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8 Keys To Starting A Business Tomorrow

Posted by Seth Elliott On December - 3 - 2009

StartUpIn addition to my regular consulting and coaching activities (and writing the Unchained Entrepreneur), I’ve been volunteering my time lately with the Network for Teaching Entrepreneurship (NFTE).

NFTE is a fantastic organization with the mission of providing entrepreneurship education programs to young people from low income communities in order to provide a pathway to prosperity. Among other programs, they coordinate E-clubs (the “E” being entrepreneur, of course), which is where I do the bulk of my volunteering. These clubs consist of high school students who are all starting businesses. NFTE provides a certain amount of start-up capital (at my E-club it’s $400 per participant) and set of formalized hands-on education sessions coupled with outside mentoring.

Needless to say, the students are absolutely amazing. Working with these kids has served once again to highlight a basic truism: starting a business is basically the same whether you are 16 or 60. There are certain basic principles and requirements that anyone starting a new venture needs to have or acquire.

I believe that there are 8 core components that you must be prepared to acknowledge when starting your own business.

1. Desire. There is a lot of talk in our community nowadays about passion. New and would-be entrepreneurs are advised to identify what they are passionate about and build a business around that. It’s not so much that I disagree with the basis of this idea (after all, I don’t want to build a business around hauling trash or data entry, as I find both jobs mind-numbing) – it’s just not enough. You need to have an active desire to turn your passion into a business in order to be successful. In fact, I would argue that you need to have confirmed that you have an active desire to start and operate your own business, no matter what the industry.

I can think of no better example than a young lady in my E-club who is a musician. She plays the violin, and she is looking to build a business that offers musical entertainment to event planners. The thing is – what happens if she’s moderately successful at this and wakes up in a few years to find that playing music has become just another chore? Be certain that you have the desire to turn your passion into your job.

2. An Idea. Most of you are probably rolling your eyes at this one. Maybe you’re even questioning why you’re continuing to read if I’m going to be this obvious. Bear with me. Of course you need an idea to start a business – but the point I’m making here is that an idea can be enough. Working with young entrepreneurs has highlighted that too many people believe that starting a company requires much more than an idea. Too often, ideas are stillborn on the route to becoming new ventures for a host of reasons (fear, lack of knowledge, etc.). That’s why it is worth reminding yourself that any successful venture starts with an idea. Your idea is the seed from which your company grows.

3. Sweat equity. Are you familiar with this term? It actually comes from the real estate world – originally this referred to enhancing a property’s value by do-it-yourself improvements. For our purposes, sweat equity can be considered any and all resources that you devote to your business – other than your own cash contributions. In practical terms, this is mostly going to refer to time that you spend. I’ve never been involved in anything that requires the type of time commitment needed to start and operate a business. If you’ve never been an entrepreneur, I want you to stop for a moment and guess how many average hours each week you need to devote to your business…OK – whatever you guessed is wrong, even if you guessed 168 hours. Exaggeration? Perhaps a bit – but you should presume that you’re underestimating the active time you will need to devote to this enterprise. Be certain that you have the time (especially if you’re going to do this while employed elsewhere) and are willing to spend it on your new venture.

4. Ability to learn. This is the key skill that you must have if you plan to become an entrepreneur. When coupled with a desire, an idea and enough time, you can learn everything else. Starting and running a business involves a set of skills – all of which can be learned. Don’t know the first thing about financial statements? Selling practices? How to network? Best methods for collecting receivables? All of these (and more) are teachable. If you have learned how to learn, then you have the core skill set needed to be an entrepreneur. Presumably you already believe this, or you wouldn’t be reading this blog.

5. Persistence. You’ve heard it before and I’m sure you’ll hear it again in the pages of this blog – successful entrepreneurs are tenacious. Woody Allen famously noted that “90% of life is just showing up.” To a certain extent, that’s true for an entrepreneur. You must have the capacity to show up and execute day in and day out. If you combine an ability to learn with persistence, you can be assured that eventually you will surmount (or go around) most obstacles in business.

6. (Human) Capital. For the most part, businesses that are scalable and sustainable require employees. You will need a plan for acquiring the best and brightest to fill each role in your firm – whether it be receptionist or chief marketing officer. Mediocre human capital will result in a mediocre (at best) enterprise. By the way, recessions are great times for small business in this regard. When job markets are in disarray, you may be able to acquire human capital that would be otherwise unavailable to a new, untested venture.

