If it were easy everyone would do it
We all know starting a business isn’t easy. Starting one as woman can be even more difficult. It’s not the right time because you’re building your expertise and paying off education loans.. Or you’re starting a family. Or you have young children. Or you have a comfortable lifestyle.
But we’re doing it anyway. In fact, according to American Express, about 1,800 new companies are started every day. And 60% of all U.S. new businesses are started by women founders.
Unfortunately, according to data from the Bureau of Labor Statistics: about 20% of businesses fail in their first year, and about 50% of small businesses fail in their fifth year.
The most important thing to me in supporting women in business is that you stay in business. You don’t go back to a day job unless you want to.
Below are three areas to consider before or as you start your business.
Common pitfalls and how to avoid them
1. Getting Stuck on “What It Is”
I waited years to start a business because I didn’t think I had a good enough idea. When I finally did go out on my own, my business was to do my job as a Chief Operating Officer, but for more than one company. As much as I liked working with two or three clients instead of one, I quickly learned that idea wasn’t going to become a sustainable business unless I wanted to hire a lot of help. My first idea was a good start. And it was the right fit for my life at that moment. But what I got by getting started was the opportunity to do the work. By doing the work, I saw common problems shared across my clients that I could package and make into a repeatable product. I didn’t close my company, but I did start testing out which of my second, third, and fourth ideas might stick.
I see people get stuck on their first idea. “I started this company to sell this thing, and I believe in it!” They keep looking for clients, throwing more money after marketing, couch surfing to avoid paying rent. They’re so attached to the first idea, they’re willing to go broke to chase it.
Your idea is a starting point. It might have a market, it might not. Lots of people might like it, but might not be willing to pay an amount for it that would ever let you reach your financial goals. Just because it’s a good idea, doesn’t mean it can pay your bills. Part of being successful is understanding how much you’ll have to sell to pay your bills and have enough left to pay yourself.
To take time, marketing, and money out of the decision, time box your goals. Give yourself a reasonable amount of time to try something the way you envisioned. Include a modest living allowance. Be as honest as you can about how it’s going at the end of that time. For example, if it’s not working after six months, start gathering intel and thinking about how you might do it differently.
2. Getting Beyond “Founder”
When I started my business, I did everything. I found and wrote the contracts for my clients. I set up my web site and marketing materials. I wrote the invoices and closed the books. I did all the work to deliver on what I promised.
But as your business grows, the “not customer” stuff you have to do gets more complex and time-consuming. You balance your time between finding new business and delivering for the customers or clients you already have. You have more bills to pay. Your bookkeeping gets more complicated. You have more compliance activities. You might even have people to manage.
In short, you have to start thinking about where you can be efficient. Think about the value you uniquely bring to the business, and what you would need to do to spend at least 60% of your time in that “zone of genius.” Then, look at the gaps you need to fill. Do you need systems, people, partners?
Even if you don’t want to have employees, you need a team of people supporting you who fill in your gaps in expertise. Make a real financial plan that shows how much money you need in order to bring on some help, whether as employees, contractors, or partners. If you can’t do it all right now, pick something that’s really draining your time and energy. Get help with that one thing. Pick the next thing you want to earn off your plate.
3. Build your CEO Skills
As a first-time founder, there’s no way to know everything you don’t know, especially if you come from a creative or non-managerial background.
For example, in the first year I freelanced in the City of Los Angeles, I got a nasty letter demanding about half of my paltry revenue in tax penalties. I didn’t know I had to register to freelance out of my house. After my heart attack, I picked up the phone to find out what had happened. The problem was annoying but fixable. The biggest challenge was my feeling embarrassed that it had happened. But I learned that this stuff happens to everybody. And now I see every day that even experienced founders aren’t specialists in business operations. You probably won’t be, either, unless you are an operations geek like me.
Do not let that stop you from pursuing your idea or starting your business. You don’t have to be an expert, but you do need to build your foundational CEO knowledge around the basics of starting and running a business. Ask other business owners to share their experiences. (We all remember our screw-ups!) Attend entrepreneur networking groups or a chamber of commerce event. Watch YouTube videos. Subscribe to free newsletters like mine. And don’t be afraid to say, “What does that mean?” Get a coach or tutor, or find people on your partnership team who will mentor you in their area of expertise. Accept that you will make mistakes, but that you won’t make the same mistake twice.
How we can help
We’ve helped countless business owners take the leap from Founder to CEO. Here are a few ways to get started when you’re ready:
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Getting expert advice from the start can give you a big advantage in starting your company and staying in business.