“If you would be wealthy, think of saving as well as getting.”
– Benjamin Franklin
Accelerating Your Retirement: Start Your Own Business
By Michael Masterson
While many people fail in business, many more succeed. If you subtract the foolish failures – restaurants being the most foolish, followed by any sort of glamour business (think travel, bed & breakfast, sports, celebrity) or retail business – the number of successes far outweigh the failures.
When starting a business, you can drastically reduce your risk of failure by becoming an expert in two areas:
How do you become an expert in two things simultaneously?
The best way I know is to get a job working for the type of business you want to start.
Think of your employment as a paid training program. Work fifty or sixty hours a week (even if they don’t pay you a nickel extra) absorbing everything you can. Pay particular attention to people and situations that help you understand how the business works.
By learning “on the job,” you’ll develop skills and accumulate ideas that will make starting your own business a hundred times easier. Some of these skills will be of a more general kind, like writing effective memos, pitching ideas at meetings, handling troublesome people, etc. Some of them will be more targeted: such as how to write persuasive copy or how to select lists of names to send promotions to.
The same will be true of the ideas you get. Some will be small – a clever way to run a meeting, a useful technique for following up on delegations, etc. And some will be big, powerful and very exciting.
The more you learn, the easier it will be to add to your knowledge and the more eager you’ll become to start your own business. Try to resist that temptation until you’ve invested at least 600 hours in learning the product/service side of the industry and another 600 learning the marketing.
Remember, any complex skill takes about 1000 hours to learn and even if you have good teaching, you still need at least 600 hours before you know enough to avoid the obvious mistakes.
When it comes to launching your business, don’t reinvent the wheel. Come up with a product and a marketing position that is 80% to 90% the same as what your most successful competitors are doing. Remember, there is a good reason that they are successful. By investing 600+ hours into learning the product/service part of the business and another 600+ hours on the marketing, you should already have a good idea about why things work. But you aren’t yet an expert. It takes much more time (about 5000 hours) to do that.
And that’s why you have to proceed with caution – one small step at a time. Yes, you should try new things, but as I said they should be only 10% to 20% new. Taking this sort of conservative approach will not limit your growth because you will be able to “catch up” later. If you aren’t careful and try something entirely new and different, chances are it will fail – however good you think the idea is. Remember: the key idea is this: until you’ve had 5000 hours of experience, you are not an expert. Don’t act like one.
How to Make Your Start-Up Business Profitable in Year One
You can invest a small amount of money (and a lot of hard work and well-spent time) in a small business and see it grow into a business that is worth a million in seven years. And you’ll greatly increase your chances for success by having a plan – by knowing exactly what you need to do.
A typical start-up business that’s close to what you already know should break even or lose a little money in year one, make a decent “salary” for you in year two, and provide a substantial bonus for you – in additional to a good, arm’s-length management salary – in year three.
To make your business profitable in year one, figure out what you need, in terms of new customer revenue, to bring a profit to the bottom line. Then devote at least 80% of your resources – your time and money – to achieving that new customer revenue goal.
The key is to follow a program that breaks long-term goals down into shorter-term objectives and finally specific tasks. Each individual task should be something that can be accomplished fairly quickly. In terms of your marketing objectives, for example, individual tasks might look something like this: (1) Stop by three offices and leave brochures. (2) Call up such-and-such group and see if they would like to have you give a talk. (3) Buy a quarter-page ad in the local newspaper.
Put all of these small achievements together and you can achieve remarkable success in a very short period of time.
8 Important Things to Know About Business
Apart from starting (and sticking to) a what is already working (and not getting too fancy), I’ve discovered eight secrets to making a start-up business work.
Buying office furniture and printing cards doesn’t make the business go. Selling product does. Yes, there are some initial preparations you need to make – but until you have that first check in hand, all you’re really doing is spending money.
In every industry, there is a good market for specialty and high-quality product producers – but capturing a reasonable share of those niche market segments takes money, time, and experience. When starting a new business, you are usually short in these three essentials. That’s why it’s better to resist the allure of high-priced, prestige products in favor of selling the most desired products and services at ludicrously cheap prices. If you can figure out how to undersell the giants, you will be in a very happy starting place.
Conventional business wisdom says you make money when you buy, not when you sell. I disagree. Great businesspeople make their fortunes by increasing the perceived value of their products, thus inflating prices and measurably increasing profit margins. (Think Chanel, Rolex, Range Rover.)
Many businesses – especially those built around the personality or drive of a single person – depend for their growth on the commitment of the founder. Avoid this type of business. It severely limits your growth potential. Make sure your business can expand with the addition of more money, property, or people – but not more of you.
Before you invest your time or money in any business (or anything else, for that matter), know exactly how much you are willing to lose – and get out if you hit that stop-loss point.
Ambitious people tend to fall into two groups: those who focus on one project at a time and those who spread themselves out on many projects. The focused approach allows you to acquire mastery faster. The diversified approach gives you more balance. I’ve done both. And although I’m naturally inclined toward diversification, I’ve had the most success and made the most money from the focused work.
Most business ideas or ventures that begin poorly, fail. This is a very important to learn. It’s easy to get emotionally attached to projects/investments we believe in. But, when the marketplace tells you that your great idea is a loser, you shouldn’t keep pushing. Close the project and minimize your losses. If you really have a good idea, it will come back to you in the future in another, perhaps better, set of clothing.
Most of the success/income/satisfaction you will get in your career will come from a small portion of your skills/projects/efforts. Make it a habit to ask yourself, “Where am I getting most of the benefit here?” and compare that to where you are putting in the most work.
Having your own business is the fastest (and most satisfying) way to a happy, wealthy retirement. So if you don’t already have a good idea for starting a side business spend some time thinking about it.
To give yourself the best odds of being successful, either start a business that is already very close to the work you do now, or get a job working for a business in the industry you want to enter.
Once you have your idea, start turning it into reality by applying the ETR goal-setting system. Break down your five-year goal for your business into manageable yearly, monthly, and weekly objectives. Then turn your objectives for that first week into daily tasks that you can get started on right away. “My chief want in life is someone who shall make me do what I can.”