Key takeaways
- There are lots of things that you might want to do that are very hard—learning a foreign language, running a marathon, and (hardest of all) starting a business.
- A recent survey reports that 49% of young investors plan to start a business within the next three years.
- The best way to improve your chances of success in starting and sustaining a business is to understand how truly difficult it is.
- The most important things to remember are that starting and running a business is very expensive and that it’s critical that you do all that you can to keep costs and expenses down to the absolute minimum. This means outsourcing your help, working from home rather than renting space, tracking all expenses, etc.
You know what’s hard to do? Learning a foreign language as an adult. You really have to want it in order to actually do it. You know what’s even harder? Starting a business. Recently, America’s Small Business Development Center conducted a survey and found that 49% of young investors hope to start a business within the next three years. That amounts to a lot of people with entrepreneurial plans. I know from experience that most won’t actually start businesses, but many will.
A community bank that we came across published six tips for starting a business and I like them, so want to share them with you:
- Separate business and personal finances. A dedicated business account that keeps business income and expenses separated from your personal finances is very important. This will give you a clear picture of how much it costs to run your business.
- Put together a team. When you’re starting out, putting together a virtual team of people who are great at what they do makes a lot of sense. It doesn’t matter if they’re local or live three states over. A good virtual team can provide you with what you need to keep things moving along.
- Keep startup costs down. Spend as little money as possible. Don’t buy a lot of equipment or sign any rental agreements for a workspace. Work out of your house, if you can. It’s tough when you’re just starting out and you probably won’t make any money for the first three years.
- Minimum early overhead. This means it’s going to be you running the business, you doing most of the work. Of course, you’ll have your virtual team to help out when necessary. At this point, it’s not likely you can afford to hire people full time.
- Track all expenses. This is extremely important. Running a business is very expensive and you need to know where your money goes. Understanding exactly what these expenses are will help you make adjustments to keep costs down.
- Pay yourself appropriately. I always laugh at this one because “paying yourself appropriately” in the first three years is zero. There’s nothing to pay yourself.
Be very careful about starting that new business. Know that it’s very hard—probably much harder than anything else you’ve ever done in your life. I’m not trying to discourage you, but if you’re serious about taking off on this journey, just go into it with open eyes. That way you can understand exactly what you’re doing and you’ll know exactly what to expect as a result. This will make your chances of success much better. Until next time, enjoy.
Gary