CHAPTER 1: MINDSET
The Early Stages
- Step 1: Is Business Right for You?
- The What
- The How
- The Why
- Will the Business Satisfy My Needs Financially?
- Do I Have the Necessary Skills and Experience?
- Do I Have a Sound Business Proposition?
- Step 2: Are You Ready for Business?
- Starting Your Business
- Operating Your Business
- Business Assistance
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Until next time!
TRANSCRIPT: BONUS EPISODE 1
Title: How to Turn Your Idea Into a Multi-Million Dollar Business (Chapter 1)
Date Published: August 38, 2015
Running Time: 19:13 minutes
Hi, this is John Millar. I’m the Naked Business Coach, stripping business back to its bare basics. As a special bonus, we’re giving you a free copy of all the chapters in How to Turn Your Idea into a Multi-Million Dollar Business.
Now this is available in Amazon and you can buy a copy in hard copy or kindle version. But before it gets released to iTunes and to Audible, I thought I’d give it to you as a free trial. I hope you enjoy it, took me some years to write. And I hope you look forward to some of the other things that we’ve got that you’re going to get absolutely free.
Thanks so much and welcome to The Naked Business Coach Podcasting Channel.
The Entrepreneur’s Guide Series
How to Turn Your Idea into a Multi-Million Dollar Business (And Avoid the Mistakes that Send Most Business Owners into Bankruptcy)
By John Millar
Chapter 1: Mindset
The Early Stages
I am sure you have heard the famous saying:
“The longest journey begins with a single step.”
When I went into business for the first time, like many entrepreneurs, I jumped in boots and all at the opportunity to work for myself. Not only was I eager to run my own company and gain more control over my destiny, but I had also discovered that I did not fit in very well with my coworkers. I felt I was different than the typical employee: I wanted everything as quickly as possible; in fact “yesterday” was a good timeframe for me. Unfortunately, while this may be a positive attribute when it comes to being an entrepreneur and running your own company, it can create difficulties when you are tasked with working in a group as a member of a team. Had I worked for the right manager back then, it is possible that I might have been promoted to a leadership position, but lacking that, I often found myself in conflict with my coworkers. You could say I was a “self-starter,” so I was a perfect candidate to launch a business of my own. This became quite a motivating factor to strike out on my own and do it “my way.”
Other factors, beyond self-motivation, are critical to making it in the business world, including good coaching or mentoring. We all need mentors, in some form or another. I was lucky in many ways when I started out: I was lucky to meet some great business mentors; I was lucky after I ignored their advice and suggestions not to do anything that would prove fatal to my business; and I was lucky I learned how to get out of my own way early enough to really take things to the next level. More on this later.
I will soon list some of the important questions you should ask yourself before you launch a new business. These questions are formed around two very important questions for the business founder:
1) Is being in business right for you?
2) Are you ready for business?
Lots of businesses fail because the owner should never have been in business in the first place and/or because they were in the wrong type of business. By considering these questions, and going through the checklist at the back of this book, you can save yourself a tremendous amount of heartache later. I know this not only from first-hand knowledge, but from my experience helping clients transition their companies from the initial planning phases into operating a successful company in full stride.
Possibly you have seen on TV a show featuring a self-made millionaire. Watching this person, seeing the property they own and the life they lead, you may have wondered how someone can achieve so much from a world that seems so difficult. At first glance, this successful entrepreneur might appear to be a typical person since so many successful business owners do start out in average circumstances, meaning they are not rich, they have no large inheritance, or no ready-built company has been handed down to them from their forebears. This person, the focus of the TV show, probably started out just like you and I did, with not a whole lot given to us, but somehow they were able to “bootstrap” themselves into owning and operating their own company. Now they are very successful— as indicated by the lifestyle they lead and the property they own.
How did they get into such a position, one that seems so enviable?
This successful person gets to call all the shots, so they can set their own schedule, purchase almost any luxury item they desire, take a vacation to anywhere in the world. They appear to have it all, and life seems simple to them. What for most of us is an insurmountable problem (financial independence) has been solved by this person somehow.
But many of our assumptions here are not entirely true. While this individual may be able to purchase luxury items, they are most often “attached” to the company they have created, and they likely spend a very high percentage of their time tending after it. They cannot just hop on a plane and fly around the world on a whim, oblivious to the ebb and flow of the business they have founded. It is in fact likely that this person spends many hours to keep it all working, so many that they may not have taken a real vacation in years, unless you count working several hours a day from a laptop in the hotel room a real vacation. Unlike the typical “employee,” who works at a company owned by someone else, this successful entrepreneur and business founder must keep his or her hand on the pulse of the business and be able to react to the sundry needs of a client on a moment’s notice.
