There are nearly 3 million small businesses (up to 100 employees) in Canada; about half those have 5 or less employees. Being your own boss and running your own business may seem appealing, but when you consider most small businesses fail in their first few years, you have to ask yourself if self-employment is right for you?
According to the experts, entrepreneurs (people running their own business) must be persistent, well-organized, confident, risk tolerant, self-reliant and flexible, as well as have a positive outlook and desire to achieve.
If you are considering starting your own business, you need to appreciate the personal time, energy and financial commitments needed to be successful. It is also important to be mindful of some common mistakes such as not doing enough research or failing to understand the market. You need to know the demand for your product/service, the market size, the business environment and the competition. And you need to be confident in your projected sales volumes, estimated expenses, financing and your “Plan B.”
Are all these really important? Let’s look at financing. You need to have sufficient financing in place, no question. However, if you manage to arrange a sizable line of credit, you may feel confident but you may actually be over-financed. While it is reasonable to expect your new business venture to operate at a loss over the first few months, there is a danger that over time you will increasingly rely on your line of credit to cover short-falls, rather than being realistic about and addressing mounting losses. Credit is a powerful tool that can be a huge advantage when used properly, but can sink your business if not managed properly.
While many entrepreneurs would rather spend their time providing a product or service to their customers, they must also spend time finding clients, creating marketing material, developing their market, maintaining a steady work flow, dealing with government regulations, and similar. The reality for business startups is that, in most cases, entrepreneurs spend less than half their time in activities which produce immediate cash.
Here are a few extra tips to keep in mind:
- You are in business to make money, so focus on productive activities.
- Sell what your customers want to buy – not what you want to sell.
- Find something that makes your product or service unique and then ensure your prospects and customers appreciate that differentiation from your competition.Use social media to creatively market your business and locate prospects you would never reach by conventional methods.
- Consider diversifying your prospect marketing efforts as you grow. When you start a business, focus on new customers. As your business grows, you will want to find referral opportunities. And to sustain your business for the long haul, develop products and services that will retain (or generate repeat) customers.
To be a successful entrepreneur, you need a realistic business plan. That plan must be based on thorough research, contain a marketing plan, include a budget and financial support, guide you through the common pitfalls while focusing on your activities, and generally fit with both your business as well as you – the entrepreneur.