Essential Tips For Would-Be Entrepreneurs
After retiring her professional dancing shoes, Judi Sheppard Missett taught dance class to civilians in order to earn some extra cash. But she soon learned that women who came to her studio were less interested in learning the precise steps than they were in losing weight and toning up. Sheppard Missett then trained instructors to teach her routines to the masses and Jazzercise was born. A franchise deal followed. Today, the company has more than 7,500 locations worldwide.
Following an ice cream-making correspondence course, Jerry Greenfield and Ben Cohen paired $8,000 in savings with a $4,000 loan, leased a Burlington, Vt., gas station and purchased equipment to create uniquely-flavored ice cream for the local market. Twenty years later, Ben & Jerry's hauls in millions in annual revenue. (For more, see: Why, How, Where and When Entrepreneurs Make Money.)
What do these entrepreneurial success stories have in common? Both involve industrious people diving into things they're naturally passionate about.
Giving credence to the adage, find a way to get paid for the job you'd do for free, passion is arguably the most important component startup business owners must have, and every edge helps. While the prospect of becoming your own boss and raking in a fortune is alluring to entrepreneurial dreamers, the possible downside to hanging one's own shingle is vast. Income isn't guaranteed, employer-sponsored benefits go by the wayside, and when your business loses money, your personal assets can take a hit — not just a corporation's bottom line. But adhering to a few tried and true principals can go a long way in diffusing risk. (For more, see: Why Entrepreneurs are Important for the Economy.)
Getting Your Hands Dirty
When staring out, it's essential to personally handle sales and other customer interactions whenever possible. Direct client contact is the clearest path to obtaining honest feedback about what the target market likes and what you could be doing better. If it's not always practical to be the sole customer interface, entrepreneurs should train employees to invite customer comments as a matter of course. Not only does this make customers feel empowered, but happier clients are more likely to recommend businesses to others.
Personally answering phones is one of the most significant competitive edges home-based entrepreneurs hold over their larger competitors. In a time of high-tech backlash, where customers are frustrated with automated responses and touchtone menus, hearing a human voice and is one sure-fire way to entice new customers and make existing ones feel appreciated — an important fact, given that some 80% of all business is generated from repeat customers. (For more, see: 10 Characteristics of Successful Entrepreneurs.)
Paradoxically, while customers value high-touch telephone access, they also expect a highly-polished website. Even if your business isn't in a high-tech industry, entrepreneurs still must exploit internet technology to get their message across. A startup garage-based business can have a superior website than an established $100 million company. Just make sure a live human being is on the other end of the phone number listed. (For more, see: How Entrepreneurs Can Save on Taxes.)
Knowing When to Change Course
Few successful businesses owners find perfect formulas straight out of the gate. On the contrary: ideas must morph over time. Whether tweaking product design or altering food items on a menu, finding the perfect sweet spot takes trial and error.
Starbucks Chairman and CEO Howard Schultz initially thought playing Italian opera music over store speakers would accentuate the Italian coffee-house experience he was attempting to replicate. But customers saw things differently, and didn't seem to like arias with their espressos. As a result, Schultz jettisoned the opera, and introduced comfortable chairs instead. (For more, see: How to Be an Entrepreneur in the Modern World.)
Shrewd Money Management
Through the heart of any successful news business venture beats the lifeblood of steady of cash flow — essential for purchasing inventory, paying rent, maintaining equipment and promoting the business. The key to staying in the black is rigorous bookkeeping of income versus expenses. And since most new businesses don't make a profit within the first year, by setting money aside for this contingency, entrepreneurs can help mitigate the risk of falling short of funds. Related to this, it's essential to keep personal and business costs separate, and never dip into business funds to cover the costs of daily living. Of course, it's important to pay yourself a realistic salary that allows you to pay for essentials, but not much more — especially where investors are involved. Of course, such sacrifices can strain relationships with loved ones who may need to adjust to lower standards of living and endure worry over risking family assets. For this reason, entrepreneurs should communicate these issues well ahead of time, and make sure significant loved ones are spiritually on board. (For more, see: The Real Risks of Entrepreneurship.)
The Bottom Line
Risks are inherent in launching a new business, and entrepreneurs must be prepared to mitigate the pitfalls whenever possible. But with a passion for the business and shrewd attention to detail, an entrepreneur can take a novel idea from concept to reality. (For more, see: Are You an Entrepreneur?)