Five days after I turned 27, my first start-up business closed its doors. A failed entrepreneur on my first try. I’ve dreamed of owning my own business since I was little. Funny how my start-up businesses never ended this way in those dreams.
It’s natural I have the drive to be self-employed. It’s how I was raised after all. Ranchers are the ultimate entrepreneur, I think. Volatile markets, weather, disease – all of which a person
can’t control – and trying to make a living at raising cattle is just about as risky as it gets.
And yet here I stand, bucked off the first time I saddled up my entrepreneurial horse. I made some serious mistakes in my inaugural attempt at owning a start-up business. I’m not proud of it, and I’d really rather not talk about it. Who wants to do a public postmortem on their failures? I’d much rather just shove them under a wagon and pretend like no one walking past can see them.
I’d certainly like to do that with my failed start-up business, but I know there are a lot of folks just like me who have awful big entrepreneurial dreams. While I didn’t make all the mistakes below, I made enough of them to learn the rest of them.
Learn from my mistakes, okay? Don’t go making these on your own time when they’ve already been spent on my dime.
11 Lessons from a Failed Entrepreneur
(in no particular order)
- Know your business. Total “duh” note, right? Except that when you go into business with other people, division of duties happens pretty quickly. This is good, but you still need to be solid on all the areas outside of your expertise. If something happens to your business partners, you need to know how to run things.
- Be passionate about it. Starting a business is incredibly time-consuming. It makes it easier to spend all your spare time working if you love what you’re doing. I liked my business. I believed in it. I didn’t love it, and I wasn’t passionate about it.
- Know when to say no. Expanding too early. Purchasing things that aren’t essential. Get a backbone and say no if it isn’t a good financial business decision. Or an ethical business decision. Definitely say no then.
- Decide how much money to put into it. Try to put a cap on how much money you are willing to invest in the business before you’re in the middle of it. This is an investment. One that you’re hoping to get a return on, and you need to treat it like one. There’s no sense in tossing money at a rank bronc who can’t be ridden.
- Know when to let it go. That rank bronc? Sometimes you have to admit you’re not the one to ride it. There comes a point where more money, more time, more dedication, more input just isn’t going to turn a failing business around. There’s a fine line between keeping a business floating and being pulled underwater with it.
- Write a business plan. How are you going to get where you’re going if you don’t have a trail? Sometimes it’s okay to strike off cross-country with a vague idea of where you’ll end up. In a start-up business, that’s not okay.
- Pencil. Pencil. Pencil. Push that pencil. Estimate your input costs and what you hope to make. Be aggressive on the input costs and conservative on the profits. Don’t forget things like insurance, advertising, registering costs and regulation requirements. Pencil it all out and then pencil it again. Recalculate, re-add, reassure that you’ve got something that has potential to work. It costs nothing to pencil. It can cost everything to assume you’ve got an idea that will carry you to the barn.
- Schedule business meetings. This one isn’t too popular as meetings seem like a waste of time. They can be, but an even bigger waste is when business partners aren’t communicating. And by waste, I mean detrimental to the business. Until you’ve been “married” to your business partner for awhile and the business is pulling a profit, business meetings are essential for everyone to continue saddling the same horse and riding in the same direction.
- Don’t bend the rules in the first year. If you wrote a business plan, stick to it. It’s tempting to make exceptions for friends or special cases. Don’t do it. This is a business. Treat it like one. You won’t be able to help out anybody if your business doesn’t exist. After the first year, you’ll have a better idea of where you can afford to do pro bono work. Go for it then if you’re moved to do so.
- Evaluate your business partner choices with your head, not your heart. Be brutally honest with this decision. Brutally. Honest. Friends don’t necessarily make good business partners. Spouses don’t either. Can they be? Yes. By default? No.
- Show up. Starting a business takes commitment. A lot of time. Money. Sacrifices. There were a lot of times I really wanted to be out riding, mowing my yard or sleeping instead of showing up at my business. Due to a combination of several of the above mistakes, I stopped showing up as often. I don’t think the business would still be going if I had lived there five nights a week, but it surely didn’t help that I detached myself.
Maybe you’ve read through this list now, and you’re thinking Well, gee. There’s nothing earth-shattering here. This is common sense stuff, stuff you read on a whole lot of entrepreneur blogs and websites.
You’re right. But I read those blogs and websites too. And I’m chock full of common sense, even two-thirds full on a bad day. You think your start-up business will be different. That it will survive any miscalculations, poor decisions and slow money flow. Maybe it will.
And maybe it won’t.