This blog post is about entrepreneurship. Not my normal stuff; but this is my background and writing about small business has been something I have done for years. I was in the process of writing several “Success Paths” books at the end of 2019 and beginning 2020 when the whole small business world was turned upside down due to the pandemic. I still anticipate writing those books as we slowly return to normal. Thought this might be of interest to you if you are giving any thought to opening your own business in the future or know someone who is giving that scary adventure some thought.
During my working career which has spanned almost 60 years, I have been self-employed for approximately half of that time. Or said another way, for 30 years I worked for someone else. What is interesting to me is that I fully identify with my self-employment years and have only vague memories of my many jobs—I was a good employee but was always looking for the next deal.
For many of my self-employment years, I was a small business consultant. This was a mixture of accounting, general business guidance and assisting those companies secure loans. I saw an unbelievable number of poorly ran businesses by people who had no clue what it took to be successful. They fully operated by the seat of their pants. Now, don’t get me wrong, many of these organizations were successful. Almost all, but not all, success in business is based on luck and someone else’s money (usually family).
Some of the best ran and potentially most successful of these businesses failed not because they were mismanaged, but because they lacked capital (no dad money). Some of the worst ran businesses succeeded because they had sufficient capital (thanks, dad) to fail but survive. On the fourth attempt Junior succeeded and became a family legend. Capital almost always determines the likelihood of success not “hard work,” innovation, creativity, great product or great management—it is always money.
Towards the end of my career, I became a consultant for M&A firms who were assisting medium size firms complete acquisitions or to sell the business. What was surprising is that most of the good and bad I saw in small companies was the same nonsense going on in big companies. In most companies the biggest asset of the company is the employees. There are exceptions to this rule where an innovative product may drive success, but in most cases it’s the employees who have the most influence over success. Yet, with hardly any exceptions, employers treat their employees like shit.
Why would they do that? Because of their egos. I have yet to meet a business owner who didn’t think all of his success was due to him or that all of his failures were due to his employees. Logic be damned the ego must be protected.
The keys to business success.
One is capital. The more money you have the greater your chances of success. This is painfully obvious but is ignored by most entrepreneurs, they always think whatever venture they are starting is an exception. This business I’m starting is so great all I need is a few bucks, and I will be a zillionaire in a week. They are always wrong; you must have more money than you can probably acquire to be successful in a new business. New businesses have a ton of surprises that cost money you did not count on. The amount you thought at the beginning was more than enough will not be. Your initial capital needs to be as large as possible and you should plan on sources of additional capital as the business grows. Capital drives success.
Two is hard work. I have met many people who wanted to open their own businesses because they were tired of working hard for some asshole boss who never did anything. As an owner you will either work extremely hard, or you will go broke. Anybody who thinks it is easier to be a boss/owner than an employee has never owned their own business.
The third key might surprise you—it’s employees. Unless your new business is a one-man operation you will be totally dependent on employees for your success. For many new business owners this is an afterthought—they assume they can always hire people. But can you hire the best? Because that is often what it takes to succeed. Learning how to hire people, manage them, retain them, keep them motivated without costing a fortune are some of the most important skills of a manager/owner. In a successful business, your employees are always more important than you are; but can your ego be kept under control so you can support these key assets as you grow your business. I have heard story after story from successful business owners who talk about their key employees when they first started, but now almost hate their employees, because they are never satisfied. If you cannot mange people successful (and, no– being a tyrant is not managing a successful team); you should not start a business that needs employees to succeed. You will fail.
Fourth is the product/service/business idea. This is usually where the business entrepreneur starts. I have an idea for a business that will be a huge success. Yes, you need that idea, but it is the least important key to success. Mater of fact many successful businesses were just a rehash of an old concept; but done better.
The best time of my life was when I was self-employed, and the business was successful. The worst time of my life was when one of those self-employment ventures was failing. And, I have, for sure, experienced both of those extremes. Even with that experience a day does not go by that I don’t give thought to a new business venture. This one for sure will be a huge success, and I can do it on a shoestring. Once it’s in your blood it’s hard to give it up.
Free e-book box set on Amazon on January 3rd.