Starting anything new is always exciting and daunting at the same time. Even if you have expectations of how things should be, you cannot be certain of the outcome. This holds especially true for setting up a business as a new entrepreneur.
A business is a “living organism.” It needs correct care to thrive. But, even when you are paying close attention to it, there are numerous factors, many of which you have no control over, that can affect its development. It is no rare situation to believe that you are doing everything right and according to the books, and yet the venture refuses to fly as you want it to.
Therefore, it helps greatly to have a fiercely realistic mindset and have an acceptance of the harsh truths about the life of a new business owner. According to a trusted business startup solutions provider, this is the best tactic in avoiding disillusionment and frustration. It can prevent you from spending too much time feeling bad when things do not go your way.
So, if you are coming into the enterprising scene with great expectations and not much clue about the curveballs the business world can throw at you, here are eight truths for a much-needed reality check.
- 1 1. You have statistics working against you.
- 2 2. The bureaucracy you have to deal with to start a business will rarely make things easy for you.
- 3 3. There will be a lot of learning curves.
- 4 4. Marketing costs so much but it is an absolute necessity.
- 5 5. The practically smart way to ease into becoming an entrepreneur is to start it as a sideline.
- 6 6. You will do most things for the business yourself.
- 7 7. You need to continue learning.
- 8 8. Commercial property prices are steep.
- 9 Press onward
1. You have statistics working against you.
The success rate for new businesses is actually low.
There are studies that claim 90 to 95 percent of new businesses fail within five years. Other reports, meanwhile, show that 70 percent of new businesses last for a year and 50 percent of new businesses actually are still around within the five-year mark. In a report from Forbes, the numbers are easier to grasp — eight out of 10 new businesses fail within 18 months.
Despite the differences with the numbers, one thing is apparent — the likelihood of failure is quite high. This is a truth that you have to bear in mind in order to work against it.
2. The bureaucracy you have to deal with to start a business will rarely make things easy for you.
Procuring permits, meeting requirements from government agencies and other authorities, and paying for business application services can be quite stressful and discouraging. Quite often, the process is long. Also, for some reason, meeting certain requirements comes with complications.
All you can do to counter all this is to be prepared in terms of documentation and finances.
3. There will be a lot of learning curves.
There will always be aspects of launching the business and actual operations that can stump a greenhorn like you. Even if you have taken business courses to help you out, there are still a lot of complex lessons to learn along the way.
After all, theory is quite different from practice. But again, if you are adequately prepared and have done a feasibility study, you should be able to hurdle this challenge.
4. Marketing costs so much but it is an absolute necessity.
The number one rule when it comes to startups is to invest in marketing. You need to get the word out there and create a buzz about your business.
Marketing is not cheap, though. Advertising alone can eat up as much as 10 percent of your operational budget. It is a considerably large amount, but this is deemed a must.
Also, even when times are low, you need to continue with marketing efforts. Studies reveal that businesses that continue marketing strategically during lean times secure their place in a market of similar businesses that do not advertise or promote.
5. The practically smart way to ease into becoming an entrepreneur is to start it as a sideline.
Take it from the girls of The Financial Diet who both started their digital business while still holding full-time jobs. Chelsea Fagan and Lauren Ver Hage stayed financially afloat by not ditching their day jobs until they were sure TFD has sailed to stable waters.
Of course, it was physically and mentally tiring juggling act but reducing the concern about money for other aspects of living helps in pushing the business forward.
6. You will do most things for the business yourself.
If your business is borne out of a hobby, you will be the entire production line, the accountant, the marketer, manager, buyer — in fact, you are the entire one-person corporation.
This period is quite taxing but it’s good to be in complete control. The main advantage here is you will learn how every aspect of your business is supposed to operate and establish the best standards for it. This way, when you are ready to hire employees, you can teach them to work properly and efficiently.
7. You need to continue learning.
Learning is a continuous process. You start long before the launch to fully understand the industry you want to break into, and you carry on as your business reaches every success goal you have set.
The business landscape is always evolving. You should accept that studying your business will be your way of life from the moment of your decision to become an entrepreneur.
8. Commercial property prices are steep.
The price of commercial real estate can be quite overwhelming, and if you use your own money to get a place, you will be left with very little for other business needs.
Therefore, explore different financing options. You may need to turn to your attorney for advice on corporation setup, apply for a loan from your bank, or even sell a valuable asset under your name to cover the cost of buying or leasing commercial property.
Or, perhaps you should just opt to launch as a home-based business. This is an economical strategy a lot of new entrepreneurs employ because the price of commercial properties to buy or rent is too much for a completely fresh enterprise.
A clear and realistic mindset will serve your advantage as a new entrepreneur. Use these eight truths to set up the best defenses against the most common reasons why a lot of new businesses fail. Pretty soon, you will find yourself past the wave of challenges and sailing on the smooth waters of business stability.
Raj Herry is the Founder and Chairman of Flying Colour Business Setup Services. His extensive experience comes from more than 15 years in the field of company incorporation for Dubai, all Free Zones across the UAE and offshore companies worldwide.