Most entrepreneurs start with hope and lots of energy. However, sometimes they underestimate the amount of time it will take to get the business profitable. They haven’t researched their target market. So, they spend their cash on things that don’t build revenue. They spend more money on “wants” than “needs.” They fall in love with the “idea of owning a business,” not the day-to-day reality. Their passion outruns their bank account.
Sometimes they do not register their business, or they pick the wrong business entity. Others don’t take the steps necessary to protect their intellectual property. They might think they are saving money by not talking to professionals.
Others just started and decided they would figure it out as they went along. Unfortunately, they didn’t understand all the rules and regulations for starting a business in the United States or their state. As a result, they underestimate the taxes they will owe. They don’t get a required business license. Others hire subcontractors but treat them like employees. They think sales tax rules in their state do not apply to them.
Unrealistic Financial Goals
Money is tight, so they put off getting business insurance. But, unfortunately, the penalties for these mistakes can not only cost you the business but can also result in personal losses.
Often, they set unrealistic financial goals based on hope, not reality. Hope is a powerful thing. It gets us up every morning. Passion for the business is necessary, but sometimes it clouds the truth. It causes us to “just jump and make it happen.” We jump unprepared. It is like jumping into a lake not knowing how to swim.
Improve Your Odds of Success
So how can you improve the odds of success? Think about what you learned in school.
Did you ever take a class in entrepreneurship? Probably not. Our education system
often focuses on job skills. We are trained to learn the skills to get a
job. We learned skills that would help us get a job. If we participated in an apprenticeship, it was to be certified in a defined set of skills. Many people in the trades learn to be master craftsmen, plumbers, and electricians. They know how to be plumbers, electricians, and carpenters, but they know very little about starting and running a business in those trades. Often people get training in massage therapy or hairstyling, but the training includes little or nothing about starting their own business. Yet, most hairstylists and massage therapists rent their spaces and are responsible for building their own clientele and managing their business. The same thing happens with doctors, dentists, and chiropractors.
How can you better prepare for success? Entrepreneurial education is the answer. First, learn how to build a financially viable business model and test it before you invest in it. Then, develop a marketing strategy based on accurate data, not guesses. Learn how to make sales projections, cost analyses, and determine a viable pricing structure. Develop trusted resources. Learn how to best set up your business structure. Learn from professionals in the field. Learn about the business lending process and determine if you will need one. Give yourself the edge in this exciting world of entrepreneurship. Finally, design a business that matches the lifestyle you want to live.
Register today for eL3’s Plan Forward Business Planning Bootcamp.