More and more people are driven by the quest of establishing their own business. They are motivated either by a vision, an inner voice calling for more freedom, the quest for independence or self-fulfillment, or they see a big business opportunity in a niche or emerging market. In any case, some statistics from various countries prove that 50% of all start-ups run into bankruptcy after the first year, another 30% fail after the second year, and a mere 5% of all new ventures make it into the fourth year. Despite such harsh conditions and a gloomy economy in many nations, I am sincerely encouraging all those who would like to become entrepreneurs or self-employed, for the future belongs to such authentic entrepreneurs who put their talents and calling into the service of humanity.
After establishing my first company and closing it down after one year, I did not give up, but built two new companies based on some crucial lessons I’d like to share so as to empower fresh entrepreneurs for making their venture a real success.
Follow your passion. It sounds like a no-brainer, but it is the be-all and end-all for founding a company. Passionate entrepreneurs dedicate a life to a greater purpose that is in sync with their core values and beliefs, which in turn are the key for igniting the fire helping you to overcome fears, doubts, and any resistance during a start-up phase.
Be patient and realistic. Many young entrepreneurs are very enthusiastic and believe that they will break even after one year at the latest. Be realistic; developing your products or services, marketing and selling them, rendering your first assignment, and sending out your first invoice might take up to 6 or even 12 months. You may even be forced to adapt your products, which takes additional time. Too many start with unrealistic expectations and give up too early. Furthermore, it often took me more than a dozen client visits until I signed a real contract.
Put a decent amount of cash aside. After establishing five companies in all kinds of markets, one thing became clear: it always takes more cash and time than initially budgeted. On average, it took me between 12 to 24 months until I broke even. Anybody telling you that you start to earn a decent amount of money after a couple of months is wrong. So, take your living expenses and all financial obligations you have to cover for one year and add twice your budgeted cost (expenses for office, business development, and other relevant issues) including the initial investment you need for your product or service development to arrive at the amount of cash you should set aside. This calculation might seem conservative, but is realistic and prevents you from running into any financial constraints. Moreover, be modest and limit your expenses in the first year. I have seen too many entrepreneurs indulging in fancy cars and big offices, which led them into early bankruptcy.
Build on your strengths; forget about your weaknesses. Your goal should be to become number one in your niche. You only get better by reinforcing your strengths rather than improving your weaknesses. The biggest hassle you might face from the very beginning is all the administrative work you have to cope with. As a founder, it is your task and desire to develop and sell your products and meet clients. Leave accounting, marketing, and other nitty-gritty staff to your employees if you can afford them or outsource all this work to specialized companies. Get somebody on board who is a real expert in tax issues.
Marketing material. Forget about producing marketing material such as brochures and flyers. Most of your prospective clients are completely snowed under with such material and do not even take time to leave through your material. Furthermore, given the feedback from your clients, your material gets outdated very quickly. Come up with a powerful but simple website. Clients spend on average not more than 10 seconds on checking out a site unless they find valuable information. Make sure that your website looks highly professional. Leave the design to a specialist but make sure that you go for a content management system that allows you to add text and pictures on your own.
Networking. Many people believe that social media are the key for networking. I disagree. Business is about emotions. Real clients want to feel, touch, and see you. So, take consistent action and make sure to move out at an early stage and meet as many people as possible. Show them your products, tell them about your visions and services, and get proper feedback, which allows you to make the right adjustments if necessary. Don’t rely too much on friends who are in powerful positions. They might be helpful in opening doors, but most likely you will get your first assignments from clients you have never known before.
Test your business partner(s). It is enriching, helpful, and joyful to establish your company with business partners. They might add complementary skills and financial resources, question critically your goals, and share your plans and concerns. However, the real acid test starts when you run into serious problems, such as financial constraints. Only then will you find out whether your business partners live up to commitment, perseverance, and a joint vision. Check and verify these key attributes before you form partnerships and not only later when you are facing serious problems.
Authenticity pays off. I left a very renowned job as a chairman, had lofty dreams and founded my first company. However, great opportunities in a fast growing market like India led me to the false belief that I could make the quick buck in an emerging and fast-growing market. When you are driven by rational thinking rather than by heart-centered actions you run the risk of conforming to your business partners or investors and you might lose credibility with clients and clarity for your real goals. Furthermore, when I started to face my first barriers I also lost my enthusiasm, self-respect and suffered from frustration. So, be always true to yourself and dare to change directions.
Tomorrow: check back for more lessons for success.
Andreas Dudàs. Swiss, visionary entrepreneur, mentor, motivational speaker, and expert on authentic leadership. More than 20 years experience in top executive positions in over 25 countries. Founder of the BE SHiRO Group in Switzerland and India, dedicated to empower individuals and organizations to achieve greatness through authenticity. Author of “Do you dare to be yourself? Developing power in life and leadership through authenticity." Learn more about Andreas at www.andreasdudas.com/book.