Don’t get me wrong. I am not trying to talk you out of owning your own business, but I want you to be aware that with all of those wonderful things that seem so positive also come some things you might find somewhat negative.
Step 1: Is Business Right for You?
Before you take the first step toward starting your own business, carefully assess whether or not you are suitable to run your own business and if your head and heart are in the right place to be the leader of your own company. Let’s not kid ourselves; you have to understand not just what you are planning to do, but how and most importantly why you are going into business.
The “What” would be the type of business you are going into, and this is a huge factor because you should be well-equipped to go into that particular type of business. Running a pet store is a significantly different experience—requiring a different skillset—than running a night club. This is a two-way street. On one hand is you; on the other, the business. Think of starting and running your business this way: the experience will be comparable to entering into an intimate relationship, so you better be ready and willing to engage all the nuances that come with a particular business. For example, if you are starting that pet store, you should really like to be around animals.
You should also have the necessary skills to run the type of business you are starting. You can’t run a technology company very well if you are computer illiterate and know nothing about technology, or worse if you are afraid of it. You might be able to manage a technology company, but it’s not going to be easy, and certainly not fun, and this is usually a recipe for disaster.
The “How” refers to all those steps involved in starting and running a particular type of company. Here, you not only need to have expertise in the section of business or industry you are entering, but you also need to have general business skills and acumen. This book is giving you those general skills, and these skills can apply to mostly any type of business. As I mentioned before, you will also need the assistance of various professionals, who can make up the difference between what you bring to the table and what is required in general business acumen.
I’m not going to say a lot here about those general requirements; instead, I have created this entire book and reading it will provide you with those skills and increase your chances significantly.
The “Why” is probably the most overlooked of these three single-word questions. Many people don’t do the hard work necessary to think seriously about those reasons prompting them to found their new business; rather, they just rush off and start the new venture. Voila! And this often leads to a failure. Most entrepreneurs will attest to the fact that they had to start several companies—most of which failed partially or completely—BEFORE they were able to get it right. By the way, this book will help you avoid those failures, and that is my goal here: I want your very first business to succeed. Follow the advice herein and it will.
There is a famous saying that goes something like this: “Do what you love and the money will follow.” I think most readers will agree that this seems generally true, so enough said. It is interesting and highly appropriate in this context, however, to consider the opposite of that statement (well, sort of the opposite):
“Do what you HATE and the money will NOT follow.”
Meaning if you do not enjoy what you do for a living, you probably will not make much money doing it. This, however, is not entirely true because you may be in a job that pays very well, but you dislike the work so much that you are seeking to get out on your own and start your own business, for whatever reason. Suppose you are a highly paid computer programmer, but you always wanted to be an artist; that has been your dream and passion for years, but only a hobby until now. You earn a significant salary as a programmer, but you hate staring at code and fixing bugs, so you decide to follow your lifelong dream and start your own company with your artwork as the product of that business. The good news is that there are many things—as discussed herein—you can do to significantly improve your chances of succeeding as an artist, even if your artwork is not that good. The bad news is that if you are an extremely bad artist, and you do not possess the natural gifts you need to get better, all the business acumen in the world might not save you. It will however, notify you of all the steps you must take to succeed and give yourself the best chance possible. And if art (whatever flavor you are into) is your passion, you can still start a very successful company that deals with art—even though you may not be the artist creating the products of that business. Many other types of companies can give you some amount of satisfaction by allowing you to work close to the artwork you love. You could sell the artwork of others, for example. The key thing here is that you really need to think about the business you are starting and why you are doing it.
It is usually not good enough to say: “I am starting my artist company because I hate programming” and leave it at that. Maybe you hate programming, but what else is at stake? Possibly, being a programmer subjects you to so much stress that you feel it is detrimental to your health and you will soon die if you cannot lower the stress levels associated with meeting programming deadlines and saving the day by fixing the large-system crashes you are responsible to fix. The latter reason—saving your health—makes starting your own company a much more viable alternative to being a programmer than just “because I hate programming.” Knowing these deeper, more important reasons will help you get your mindset right since you will better understand what is at stake in your new venture.
If you really think these things through—answering the questions posed in this section and in the Appendix will help you do so—you will gain a better understanding of your reasons for striking out on your own, and you need this insight to continue. Too many new business owners fail in this respect, and by the time they realize the real reasons, it is often too late to change the business model.
To gain insight into your motivations for starting a business, first answer the below questions in your mind; then take the time to write these answers down on a piece of paper. The act of writing will help clarify your thinking.
