start a business, make it profitable, grow it and keep it profitable, and keep that happening year after year and decade after decade.

Anyone that thinks owning a business is an easy way to make a living and that you work less, is an idiot. Most start-up businesses require the owner to work 60+ hours per week. Once established, the owner continues to work around 50+ hours per week. Once established and profitable, the owner is still working 40+ hours per week.

Anyone that thinks owning a business is easy, is an idiot. As an employee, you have one boss to keep happy. As a business owner, you have hundreds of bosses to deal with! If you doubt what I am saying, then consider this.... as a business owner your bosses include:

1. Each and every customer - they provide your income. They decide whether they buy from you or not, and as a result, whether you get to pay the rent and eat that week. Treat them nicely!

2. Your suppliers - They provide the goods that you sell and directly affect your income. if you fail to do the right thing by your suppliers, you may have no product to sell. Treat them nicely.

3. Your landlord - They provide the place you work from. Look after their asset, because if they kick you out, moving is expensive and disruptive to the business.

4. The Tax Office - they have expectations from you and you MUST meet their requirements with regard the company tax and the reporting for every employee.

5. Your bankers/creditors - If you have borrowed money for the business, you need to keep your creditors happy by ensuring you make your repayments ontime. You don't want them calling in the loans and reposessing the business assets that generate your income.

6. Insurers - without proper insurances, you will be unable to operate.

7. The Government Regulators - regulators such as licensing authorities, health and safety autorities, environmental protection authorities, ASIC, and other various regulators that police the relevant legislation that applies to your industry etc. All these government bodies need to be dealt with and you need to comply with proper documentation for each of the relevant bodies.

Most people are unaware of the headaches associated with owning a business. An employee generally reports to one "boss", and as you are now aware, a business has to report to numerous "bosses".

Most people are quite clueless about what it takes to start, and run a profitable business. They see the end result of what they percieve is a successful business person and assume it was an easy ride for them, never knowing the full extent of their trials and tribulations.

The adjacent picture says it all quite clearly.

Unfortunately, I cannot claim this picture as my own, and I do not know who to give credit to for it, but it does speak volumes!

If more start-up business people were aware of the picture above, then I believe we would have less start-up businesses, but also a higher rate of business success as well.

So, now you know what you're getting into.

You have seen some of what needs to be considered - yes there is more, but you have enough to get a idea as to whether this is for you. However, I would look for more information, ask questions of those you know what they are talking about, and decide if this is really for you. If it is, then we can talk more in Part 3.