12 Truths For Starting And Running A Profitable Business
Here is an article that I have written for people that wish to start a successful business and not get emotionally and financially destroyed doing so!
You maybe a very successful entrepreneur and are probably already aware of some of the things written below. However, it is still recommended you read this as you may get some new ideas from this. Also, this will be invaluable to anyone around you who is looking to start a business or a family member who is going to join your business to grow it further. Do share it with them, it will save them a lot of time in the learning curve!
So let’s get started.
1) When starting your own Business, treat the first year as a hustle phase.
In the first year of “doing what you love” as a profession, treat it as a hustle phase. Do not go after immediate results. I am not saying that you should not be result oriented. You will get feedback from the market and consider that as result. If you make a lot of money in the first year, great, but don’t bet on it to start dishing out a full time income in a couple of months.
The truth is that a lot of businesses take almost two years to properly get going and here we are counting the ones that even become successful. Most businesses shut down within an year or two because their owners found the journey too tough, got bored, lost interest or ran out of cash.
2) When starting your own business, give things enough fuel.
The most crucial thing you need to do before you even begin starting your own business or a profession is to ask yourself, can you imagine doing it for years and years with the same love even if the results were just average. Most people just start expecting results straight away, almost like a gambler that expects to win. When things don’t work out well, they quickly move to something else, then to something else and so on. In other words they never give enough fuel for the “rocket” to launch in either of the cases.
The real pay-off from any endeavor comes from a lot of consistency over a period of many years. The reason is that no matter how talented, or how amazing you are, it will take time to build credibility. It will take time to build a following or get paying clients because that happens when you prove over and over again that you are actually good at what you do. It will also time to develop services or products, figure out how to make money from it and acquire considerable mastery of your business.
Most people give up far earlier, the main reason is that they have unrealistic expectations of how quickly things will work out, foolishly inspired by other popular overnight success stories.
3) If you want to make money after starting your own business, understand that you need to deliver great value to the customer.
The fact is that a decent full time living can be generated from almost any line of work even if it takes time to get things going. Creative work, products or services, all generate money as long as you are providing considerable value to the market.
But how do you expect to provide value to your customers if you are not even good at what you do or when it is not your core strength. It is better to be terrific in a niche market than be mediocre in a broad one.
But even talented people often never get far because they can’t stick it out. As I have stated before, most of the people who did find success never got very far in the fear year of business. They did take a look at the results and realistically evaluated that sticking it out would be worth it. After sticking it out for a longer time, becoming a master of what they did and learning how to make money from it, it is then that they finally made a proper profession out of their passion.
4) Decide to get serious. Time does not always equal mastery.
Let’s put to rest another misconception. While giving time is crucial to mastery of any profession, just giving time won’t make you a master, unless you are committed to becoming one. Let me give you an example. Suppose there are two people trying to making money from a business. One guy has been in the field for over 5 years but still has gotten nowhere, as he does not actively try to get better at his craft, does not improve his marketing, does not try to network and does not know how to manage his finances.
On the other hand, another guy who has been in the field for 2 years has been doing the exact opposite. Every single day he has been trying to do whatever he can to improve the value he gives to potential clients. He networks and follows up on leads, he does everything he can to hustle and grow his business everyday. Despite the fact that the first guy has technically been in business longer, who do you think would be more successful at it? Obviously the second one. Do not equate time with mastery.
5. Understand that there is something as a wrong customer.
It is undeniable that sales are crucial to the growth of any form of business. But you cannot expect everyone on earth to be a client. Some people are much easier to sell to than others. For example if you are a classical musician you will have an easier time selling to people who actually appreciate classical music as compared to selling to rock music fans.
Then there are some types of people who give more trouble than the sales they provide. These kinds of people simply wont be worth the trouble in the long run. Let your competitors deal with them and have their headaches. Focus your efforts on providing value to the customer that gives you the most value in return. At the end of the day a customer that gives you more stress than money is not worth it.