Will the Business Satisfy My Needs Financially?
- Why am I thinking of going into business?
- Have I discussed this with my family?
- What are my current financial needs?
- How much do I need the business to provide and by when do I need the business to provide this?
Do I Have the Necessary Skills and Experience?
- What experience do I have?
- What training and education have I completed?
- What experience is necessary for this particular type of business?
- What will be the most difficult thing to do in this type of business?
Do I Have a Sound Business Proposition?
- Have I prepared a formal business plan?
- What obstacles and challenges do I anticipate?
- Have I identified a target market?
- What will make my business stand out from the competition?
- Can I acquire the licenses and permits needed to run my business?
- Will I have the finances and resources to start and run my business for an adequate amount of time?
- What is an adequate amount of time before the business will be self-sustaining?
- Where will the funding come from?
- How much will it cost to start my business?
- What are all the expenses I will need to meet?
- Which expenses will be most critical to keeping the business running?
- What parameters will I use to measure my success?
- What business reports will tell me if I am doing well or not?
- What steps do I need to take next?
- Do I have my support team in place: (1) a competent business coach, (2) an accountant, (3) a bookkeeper, (4) a financial planner and (5) a business banker?
Take the time to write down your answers to these questions. I know this works because I didn’t consider any of these questions when I first went into business. I just saw the opportunity and jumped in, which is what most people do when they get carried away in the excitement of starting a new company. The result for me was that my business was in chaos. I had good sales in my products but no idea whether or not I was actually making any profit. I was working around the clock, seven days a week, churning away like crazy and hoping things would turn out. I thought for sure with all the products and services I was delivering that I had to be doing well. In reality, however, I had no idea what was and wasn’t working and I felt like I was just working to keep all the balls in the air—like a circus juggler.
Had I taken the time to think about and answer the above questions, I would have been better equipped to measure my success and make critical decisions about how I needed to run the business.
Had I taken the time before I started the business to think about the parameters I would need to measure the performance of the business, and had I developed some relevant reports to measure that performance, I would have known exactly how I was doing. Since I did not, I was essentially operating in the blind. I might as well have been speeding down a busy freeway in a big truck wearing a blindfold, pedal to the metal. In that instance, I got lucky my business did not end in a tremendous crash, as I have seen so many other new startups do. In that startup I was extremely lucky: despite my incompetence, my lack of knowledge, and the improper systems and planning, I didn’t go broke. I did go on to realize my mistake (and how lucky I was), so this near-miss taught me to do the opposite for my next business venture, which grew faster, was more profitable, and had better cash flow. Best of all, I worked half the hours!
Step 2: Are You Ready for Business?
Is it now or not right now?
Many businesses fail due to a lack of planning and preparation. But there is another key factor: timing. Before starting a business, make sure you are ready. All of us want immediate satisfaction. We want what we want right now and with no delays! This is how life is getting, and this phenomenon is due to several factors, like the progression of technology and the increased connectivity of society. We no longer take the time to think and plan our communications; rather, we just tap in a text message and push SEND. Ooops! It is not so easy to take these messages back; in fact, there is no way to UNSEND. This might be forgivable in our personal communications, but in business it can be fatal. So avoid the impulse to just launch into your business; take the time to consider if this is the right time to start your company. You need to know whether it is time to go all out and start your business or if it’s better to delay your plans for a while in case you are not quite ready yet.
As with the above questions, answer the below questions in your mind and then take the time to write these answers down on a piece of paper. The act of writing will help clarify your thinking.
Starting Your Business
- Which business structure will I use?
- Have I identified what roles need to be filled within my company?
- Have I thought of registering a business name?
- Do I understand my tax obligations?
- What marketing strategies will I use and why?
- What insurance will I need and how much will it cost?
- Are there any other legal issues related to my business?
- Where will my offices be located and who will be my suppliers?
Operating Your Business
- Have I thought about cash flow and record keeping?
- How will I manage the performance of my employees?
- How will I manage debt in my business?
- Do I understand my obligations towards my employees?
- Have I developed an exit and succession plan?
- Do I know where to find help, advice, and assistance?
- Are there any grants or other financial assistance programs available to my business?
- Have I identified my five pillars? These are my accountant, my bookkeeper, my business coach, my finance broker or business banker, and last but not least my financial planner.
On a final note, the reality is that most businesses won’t make you wealthy, but if you run them properly they will spin the cash flow wheel and generate profits that allow you to invest in those things that will make you truly wealthy. Knowing the Whats, the Hows, and Whys of your particular business venture is more important than ever, and to do so you must ask yourself the questions posed in this chapter.