16 months ago, I opened my first business – a coffee shop. I had no clue or experience how to own a business – which meant I had no wisdom or intuition to do the right things to make it successful. I was winging it – and doing so badly. A year later, I closed that business – with substantial losses that almost crippled my family.
I write here what I have learned – so that I never forget them, and so others may learn from them and not make similar missteps. The lessons here are coming from my own personal experience. Each of these, I went through with much agony before I could learn them.
A wise man learns from his experience – but a wiser man learns from others’ experiences. My hope for you is that you be the wiser man. Here are the 12 lessons.
1. The business you go into has to be something you personally love. There are many practical reasons why. First, you instinctively know how to make your product better. Second, you know what your customers would want because you are one of them. Third, you enjoy the work more – so you don’t count the hours.
2. You need a complete operations manual before you start your business. Plan as much as possible without getting paralyzed. The more you plan upfront, the more time you have to deal with the surprises once you start.
3. Before you start you must have enough finances to (1) cover 100% of your initial investment, (2) 6 months worth of operating capital, and (3) just enough money so your family’s lifestyle does not get affected much. You must have a very clear financial model in place. For example, how much revenue do you need to pay your suppliers, staff, government, yourself etc. How much products do you need to sell to reach the target revenue? What assumptions do you have to sell that number of products? Create the whole financial model, so when you open you can easily validate if your assumptions and model can be sustainable.
Whew – that was just three tips? Hang in there…here’s another 3.
4. You need an accountant, a lawyer and an HR person. Or at least know how to find one. Leverage their specialized expertise in key process decisions. And while you are at it, make sure you find a good business mentor– someone who has done this before – and both failed and succeeded. If I can go back in time and change one thing in how I run my business, it would be to get a good mentor.
5. Spend a lot of time working on recruiting. Your people will make or break the business. Invest time finding the right ones. Fire non-performing employees fast because they weaken the team and demoralize the performers. Have a clear probationary period.
6. You need to manage the operations day to day (i.e. you need to invest the time). A lot of things can happen in a day – so you being there (or a trusted manager) makes a big difference in handling supply issues, in knowing customers, in calibrating staff.
Halfway there! Great job! Keep learning…
7. You need to have a good way to assess performance of suppliers, staff and operations. A scorecard that everyone knows and works for ensures people know what is important and they focus their energies on those.
8. Read any contracts you sign with due diligence – make sure you are getting the best deals on supplies, equipment, etc. Question when in doubt, do not assume things are supposed to be that way. Remember that the other person you are dealing with has his own personal motives as well.
9. Know who your customers are. You can’t serve everyone and you can’t please everyone. So focus on the ones you really care about – i.e. the ones who will be willing to pay you for what you offer. Who are they? What are their lives like? What do they normally do? How can you reach them?
The last set is here. Let’s complete this by talking about….
10. Location. Location Location. It does not matter if your business is a physical store or an electronic shop – location is important. If you are running a physical store – you need to be in a place where it is easy and convenient for your customers to go to you. If you have an online business, you have to place links to your shop in the right forums, websites, social sites where your target customers can find you.
11. Have a message – what is your promise to your customers? Keep reemphasising it. Keep repeating it. Design your processes so they naturally repeat the promise everytime you transact a business with a customer. This is what real marketing is all about. Making an exciting promise, and delivering on it.
12. You have to be in business more than just for the money. This purpose will serve you well on times when you are not earning and ready to give-up with business in general. This purpose is what will sustain you and give you clarity whether it is time to pack-up and move to the next one, or keep on fighting.
To those who have ventured into entrepreneurship – any other lessons you can share? Leave a comment so others can learn from you too.