Facebook buys Instagram for one billion dollars; Amazon acquires shoe company Zappos in a multibillion-dollar deal; venture capital group invests in African startup Jumia. And from the people who sell words for a living, How I went from zero to millionaire status running a business from home; How being your own boss is the best favour you could do for yourself; Seven principles of entrepreneurship; etc. The not-so-good-news, though is that seven out of ten businesses fail in the first year. Only one in every new business makes it past ten years.
All of the statements above are true. Millions and billions are exchanged in mergers, acquisitions, start-up funding, and expansion drives between businesses daily. It is also true that entrepreneurship is the best (though not the easiest) career path you can work yourself into. The statistics are also true, many businesses fail. There are still things that no one will tell you about entrepreneurship. Some of them may sound cliché but it is important that you are mentally prepared to face these challenges.
Entrepreneurship is hard work, no doubt, but a certain level of preparation and fitness would help you manage the rough terrain. I have compiled ten areas where many entrepreneurs make mistakes or encounter situations they were not adequately prepared for. Beyond simply identifying these areas, I would make an effort to proffer solutions that reduce the risks involved.
What Nobody Tells You About Entrepreneurship
Entrepreneurship is a lonely journey. Yes, you have your team and your staff strength of ten or ten thousand, but there are certain parts of the job that make it lonely. You realise you are alone when there are multiple good options. You realise you are alone when you have to decide how to cut costs. Also, you realise you are alone when you have to pivot the business and close an entire unit of your operations.
Loneliness cannot be entirely avoided and these are a few ways you can mitigate it. Get a committed and passionate co-founder. In addition to this, be very clear on what your personal values and your reasons for starting your business are. It helps you answer tough questions in the moments of loneliness.
At some points in your business, you might need to take up debt. It could be from friends, family or financial institutions and sometimes some of these debts may go bad. You may lose all your personal money and even the borrowed money.
You aren’t the first person to go through this experience. It is a hard time especially when you have to disappoint people who believed in you and your business. Toughen up and start from scratch. Explain to those who care to listen what your challenges are and negotiate new payment plans. If your debt was collateral guaranteed, you may likely lose your collateral.
You will also lose your goodwill but with time and commitment, you can get that back. As much as you can, avoid taking up debt. The figures rarely add up when you expect them to and if you must, avoid crazy interest rates. Those smiling account officers can turn nasty when you default.
Regardless of how detailed your plans are, you will make mistakes. If you make clothes, you will get a sizing or cut wrong. If you’re in the logistics business, a package may go to the wrong customer.
Mistakes happen, some more grievous than others. When mistakes happen, call the affected customers and explain. Offer a full refund or do something else to show that you are truly sorry and don’t always be quick to penalise the erring staff. Make it a learning point and build checks into your processes so at least that particular mistake never repeats itself.
Or call it second guessing. Do I hire candidate A or B? Will strategy C bring higher returns than strategy D? It is a never-ending game. Worse still you will never know the possibilities of the foregone alternatives. When you take a decision, embrace that decision and get as much buy in and forget the forgone alternatives. Making a bad decision is better than making no decision. At least you have the benefit of hindsight to know it was a bad decision.
There’s this line that asks: ”What can a man do when he has done his best?” I will say the man should stay persistent at what he does. Cracking the success code when you have done every other thing right in business comes down to your staying power. You need to stay with the business and stay with it till it works. Business is a set of small experiments till you get what actually works and why. Then the success you really want comes.
Not every entrepreneur experiences this but it is important to note. Five out of your eight-man team resign, start the exact business you do, poach 60% of your customers and open right next to where you do business. Another angle to this is that all five came in as novices, you trained them and after they become ‘world class’, they leave you and become direct competitors.
Before you vow never to train any staff again, simply because you train and then they leave, consider the alternative of not training them and they stay. You are stuck with a mediocre work force. Understand that you don’t own people and they are free to chart their unique paths through life even if that makes you feel used in the process. Bear no grudge against them and pick up building your business again.
In the early days of your business, you will rarely hit your numbers regardless of how realistic you think they are. Many times you will fall short on sales, payroll, marketing efforts, etc. As important and as attached to the business as you may be, it is not your life.
When the chips are down in business, look somewhere else to lift your spirits. Family and great friends help through difficult business periods. Learn a new skill, a new language or learn to play an instrument, the idea is to pour your energy into something that distracts you momentarily from business.
Regardless of how nice and understanding you are, you would have to fire staff. The reasons could be for integrity issues, culture misfit or “right-sizing”. When you have made up your mind to fire someone, fire quickly and don’t get emotional about the decision.
If you don’t take care of this one loose end, your entire business might eventually pay the price. Separate issues from personalities. Fire people but let them leave with their ego intact. Don’t always feel compelled to give the remaining staff an explanation.
Entrepreneurs are usually broke not because they don’t have money but because many attempt things beyond their available cash. So you just earned 10 million from project A but require 25 million for project B. Yes you have 10 million in the bank but you actually are 15 million broke. Put yourself on a salary at the quickest possible time your business can permit it and when you have to dip into the business for major expenses, make a note of it and return it as soon as you can.
Entrepreneurs worry about business sustainability, meeting payroll, sales figures, staff productivity, competition, policies, government interference, taxes, etc. This shows you have genuine concern for your business, but worrying does nothing to alter events from happening. Make your plans, have plans to reiterate quickly and expect the best. Rather than worrying, call a meeting and make the issues everyone’s issue. They are stakeholders and some may have sound solutions to the worrying issues.
Entrepreneurship isn’t the easiest career path to chart but it definitely has its rewards and privileges. It is hard work, but it is the path you chose, embrace it and see your efforts get rewarded.
May the force be with you.
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