yourself a favor: work on your bookkeeping and financial skills before attempting to start your own business. (I won’t get into this in too much detail in this book, but Self-Counsel Press has several great books on the subject by Angie Mohr, including Bookkeepers’ Boot Camp and Financial Management 101.) Alternatively, find a partner who has these skills, or accept the fact that you’ll have to pay for a bookkeeper and perhaps an accountant as well.
I’ll give it to you straight:
If you don’t focus on the financial and administrative aspects of your business from Day One, you’re pretty well doomed to fail from the start.
* * *
Your next decision is a big one. Keeping in mind the attributes you need to be a successful entrepreneur and the three fundamental things that will keep a company stable, what business are you going to start?
Learning from an expert: Benjamin Franklin
Benjamin Franklin was one of the most incredible people of all time. He was many things: an inventor, a philosopher, a scientist, a statesman, a musician, and an economist. He was also a small-business owner. In fact, he was one of the most amazing entrepreneurs of his day. His business, a printing shop, did so well that he was able to retire by early middle age to pursue his writing and other activities.
But why was he so successful? Let’s look at his attributes.
First of all, he was interested in the people around him and always strove to make improvements to their lives. This natural curiosity drove him to invent many products — the cast-iron Franklin stove so people could warm their houses with less wood, the lightning rod to protect buildings and ships from lightning damage, bifocals so people could see both near and far with the same glasses, and a simple odometer so he could figure out the shortest routes for mail delivery.
He loved what he did. He enjoyed his printing business not only because it provided him with a good income, but also because it allowed him to distribute his writing and opinion pieces at a time when this was hard to do. This laid the groundwork for his future as one of America’s founding fathers and one of the greatest citizens of the country.
He was not afraid of hard work. He attributes many positive things in his life to the reputation he earned as a diligent, hardworking man.
He was obviously a great communicator. All you have to do is read some of his writings to be convinced of this.
He had good skills and experience that he developed on his own. He himself attributes his business success to his love of reading and writing.
He also realized how important physical fitness was. Swimming was his chosen activity as it strengthened his aerobic conditioning as well as his arm muscles. He shunned beer (that’s one strike against me!) and preferred water because he had seen the ruinous effects of too much strong beer on his compatriots.
Benjamin Franklin also had his faults, which he talks about eloquently in his autobiography. If you are interested in the life story of one of the greatest small-business owners that ever lived, I strongly suggest you read his autobiography. (You can do so on the Internet by Googling “autobiography of Benjamin Franklin.”) He learned what he needed to know by reading — you can too.
3
What Do You Want to Do?
Okay, you definitely want to take the leap and start your own small business. Now comes your first big decision: What type of business are you going to create?
You could decide to provide consulting services on your own, out of a home office, or run a bed-and-breakfast or a home daycare. Some people have coined the term microbusiness to describe these types of ventures. They are examples of the simplest form of business, and if that is your long-term objective, that’s fine.
On the other hand, perhaps you’d like to create a corporation that will eventually have annual revenue of millions of dollars and raise capital from the public for further expansion. That’s fine too; it will just take a lot more time and effort to reach your goal.
There are myriad variations in between the microbusiness and the publicly traded corporation. Maybe you just envision a service business with one location and one employee (like mine is at this point). Or perhaps you’d rather set up a partnership with someone else, a partnership that strives for half a dozen employees. Maybe you’d like to have a store with several locations and dozens of employees.
It doesn’t matter what type of business you want to build. The key is to realize that the stage you are at now, the planning stage, is crucial. Every hour of work you do now will go a long way to ensure you meet your goals.
Remember, you are no longer an employee being told what to do at every turn. You will be the owner and will have to make all the important decisions, and the first key decision you’ll have to make is what business to start.
“A Restaurant Sounds Good”
I often hear people dreaming about starting their own restaurant, and I’m not sure why they do. I’ve got nothing against eating establishments — heck, my wife and I even talked about starting one a few years ago. Okay, we were sitting in a beautiful restaurant in Florence, and we’d had a couple of bottles of wine, but it sure seemed like a good idea at the time!
However, even though starting and running a restaurant sounds exciting, it has got to be one of the toughest things on earth to do. My conclusion is that many people suffer from the “grass looks greener over there” syndrome. They think that because a restaurant is such a pleasant place to eat, it would be a nice business to run. They have no idea of the risks involved in developing a restaurant and the effort required to keep it running. That’s like judging a book by its cover — don’t do it!
Let’s look at another type of business that often attracts people who want to work for themselves. Many years ago I investigated a company that sold household water-purification products. The company made slick presentations to groups of people, telling them how much money they could make selling these units to friends and family. The presenters said anyone could make $30,000 or more each month with hardly any effort. Sounds pretty good, doesn’t it?
When I arrived at the company’s head office, I was amazed at the buying frenzy going on. I stood beside two individuals who I was sure knew nothing about the product or how to sell it. They handed over a certified check for $5,000 for a number of products. I have no proof, but I’ll bet most of those products are still sitting in their garage.
These two examples show how easy it is for people to imagine that the grass is greener on the other side of the fence. They hate their job and have found what looks like a fun or easy way to make more money than their current salary, but without the boss or coworkers they hate. The problem is they have no idea what is actually involved in running the business. In most cases, a business that sounds easy is not. You are much more likely to succeed — and to avoid wasting a lot of time and money — if you stick to what you are really interested in and skilled at.
Something Old? Something New?
For many people, the type of business they are going to start is obvious: it’s what they have been trained to do. The landscaper starts a landscaping business, the doctor becomes a general practitioner, the lawyer starts a law firm, and the contractor starts a construction business or provides general handyman services. This is the simplest route to take and generally has the highest chance of success because the individuals already know how to do the work of the business. It isn’t a guarantee of success, however, since there is more to running a business than just doing the work (remember my description of the three-legged stool in Chapter 2?).
But maybe you’d like to do something different. Maybe you’re after a change, a challenge, something