6. Do not spend too much money.
Until the point that your business starts generating a good income, it is not wise to put in everything you have into it unless it is absolutely necessary. The truth is that a new business is a massive risk, 9 out of ten businesses will fail. Putting in all your savings into an untested business model just because it is your dream is a massive financial risk.
Even the businesses that do not fail often take a lot of time to get going, unless you are lucky enough to get loads of clients straight away, which rarely happens if you are very new to the industry. Every dollar or rupee you put into the business has to be recouped in some way and that it may take a long time to do so. In the meanwhile you still need to run your family don’t you? Unless you have outside investors, you are better off putting aside the bulk of your money as emergency savings until your business starts making money. Don’t blow it all away on a business that may not work.
7. Do not spend too little money.
Just as it is a bad idea to spend too much money on an untested model it is also a bad idea to be overly frugal so much that it gets in the way of predictable growth of the business. If your time is worth more than the money or if there are people or tools that can do the same things you are doing much better, it is wiser to spend money and get things done faster and better.
You don’t have to spend on the fancy stuff but spend on the functional and utilitarian stuff that is crucial to the core of your business if you want to see it grow
8. Don’t think about starting your own business with friends unless the terms are absolutely clear and put on paper
We have all heard of stories where two friends founded a company, that company succeeded wildly, both friends became multi millionaires and ran the company together as a great team for many years.
Unfortunately, the other scenario is more likely where long lasting friendships are destroyed because of business fraud. Or when there is no fraud but one party puts the blame on the other and the personal relations that took so long to build are destroyed in a blink of the eye. It is not a good idea to start a business with your best friends or people with whom who share extremely close relations ,unless you are sure that even in business failure your relations won’t suffer.
Also another good idea is to put terms on paper. Putting them on paper won’t save a friendship gone sour but it can protect you from a professional angle.
9, Have enough savings before you start
Now if you are going to be starting a business, remember that you have to give it time to grow and cannot expect immediate money. So what does that mean? That means that if you are going to start a business, then either ensure you have enough savings for your kind of lifestyle for at least two years or don’t quit your corporate job just yet. Success is not guaranteed and even if it comes it will come slow. Don’t rely on a miracle to bail you out. Be smart and have some savings for your personal expenses. If possible, cut down on your expenses to save more and last longer.
10, In ideal circumstances, start young and make sure you have a supportive partner.
Also, it is a good idea to start your business while you are still young. If you are married, with kids, first set savings aside for them and only then think starting a business. Make sure your spouse is supportive. In the initial years, you will have to work even harder than you would in a job. You won’t get to spend as much time with your significant other as you would like. This time is also going to be tough because of the uncertainty surrounding money, which can create problems in even some of the best relationships. So start your business when young and single. If you have a significant other, make sure they are supportive.
11) If possible, go B2B instead of B2C
The most important in order to result in a profitable business is low overhead and high paying clients. Most entrepreneurs who start out have this in reverse and fail.
To get high paying clients, it makes more sense to go B2B instead of B2C. Successful companies can pay you good money which most individuals cannot.
If you are going to go B2C, preferably target those B2C markets where you can make good money without you having a huge overhead. Focus on affluent customers and providing SERVICES, not products that require you to have a big inventory. Examples of these services could be Event Photography/Higher Education Consulting/Real Estate Broking etc.
However, during the times of this pandemic related crises, it is useful to also structure your services in a way that they can be delivered online so that the impact on revenue due to uncontrollable factors is lower.
12) Final tip: Don’t confuse popularity with success
People automatically assume that if something is popular, they are financially successful. They maybe in deep debt or maybe running into huge losses. There are tons of business people who are much more financially successful than others but they either don’t market their success or the nature of their business doesn’t result in media coverage, Instagram or Youtube popularity.
Also, a small profitable business is better than one that posts a big turnover, but loses huge money year after year, eventually dying. Don’t get distracted by the noise and by the judgement of people. Focus on your financial numbers and whether you are making a profit while maintaining a healthy margin. If you can do so long enough, in the end, your success will speak for itself.