WHY AM I writing this book? Because you need it. That may sound arrogant, but it’s true. I’ve spent decades learning—sometimes the hard way—what really makes small businesses work. I started my first business when I was 15 years old, and I have always been intrigued by the myriad opportunities there are to use your own resources to make money.
I’ve been a serial entrepreneur. Not that everything I’ve done has been a success, but fortunately I’ve had more successes than failures. And while it is always nice to bask in the glow of my successes, I’ve definitely learned more from my missteps.
I’ve also spoken with countless entrepreneurs around the world, hearing about and learning from their problems and stories. I’ve delivered keynote speeches and seminars to hundreds of thousands of people with small businesses, and I have listened to their feedback. I’ve taught college-level entrepreneurship courses, and many of my students have gone on to build successful companies. And as a journalist, I’ve covered countless business conferences and have reported on a plethora of topics related to operating a small business in this country. As a media expert on small-business operations, I’ve taken on hundreds of topics and answered hundreds of viewer questions. Suffice it to say, I’ve seen, heard, and experienced a lot, whether directly or through others. My goal in this book is to leverage that experience to save you time, effort, resources, and aggravation as you start up your own business.
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In the pages that follow, I give you the realities of what it takes to start and grow a successful small business—especially in today’s economic environment. There are millions of people starting businesses all the time, and millions more who are dreaming about becoming their own boss. All of them have talents, skills, and ideas; but without understanding certain fundamental business principles, their chances of being among the failed-business-venture statistics are high.
Yes, there are exceptions to every rule, and I acknowledge that sometimes someone simply gets lucky in business; but most entrepreneurs have to work extremely hard. And part of that hard work is seeing past the romantic vision of launching your small business and focusing on the cold, hard reality of what it takes to build a business. The bottom line is: What you don’t know will hurt you.
The recent recession has transformed the long-established business paradigm more dramatically than at any other time since perhaps the Industrial Revolution, which turned traditional employment on its ear. I submit that we are entering a new era in which the majority of Americans will either own a small business or work for one. Large companies will always exist, but not on the grand pre-recession scale. Having learned to do more with less, many big firms will outsource work when it is needed. And who will do that work? It could be you, as an independent worker or operating your own small business.
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Allow me to put this in perspective. Back in 2003, there were massive downsizings, and many of my friends and family members for the first time in their lives joined the ranks of the unemployed. They were traumatized by pink slips and the reality that there was no longer a place for them in the company where they had spent the majority of their professional lives. Shell-shocked by the abrupt change in their lives, they were lost and afraid, their self-esteem shaken to the core. “Who am I without my job?” they asked.
I watched people’s lives be nearly destroyed after they had been discarded by their companies, and I felt a strong desire to help. I wanted to inspire them, to help them see themselves as much more than a job title followed by a company name. These were talented, unique individuals, and I wanted to encourage them to look at their unique and special gifts—to focus on the very real difference between having a job-related skill and having inherent talents. Why? Because it’s our special talents—the things we are really, really good at—that are the essence of who we are. Tapping into these special talents can help you make a smooth transition from one career path to another. In other words, your unique gifts give you the ability to reinvent yourself, and likewise, to reinvent your professional career.
So, in 2003, I wrote a book called Reinvent Your Career: Obtain the Success You Desire and Deserve. In this book, I described an interview with a woman who had been a professional flutist and reinvented herself to become a genetic researcher. Seems a far reach, doesn’t it? But not when you recognize, as she did, that music, like research, is based on mathematics. Her mathematic skills enabled her to transition easily to a new and more lucrative career.
Since I wrote that book, the business world has evolved even more. The recent economic recession has wrought millions of unemployed workers, an unprecedented number of home foreclosures, countless major retail brands boarded up for good, a rash of business and personal bankruptcies, and an unstable financial market. Even as the economy rebounds, there simply won’t be enough jobs available to absorb all those millions of unemployed and displaced American workers. At many companies, streamlined operations have reduced staffing needs. And increasingly sophisticated technology continues to replace many job functions, further reducing the need for human capital.
Millions of Americans are facing the stark reality that they need to rely on themselves—and their own resources—in order to provide for their economic well-being. Stealing a phrase from the ’70s era, “There’s no trust in working for the man.” People are fed up with working crazy, long hours for a bureaucratic entity, sacrificing balance in their personal lives and their well-being in order to line someone else’s pockets.
In this new business paradigm, it’s no longer about reinventing your career or looking for creative ways to rev up your job search. Today, it’s about building your career as a freelancer, an independent contractor, consultant, small-business owner, or franchisee. Now is the time to focus on what it is you can create and deliver to the market.
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Whether you leave the employment ranks voluntarily or involuntarily, the landscape for starting and building a small business is rich. Many people are concerned that because of the current financial crisis, now may not be a good time to start a business. While it may seem counterintuitive, a recessionary climate can actually be an ideal time to start a business. In fact, many of today’s popular name brands started as small companies in a down economy, such as Hyatt Corporation, Burger King, FedEx, MTV, and CNN. HP (Hewlett-Packard) was founded in a garage in Palo Alto at the end of the Great Depression. Microsoft was started in a sluggish economy by college dropout Bill Gates, and the company did just over $16,000 in revenue in its first year. Compare that to the $60 billion or so the company earns today.
So you may be wondering what it is about a down economy that serves as a fertile environment for start-ups. The founders saw a market need and created a way to fill that need. (There is much more about this in forthcoming chapters.) You could be the next big brand success.
And the best part about starting your own business is: It doesn’t matter how old you are. Two of the fastest growing groups of business owners are the Gen Yers and the Baby Boomers. Both groups are often being shut out of traditional employment, so they are creating and designing their own destinies.
What does all this mean? It signifies that America is becoming a society of the self-employed. Yet most, regardless of their level of achievement in the business world, are unequipped to start and build a successful business. That’s why more than half of all small businesses fail in the first three years. Moving from the security of being a W-2 employee to the topsy-turvy world of being your own boss is a significant life change and a huge challenge.
Corporate employees work hard to meet the goals and objectives of their organizations, just as small-business owners do. But that’s where the similarity ends. Unlike small-business owners, corporate employees never have to worry about making a payroll or keeping the lights on. Most often, corporate employees have nice benefit packages, which include health and retirement plans. As an employee, there’s no stress about accounts receivable because the corporate accounting department handles those. Bad press, a missed deadline, or a failed project can certainly create turmoil and stress in the corporate world, but when those happen to a small-business owner or entrepreneur, it can mean the end of the road. Entrepreneurs and small-business owners don’t have a safety net. If there’s a screwup, there’s no one to bear the responsibility but themselves.
I’m not trying to discourage you from launching your own business endeavor—in fact, quite the opposite. I want to be your advocate and mentor should you decide to start up on your own. However, I also want to make sure you make your decision with your eyes wide open. If you choose to believe the motivational gurus who tell you “just follow your heart and you’ll succeed,” I wish you luck. If that’s the case, put this book down now, because it’s not for you. It is important to love what you do, whether you are an employee or an owner, but loving the work isn’t enough to build a successful business.
As I’ve mentioned, what you don’t know about running a business can and will hurt you. You need information to make smart business decisions for yourself and your business. This need for information starts the moment you conceptualize your business venture, and it extends all the way to when you exit the business, far down the road.
Success in your own small-business venture greatly depends on your willingness to learn, to work hard, and to focus on getting it right. That’s what this book is all about—getting it right!