Do you have a great idea or something that will revolutionize the world? Or is it just a simple idea that will allow you to work for yourself and call the shots while providing for your family? Whatever your motivation is, if you elect to go at it alone, you are in for an adventure, to say the least.
I went into business for myself at the age of 29. Because I was treated unfairly I quit my job and, rather than going to work for someone else again, I did the very thing I was scared to do—I started my own business. That was nearly 30 years ago, and since then I have started several businesses.
I have been very lucky that most of my ventures have worked out well. It has become easier every time, but the first time I did it I was terrified. I had no business plan, no money and just enough guts and craziness to go for it.
When successful, being your own boss is extremely rewarding. On the other hand, it is very expensive and painful when it’s unsuccessful. I know, I have done both. To make it work you need to go in with eyes wide open knowing what it takes to succeed. Here are some tips to prepare you when you finally take the plunge to be your own boss:
1. You must become obsessed.
You will no longer have the option to take holidays off or even turn off at the end of a long day. This is a 24/7, 365-day per-year gig. The idea of balance, time off, weekends and vacations will become nonsensical luxuries that you will no longer be able to afford. Be prepared to live, breath, eat and sleep your new company.
The greats all talk about being obsessed with their business, even when they are off. Maybe that’s why they make it—healthy obsessions. To find out what your healthy obsessions are, make a two-column list. One side is the obsession, the other side is the payoff. Focus on the obsessions with the highest payoff.
2. Prepare for a pay cut.
Be ready to make less than what your current jobs pays. It took me three years in my first business just to get back to where I was when I left my job. I thought I would be making more money in three months but it took 10X longer than my conservative calculations. Even when I did finally exceed the income from my previous job I couldn’t use the money. I had to plow my money back into the business to continue my growth.
3. Understand the true skinny on margins.
If your business concept is modeled on operating at half the margins of the leader in the field, you will never make it. Businesses that try to operate with skinny margins will cease to have positive cash flow, and limit their ability to reinvest to steal market share from their competitors.
Walmart’s business plan works because they do have margins and they do have volumes while advertising the lowest price. Businesses fail when they are unable to sell their products in volumes high enough and at margins fat enough to continue to reinvest and sustain unforeseen events. Top companies like Apple, Google, Caterpillar, Coca-Cola, Starbucks, and WholeFoods have both high volumes and high margins. You must have both to succeed.
4. Stick-and-stay is bound to pay.
As a founder of a startup, remember that the buck always stops with you—and so does the business. When you are done, the business is done. How much staying power do you have? I don’t just mean money, but energy, belief, stamina, and courage. Outside factors aside, most startups fail because someone quits, not because they run out of money or time.
You must build on your own staying power and surround yourself with people who believe in you and your idea, even more than you do. Surround yourself with mentors and board members, and force yourself to invest time in new information and personal training so you have the motivation to stick and stay. If you have had problems with several companies, you may be part of the problem.
5. Promote yourself to sell.
More than 90% of your time as a business owner will be spent selling employees, your spouse, investors and even yourself on your new business—and that’s before you even sell your ideas to a customer. When you take on starting your own business, you must become the consummate evangelist sales master, constantly selling those around you on the business. Your ability to sell will make or break you. Become a master at selling others on your products and services and no one will be able to stop you. My sales ability is what has made my businesses successful.
If these points haven’t scared you out of becoming the BOSS, you just might be ready.
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This article also appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editor.