THE BEST SMALL-BUSINESS PLAN WITH OPTIMAL RESULTS and other advice from successful entrepreneurs.
One of the most frequently asked questions I get is, “Should I quit my job and start my own company?” There’s a lot of literature out there that’ll tell you that you need to take the risk, and may even give you advice on how to woo investors. But, as a small business owner, it’s my opinion that you shouldn’t have to do any of that. Today I’m going to discuss the simplest, most doable business model for optimum success.
Don’t quit your day job.
Did you know that eight out of ten businesses fail within the first couple of years? Those ground-building first few years will ascertain the foundation that your business will sit upon. To make sure that your foundation is strong, start out small; don’t go full-out. A business starts out as an idea, that you just can’t let go of. As you turn this idea over and over in your head, you’ll fine tune some details, and eventually the timing will be right to act on those ideas. Ideally you’d begin to work on your business on the weekends, then once you build up revenue, experience and momentum, then you can transition from a side-hustle to a full-time operation.
Yes, this plan may take a while to get off the ground, but hear me out. A lot of people feel they need to really make the commitment by focusing solely on growing their business. That’s admirable, really, but eventually you’re going to get to something I like to call “the initial hurdle”. Say, for example, that you decide to build a spaceship. You’ve never done it before, but you’ve got this great idea on how to make one fly faster and more efficiently. Because you’ve never done it before, you may realize as you go through the process that you don’t have the supplies that you need, or the credentials you need to test it.
There will always be unforseen complications, but that first one will make or break your business. If you don’t have to funds to overcome the initial hurdle, then your business will soon be nothing more than a pipe dream. Small business owners tend to be overly optimistic; they think that x will cost this much and y this much, and if you add it all up, then that’s exactly what it’ll take to run this business. In reality, you’re going to make mistakes when you first start out, and those mistakes will cost money. And I’ll tell you something else: your business, will take a long time to generate any revenue. So unless you have an outside source of income, getting your business off the ground is going to be exponentially harder.
Never compromise (within reason at least).
At this point, you may be saying to yourself, “Well, I’ll take out a loan or look into investors, and that’ll keep me afloat if the going gets rough.” Let’s take a second to look at opportunity cost. New business owners are rich in time but not rich in cash resources. So you’re putting all this time and effort into growing your business, but if you have investors, you’re not going to reap the rewards of any of that. The nature of investors is that they want to see a return on their investment, and because of that they’re going to want to have a say in the direction that you head. For a very small amount of money (in the grand scheme of things), you’re trading a percentage of your company. You’ll always have to answer to a business partner or a board of directors for every decision that you make, making it much harder to run your business. If you’re a first-time business owner, then adding investors and shareholders early on will actually become a dead weight. The revenue from your sales will go to your investors as opposed to a larger strategy.
Having said that, having investors can up your game, but that’s something best left once you’ve already gotten the ball rolling. Establish what works for you and your company first and worry about investors further down the line when you absolutely have to in order to grow.
Growth hack your way to the top.
The way that I started my first company is that I began with my own money. Not a huge amount; just $400 to buy the necessary equipment. As I put effort into my company, I began to get a return. And because I always had my living costs covered by funds from other jobs, I was able to take those returns and reinvest them into the company. Sounds simple right? That’s because it is. The goal is to go with the most simplistic business model possible, then eventually grow into something bigger and more complex. It’s called “growth hacking”, and it’s what I suggest for every start-up or small business owner. Instead of worrying about pay-per-clicks and infrastructure, just make sure you have a business card. Go door to door, hand out flyers, or post on Craigslist. Start off with as few expenses as possible and gradually add more as the revenue starts to come in.
The side benefit of the growth hacking model is that it really spurs you to get out there and understand the business. There really is no other job out there that expects you to wear all hats at all times the way being a small business owner does; you have to be the accountant, and the marketing manager, and the CEO and a dozen other things. As you go door to door, you’re meeting your potential customers as head salesperson. Nine out of ten people will not be interested, but you’re just going for that one. And once you see that one and get to really understand what they want and need, then you’re beginning to understand who your target audience is. That will start to inform you as a marketer and publicist, and so on. If you spend your time doing this– as opposed to designing a logo or choosing an office– then you can go forth knowing that your business model works before you invest in the bigger things. It’s the execution of a working business model that separates a successful business from a good idea.
Defining your business model.
It’s natural for you to put a lot of thought into something that you care so much about, but there’s a fine line between carefully considering your options and over-thinking things. A lot of new business owners get overwhelmed with all there is to do. Pick five things– the most fundamental things you need to get done to start your business– and create a five-step action list. Once you complete one task, cross it off and add another so that you always have five things to do. You want enough things on this list so that you don’t focus overmuch on one aspect of your business while having few enough things to make the list seem easily achievable. Make sure to put due dates on your tasks so that you aren’t constantly pushing one task further and further down on your list of priorities.
Take the time to write up a business plan. Again, don’t over-complicate things; you don’t need to hire an advisor or spend months on this. Dedicate one afternoon to creating a one-page business plan. Google it; hundreds of different examples will come up. In this business plan, you’ll have to define who you are and where you want to go; from this information you’ll extrapolate how you’re going to get there. Keep your answers to two or three sentences and you’ll be sure to get to the heart of the matter.
Keep it simple. Keep it central. Keep yourself afloat with other income as you first start out. Those are the basics of starting a company with amazing growth potential. I’ve gone on to own and run half a dozen companies, and this business strategy has worked for me every time.
Books on Growth Hacking
Lean Analytics: Use Data to Build a Better Startup Faster, by Alistair Croll & Benjamin Yoskovitz.
Startup Growth Engines: Case Studies of How Today’s Most Successful Startups Unlock Extraordinary Growth, by Sean Ellis & Morgan Brown.
100 Days of Growth: Proven Ways to Grow your Business Fast, by Sujan Patel & Rob Wormley.