What entrepreneurs should know before setting up a business
Every minute a new business is started in the U.S. while in the UK, there were 581,000 new companies created in 2014 and 2015 was another record-breaking year, with more than 600,000 companies launched.
In the UAE, according to the Department of Economic Development (DED), Dubai issued 22,691 business licenses in 2015, a 75 percent increase from 2010, at an annual average of 15 percent.
Incredible as these figures sound, according to Bloomberg 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. That’s a whopping 80 percent of all businesses! So, what is it that only two out of every ten entrepreneurs do right?
Many say that you need to be well prepared when you go into a new business venture; you need to know how to write a business plan, how to budget, ensure that you keep your cash flowing and manage your capital. I agree all these are important elements of starting a business but are they enough to not only keep your business afloat but also make it successful?
The problem most of the time is in the foundation, in the thinking itself. We have learned to work a certain way, so to be successful as entrepreneurs we need to adapt to a new way of thinking and acting.
Know exactly what you want to achieve
Successful entrepreneurs know exactly what they want and make a plan on how to achieve it. Understanding what you really want takes a lot of thinking and often we have to overcome a number of inherent beliefs that dictate what we can or cannot do.
People usually set three types of goals:
Type A goals: This is the most common way of setting a goal. This is when we do what we know how to do. We stay within our comfort zone, we do what has been tried and tested. As a result there is no growth for the entrepreneur attached to this goal.
Type B goals: in type B goals, we tend to do what we think we know how to do. So we gather all of the facts and we carefully plan on how to go from point A to point B. The downside with these types of goals is that they are not inspiring so the moment we face a challenge we tend to give up.
Type C goals: these are the goals that stretch you outside your comfort zone. They scare and excite you at the same time. These goals stem from your dreams and fantasies and are the ones worth going after.
Successful entrepreneurs know exactly what they want. Their vision will not only shape the idea of their business but will keep them motivated.
Setting up a business without a concrete goal is like going on holiday without having a destination. Once you’re out of the house, which direction do you go?
Learn to work outside your comfort zone
We all have a comfort zone, an area that we are comfortable working in; we know what to expect, we know how to act and react under different circumstances. We are so comfortable in this area that we do not take any risks, as a result we do not grow as individuals.
To grow and learn something new, you need to get stretched outside your comfort zone. And to be a successful entrepreneur you need to be able to get and operate outside your comfort zone, often.
Decision-making is critical
Successful people make decisions quickly and change them slowly, if ever. People who fail make decisions slowly and change them quickly and often.
This is not to say that an entrepreneur should make hasty and risky decisions. Quite the opposite! While to keep yourself afloat in business you need to learn to evaluate your options carefully, to be part of the 2% you need to balance your decision making skills with the ability to recognize an opportunity when presented to you and act on it without procrastinating.
Lastly, sharp and permanent decisions are never based on temporary emotions. Instead, every time you are presented with a choice, ensure you are able to recognize and understand your emotions and make decisions objectively and rationally.
Surround yourself with the right people
Entrepreneurship is not about working alone and having the right people around you is one of the most important elements of success. When you are working on anything new, you will find many people who are keen to tell you why something will not work. Avoid negative people and surround yourself with positive, like-minded individuals who are keen to make things happen.
When starting up a new business, you will have a steep learning curve ahead of you. However, you will also have to accept that you cannot know everything about each aspect of the business you are going into. Choose to work with a team of people who do not only have a positive energy but also a skill set that supplements and the skills that you are not having. The collective knowledge of the team should be what you need to run a successful business. This team will be your closest working people and most trusted advisors.
This is perhaps the most important tool for a successful entrepreneur. No matter how thorough your business plan is and in how much detail you budgeted your cash flow, there will always be unforeseen challenges coming along the way. Determination and perseverance will help you focused along the way.
Remember that even the most successful entrepreneurs had a number of failures before they succeeded:
Richard Branson, may have successfully created Virgin Records and Virgin Airlines, but he also developed Virgin Cola and Virgin Vodka. Probably the fact that you do not recognise these brands says a lot about their success or lack thereof.
Bill Gates first tried his hand on entrepreneurships with a company called Traf-O-Data, which didn’t go far.
Colonel Sanders, the founder of KFC had his secret chicken recipe rejected over a 1,000 times before a restaurant accepted it. He founded KFC when he was 65 years old.
Thomas Edison, one of the most successful inventors holding over 1000 U.S. patents, tried more than 9,000 experiments before he created the first successful light bulb.
The secret is not to confuse temporary set backs with defeat. Learn from your mistakes and move on swiftly.
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Sophia Fromell is the Founder of Ithaca Life and is a certified Life Coach with a degree in Life Coaching Skills and Practice from Newcastle College, UK and a member of The International Coach Federation (ICF). The views expressed in her columns do not necessarily reflect those of Esquire or Hearst International