For entrepreneurs, time is among one of the greatest teachers. That sounds like a platitude, but with 90 percent of startups destined to fail, it’s also true.
To be one of the 10 percent of businesses that actually become legitimate you have to show a tremendous amount of dedication, and put in an insane amount of time. But for those of you who are contemplating whether to start a business for the first time, here is a checklist of things you should understand before getting underway.
1. Thoroughly analyze your barrier to entry.
This should go without saying, but it’s amazing to see how many young founders there are who jump the gun when it comes to analyzing the market they want to do business in. We’ve all been there: you think you have such a great idea for a product or service that it’s meant to disrupt the perspective market you want to break into -- no matter who you’ll be competing with.
Related: 6 Tips for First-Time Entrepreneurs
The best advice I can give to people who are determined to start their own business is to slow down. Take the long view.
First, analyze what your perspective barriers to entry are. What are the minimal capital requirements that businesses are expected to meet in order to compete within your market? If your business model is based in ecommerce then do you need to pay the upfront costs for an ecommerce software platform such as Shopify, or is your space niche enough to scale (for the time being) with a Squarespace commerce site?
If you don’t want to build a digitally based company -- say you want to start an art moving business -- do you need to have access to distribution channels (such as moving trucks) and if so, are there other companies that would block your access to these resources?
These are all the types of questions that should be running through your head before you commit to starting a business of your own. Probably the most common way to troubleshoot barriers to entry is to create a SWOT (Strengths, Weaknesses, Opportunities, Threats) board. It may seem a little business 101, but this a helpful method of visualizing where you’ll run into snags.
For example, say you want to start a tech company in New York City that builds websites specifically for startups. The fact that there are a lot of startups needing websites in New York would be under the “O” category on your board. However, the fact that web development is such a saturated market in NYC means that you would have a lot of threats to your business’s success, which, obviously, would fall under the “T” category.
2. Be open to doing everything.
Even if specific tasks such as finance or marketing aren’t really your forte, you better get comfortable operating within different verticals, and quick. If you can’t imagine dabbling in sales or delivery, then it might be time to decide whether entrepreneurship is really for you. There’s no shame in not wanting to handle different types of workloads, but the bottom line for startup founders is that you need to be able to operate as a one-person team before experiencing success.
When you’re your own boss no one is going to sit you down and tell you that you need to get next month’s pipeline into the spreadsheets. Likewise, no one is going to sell the strengths of your company better than you can. Being a successful entrepreneur is also a lot more than just wearing five different hats at once. It’s prioritizing which hat to wear when, and not getting caught up in only wearing the hat you like best.
3. Don’t be afraid to make imperfect decisions.
Even after your business becomes successful, imperfect decisions are the best we ever get -- but this especially true for startups founders who base most of their decisions on imperfect data. When it comes down to it you should almost always make a decision sooner rather than later.
One great thing about startups is that, by definition, they’re very lean, which makes pivoting easier since it will ordinarily take you a while to find a space in the market that’s right for you. That being said, the biggest startup killer out there is not making any decision (that, and making unplanned, illogical decisions).
Let’s say that you operate an online luxury retailer but can’t decide whether to start selling your goods at the average market rate to start or just below the average market rate. Being that you’re the new kid on the block neither are necessarily bad decisions depending on how you plan to scale your business. Let’s also say that you have a set amount of capital to spend in your first year of operation but don’t know whether to spend this on marketing -- which would allow you to build your brand and possibly earn you the ability to sell your goods at the current market value -- or if you want to spend your year's capital on hiring more employees, such as customer service reps.
No one will make decisions like this for you, but if you don’t know what decision to make, you’ll be stagnant for as long as that 900-pound gorilla remains in the room.
4. Learn from other people’s mistakes, including your own.
This is probably both the easiest piece of advice to implement in your startup planning as well as the hardest.
Everyone has had a boss make a decision and said to themselves, "I’d do that differently." You don’t have to be an entrepreneur to think this way, but the most successful entrepreneurs don’t stop at making simple judgments. They go the extra mile and really analyze the mistakes that others make and synthesize solutions of their own.
Any kind of workspace you can think of can be a training ground for starting your own business, but you have to remain observant and question not only why you’d do things differently, but how you’d do things differently.
But you can’t just learn from other’s mistakes, you also need to learn from your own. This is where turning that eye for detail inward becomes most critical. If you’re starting your own business for the first time, being not only able to admit when you’ve made a mistake, but then to learn from it, can be the most difficult proving ground for any entrepreneur.