I have coffee, lunch, and dinner with a few entrepreneurs on a weekly basis. When we get together, I hear about their so-called revolutionary business ideas, how great their teams are, and how much more money they need to take their businesses to the next level.
After doing this for a few years, I became tired of hearing the BS that comes from most entrepreneurs.
Thinking about starting a business? Download this cheat sheet of 7 harsh realities of starting a business.
So, for all of you entrepreneurs reading this blog post, here are the 7 harsh realities you need to know if you want to succeed.
Harsh Reality #1: Starting a business is like riding a roller coaster
You probably have a vision of what your life will be like if you start a business. Well, you can take your vision and throw it out the window because your vision isn’t accurate.
There isn’t much glamour in creating a company. It’s actually like being on a roller coaster. And it’s not like one of those kiddy roller coasters at Disneyland. It is more like one of those crazy ones at Six Flags.
In business, sometimes things move very slowly, and at other times – really fast. You will have moments when you will enjoy what you are doing and and others when you won’t be pleased with how things are going at all.
To make things worse, sometimes things will look really good, but just around the corner there will be something that will make you crap yourself. Sadly, at times like these, you probably won’t know what to do other than cry.
Harsh Reality #2: Owning a business isn’t easier than having a 9 to 5 job.
Starting a business means being your own boss and setting your own hours, right? Although that is what most entrepreneurs believe, it is inaccurate.
Instead of having one boss, you now have hundreds of bosses. Just think about all of your customers because, essentially, each one of them is your boss.
If you still aren’t a believer, remember that you have your own business because you are here to make money. And if you don’t do what each of your bosses (customers) want, your business will go bankrupt.
In addition, when you work a 9 to 5 job, all you have to do is work from 9 to 5. When you have your own business, you usually end up working 10 to 14 hour days and, in many cases, 7 days a week.
Even after you start making money, things don’t always change. I am not rich. I have done well enough that I don’t have to worry about money. However, I still work 60 to 80 hours a week.
Sadly, money didn’t change how much I work.
Harsh Reality #3: Consumers have to believe you are solving a problem
It doesn’t matter if you think you are solving a problem. What matters it that your customers think you are solving a problem.
As a business owner, you can get so wrapped up in your company that you won’t be able to see what’s right in front of you.
For example, a few weeks ago I met up with a great entrepreneur who recently started a real estate company. I love this entrepreneur, and I think he will do well in the long run. He told to me about how his company was different from all the other real estate companies online.
As someone who recently bought a home, I was actually using his site as well as Trulia, Redfin, and Homes.com before I even met him. And although he had some valid points demonstrating how his site was different, as an end user, I couldn’t see much of a difference. I ended up using other real estate websites because his company’s site didn’t solve a problem for me.
Harsh Reality #4: You have to make money
If you are creating a business, you have to make money! You need money to keep your business moving forward, but as an individual, you need it to survive.
If you think you can create a company like YouTube, not worry about making money, and then sell it for over a billion dollars, think again. Companies like You Tube aren’t just a needle in a hay stack. They are a needle in a BILLION hay stacks.
Before you put time and effort into a business idea, ask yourself how it will make you money. If you don’t have a solid answer, don’t get into that business.
And if you’re already into a non-revenue generating business, get out ASAP.
Harsh Reality #5: You have to give a lot to get a little
The world has changed, and it is no longer easy to build a successful business. Unlike in the old days, you can’t just pop up a website, point some ads at it, and build a big company.
In today’s world, you have to give a lot. Whether it is free information or samples of your product, you have to do something to build trust with your customers. If they don’t trust you, they won’t spend money with you.
For example, one of the main reasons Zappos does well is that it gives a lot. Just take a look at its return policy: you can return your shoes within a year with no need for an explanation. Plus, the compnay even pays the shipping costs for the shoes you supposedly didn’t wear (but we all know you did).
The sad reality of building trust with your customers is that it isn’t something that is easy to do or cheap. You could lose a lot of money before you gain people’s trust.
Harsh Reality #6: Coolness is inversely correlated to success
I have no actual proof that coolness is inversely correlated to success, but in most cases it is true. The most successful companies aren’t cool or hip. They are actually dull and boring.
If you don’t believe me, take a look at Twitter. Although it is a hot company, they’ll probably never make what Exxon Mobil makes in a day.
Look at Facebook. Although unlike Twitter, Facebook is making money, but it can never be the size of Exxon Mobil. We need oil to survive. You can’t say the same for Facebook.
The next time you are thinking about creating a cool and hip company like Twitter, think about creating a company like QuinStreet. You have probably never heard of QuinStreet, but it’s been posting good earnings every year.
Harsh Reality #7: Time is worth more than money
The companies that succeed over time aren’t the ones that create the perfect business from the start. Instead, they get their company out into the public as soon as possible.
Once you get your company out there, you can find out what people are saying, make modifications, and then get more feedback. By being in a constant stream of iteration, you’ll have a higher chance of success because you will be modifying your company to meet your customers’ demands.
If you take your time and release your company when you think it’s perfect, you’ll be in for a big surprise. You will never be able to please everyone, and you will always run into problems you never even considered.
What are you going to do when your customers tell you that they don’t like your so-called perfect company? You just spent a year perfecting it and wasted thousands of dollars. You would’ve been better off throwing something out there and getting feedback immediately.
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