Fear or shame of failure could cripple you as an entrepreneur. While failure is possible and not shameful, you can still take these steps for your due diligence in starting a business.
I am now at a point in my life where I have cemented my place as CEO of an established financial services company. I am a founding member and the current CEO of The Debt Relief Company, a New York-based debt relief company that helps Americans become debt-free across a majority of the United States. We provide our clients with debt relief options and strategic solutions to their financial burdens by consolidating their high-interest credit card and personal loan debt into more manageable payments. However, getting to this point was no easy feat. It took years of struggle, sacrifice and, well … failure.
As any successful entrepreneur will tell you, failure and entrepreneurship go hand in hand. According to data from the U.S Bureau of Labor Statistics, approximately half of all small businesses fail within five years, and approximately 20% fail within two years of establishment. My personal failures run far and wide. Failure is part of the process. As an aspiring entrepreneur, you should wear it as a badge of honor – not a mark of shame.
Adversity is and always will be a huge part of entrepreneurship. Without it, we become stagnant and are never truly motivated to push ourselves past our limits. These are two of my favorite quotes, which I wholeheartedly believe any striving entrepreneur should live by:
- "I have not failed. I've just found 10,000 ways that don't work." – Thomas Edison
- "Failure is the condiment that gives success its flavor." – Truman Capote
Anyone setting forth on a new business venture or looking to found a startup must expect some missteps and bumps along the road. Failure is not always a bad thing. Like anything else in life, it gives us invaluable experience, granting us an opportunity to learn from our mistakes and better ourselves. As was the case with me, your first attempt may not always be your best one. In fact, founders of previous startups that failed have a 20% higher chance of success on their next business venture. We are the sum total of our experiences, so every experience must be taken in stride.
How, then, can we founders and entrepreneurs do everything in our power to promote a successful and profitable business? Here are seven actionable tips to empower your future business today.
1. Establish a business model and plan.
Elon Musk didn't just wake up one day and say, "Hey, I want to start a revolutionary and high-impact electric car company today." He crafted a meticulous roadmap well before then. In 2006, he quietly published his master plan, well before the successful release of the first-generation Tesla Roadster. The founder of Tesla, SpaceX, The Boring Company and Neuralink carefully crafted a business model well before the formation of any of these companies, as should you. [Read related article: 5 Tips to Write a Great Business Plan]
The key to starting any business is preparation. You must focus on the front end (marketing, word of mouth, sales, etc.) first, and then consider the back end – if it's something you intend to handle. Sometimes it makes sense to pay for someone else to handle the back-end services and logistics of your business (partners like Amazon or Shopify can save you both time and money). This is especially the case if operating your own back end is highly capital-intensive. As an aspiring entrepreneur, you need to focus on your strengths, not on logistics or clerical work.
You can also prepare in the form of presales and waitlist campaigns. In today's business climate, presales have become extremely important and can greatly increase your odds of future success. Harvard Business Review recently found that companies that employ significant presale strategies can yield an additional 6-13% in revenue improvement. So, whenever possible, try to seriously prepare ahead of any massive product or service launch. Take Robinhood, Tesla and Honey as examples: All three of these companies can generate serious demand well ahead of any product launches. If premarketing is one of your strengths, build on that to generate demand.
3. Start slow – maintain low overhead and ascertain proof concept.
Everyone mistakenly takes the John Maynard Keynes quote ("in the long run we are all dead") as an endorsement for short-termism. However, it is more a recommendation that we act today instead of waiting for things to naturally correct themselves. Entrepreneurs must always look toward the future, but more importantly, you need to begin the actual process of developing your business. Start slowly, but start nonetheless. Create a checklist for what you need to become operational and complete each task one by one. If you take things day by day, you are less likely to feel overwhelmed and will feel more accomplished as you gradually complete each goal on your list.
4. Test your proof of concept while maintaining a full-time job.
Every hungry entrepreneurial individual I've ever come across has taken the view that they must drop whatever they are doing and dive headfirst into their new business venture. I strongly advise against this, especially in the beginning stages. You do not need to quit your day job to become an entrepreneur. If anything, your odds of success are greater if you work out the kinks of your startup while maintaining other sources of income.
5. Use your own funding initially.
When you start out, there are countless ways to fund your business. However, it is essential that you use your own funding whenever possible. Both Mark Cuban and Richard Branson agree that you do not need a tremendous amount of funding to begin a business venture. Most proof of concepts have very low capital expenditure requirements, and it is often much better to have some skin in the game by using your own funding sources. Otherwise, you will be left answering to investor demands as soon as you found your business, which may lead to the downfall of your business. According to Small Business Trends, one-third of small businesses start with less than $5,000. So, before you go reaching out to angel investors for funding, make sure it is something you absolutely have to do at the current stage of your business.
6. Incorporate your critical thinking and decision-making process to include opportunity costs.
One way to effectively develop your decision-making skills is to place all decisions into the perspective and framework of opportunity cost. Any and everything can be put into the framework of what I would call "opportunity cost decision-making." If you are a master of financial services and sales, you shouldn't allocate the majority of your time and effort learning how to code and develop websites. This should be common sense, but many aspiring entrepreneurs try to juggle too many things on their own. If you are not adept at web design, hire or outsource someone to handle it for you. If you put your time toward the things you are best at, your company and startup will be better for it. If I can attribute any one thing in my life to enhancing my decision-making ability (regarding managing a team of employees, competitive advantage, marketing outlays, consumer demand, etc.), it would be incorporating opportunity cost into my decision-making process.
7. Avoid marketing fumbles.
I cannot stress this enough: Throwing money at untested, unproven marketing will lead to your downfall. From experience, I know marketing fumbles can eat up your revenue, and testing a new strategy is always a risk. This doesn't mean you should avoid innovative marketing tactics, but always be cautious when considering new marketing campaigns. One blunder could significantly hurt your bottom line and set your business back for months. Go with what works! Developing an innovative and new marketing strategy is great, but never abandon your bread-and-butter marketing for a shot in the dark.
Wherever you are in your process, you need to start somewhere and plan accordingly, even if that means taking baby steps. People don't plan to fail; they fail to plan. Take everything day by day, and eventually the bigger picture will form on its own. If you follow these guidelines, you will undoubtedly have an easier go than I did on my first attempt. Rome wasn’t built in a day, and your business won’t be either.