7. (Financial) Capital. It’s certainly possible to start a business with little (or even no) capital. You are most likely going to be starting on a relative shoestring and bootstrapping in the early phases of your growth. However, with some exceptions (primarily on-line based information businesses), you will need capital to build a scalable business. If you are looking to grow beyond simply providing you with a replacement for a salary, you’re going to need to finance. This won’t be easy – particularly in today’s financing environment – but it isn’t impossible. You’ll start with friends and family, proceed to angel investors and may even seek out venture capital funds if your business model warrants that. One way or another, though, capital will become an integral component of growing and succeeding.

8. (Customer) Attention. At some point, you’ve got to sell your product/service offering to a customer. Business is sales. There’s no way around that hard fact. That means you’ve got to get attention – eventually customers’ attention. Your great idea and the business infrastructure you build is meaningless without customers. There are numerous ways to garner attention (many of which we address in this blog), and you need to be planning for this from the moment you decide to take your first entrepreneurial steps.

Are there other key elements you think are needed to succeed in starting and growing a business?

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About the Author

I have spent the last 15 years advising entrepreneurs on starting and growing their businesses, as well as assisting in financing those growth efforts. I have also been an entrepreneur on several occasions myself. By writing this blog, I hope to provide actionable advice on how to achieve your goals and become more successful.
  • franksimkens

    Hello Seth,

    Thank you for your insights. When i read reports about why start-ups fail in Belgium, it seems that one out of three have to stop because of starting without the necessary fundings. I would advice a number 9: ADVISE have a hard look on yourself and try to identify your blank spots. Be sure that you have the right people to advise you when you start. Not starting a business because something lacks to your project is sometimes the best decision you can take in your life.

    ps: tip 10: don't have your advisers take the decisions. You take the decisions. If you can't, don't start a business

    Frank | running a small business in Belgium

  • robertkehoe

    Hi Seth,

    This is an excellent list. My career spans a lot of corporate work and miscellaneous consulting, plus the founding and building of 6 businesses of my own. Now I'm active as an Entrepreneur In Residence for a non-profit microlender,and am building a new entrepreneur training capacity. Your NFTE group sounds great, and I look forward to exploring this more fully.

    By the way, I'd add another component to your excellent (and well-written) list: Preparation – writing and regularly revising a business plan is essential to long term success (plus having all employees very involved with the revisions). Also, I recommend that before a person starts a company that he or she first have at least one year of compensated training in a minumum of two companies within the industry. Benchmark these companies best practices and add them to your own ideas. Network and gather industry contacts, particularly with potential customers. Nothing like getting paid for free training and preparation for launching your own business.

    I look forward to following your blog, and will add your book to my mus-read reading list.

  • http://www.unchained-entrepreneur.com Seth Elliott

    Excellent points, Robert.

    By seeking out knowledge and best practices to combine with your own strategic plan, you get a leg up on 90% of your potential competitors.

    Thanks for adding your voice to the Unchained Entrepreneur community.

  • http://www.unchained-entrepreneur.com Seth Elliott

    Frank

    The sad fact is that lack of capital is one of the primary factors in the failure of many businesses.

    However, you rightly point out that prior planning can help mitigate that. And your point about advisers will resonate with many entrepreneurs. It's important to secure an advisory group with expertise that complements your own – BUT at the end of the day it is your company and YOU must make the decisions.

    Best of luck in your business.

  • robertkehoe

    Hi Seth,

    This is an excellent list. My career spans a lot of corporate work and miscellaneous consulting, plus the founding and building of 6 businesses of my own. Now I'm active as an Entrepreneur In Residence for a non-profit microlender,and am building a new entrepreneur training capacity. Your NFTE group sounds great, and I look forward to exploring this more fully.

    By the way, I'd add another component to your excellent (and well-written) list: Preparation – writing and regularly revising a business plan is essential to long term success (plus having all employees very involved with the revisions). Also, I recommend that before a person starts a company that he or she first have at least one year of compensated training in a minumum of two companies within the industry. Benchmark these companies best practices and add them to your own ideas. Network and gather industry contacts, particularly with potential customers. Nothing like getting paid for free training and preparation for launching your own business.

    I look forward to following your blog, and will add your book to my mus-read reading list.

  • http://www.unchained-entrepreneur.com Seth Elliott

    Excellent points, Robert.

    By seeking out knowledge and best practices to combine with your own strategic plan, you get a leg up on 90% of your potential competitors.

    Thanks for adding your voice to the Unchained Entrepreneur community.

  • http://www.unchained-entrepreneur.com Seth Elliott

    Frank

    The sad fact is that lack of capital is one of the primary factors in the failure of many businesses.

    However, you rightly point out that prior planning can help mitigate that. And your point about advisers will resonate with many entrepreneurs. It's important to secure an advisory group with expertise that complements your own – BUT at the end of the day it is your company and YOU must make the decisions.

    Best of luck in your business.