Unfortunately, there’s no universal formula for building a successful business venture. If anyone tells you otherwise, they are probably lying. Instead, it’s a process knotted with setbacks, replete with challenges, susceptible to the whims of third parties, and subject to luck.
Say what you will about his business acumen and advice, but Robert Kiyosaki hits the nail on the head: “Starting a business is like jumping out of an airplane without a parachute. In mid-air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.”
This article doesn’t pretend to give you all the answers. Instead, it’s meant to prepare you for that fall – offering words of advice for building the parachute. Here’s what you need to know before building your business venture.
Your Business Needs to Fill a Need
Let’s start at the beginning with the ideation phase.
Take it from Nobul founder Regan McGee, whose successful digital marketplace “make(s) purchasing real estate as easy and painless as possible for customers.” Speaking to Superb Crew, McGee shares that “A key element for any business venture is the ability to fulfill a need.” The need, in McGee’s case, was the increased demand among consumers for “choice, accountability and transparency” in real estate transactions.
What is the need that your business is filling? Start by answering that simple question before building further.
Strap in: The First Two Years Are Bumpy
Elsewhere in the interview, McGee strikes a sober tone when asked about Nobul’s milestones. “Still being here is a milestone in itself. Most companies struggle the first two years.”
Research backs this up. According to the Bureau of Labor Statistics, 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years.” Bear in mind that the research encompasses all businesses (restaurants, retail outlets, etc.). The outlook for startups is bleaker: According to Investopedia, “As of March 2021, only 80% of startups survived after one year.”
None of this should dissuade you from trying. Many businesses fail for lack of preparedness. Your ability to understand the hardships – and adjust your resiliency accordingly – can be your advantage.
Financing Isn’t a Sprint – It’s a Marathon
Save some stamina for the financing process. Through pre-seed, seed funding, series A, B and C funding rounds, you will be required to prove yourself over and over again.
It starts with finding someone to champion your business idea, an investor who believes enough in your vision to give you that first push. But you should never rest on your financial laurels. There’s always work to be done in financing.
Don’t Just Consider Your Product – Consider Your People
Mismanagement can sink even the best idea. A joint article by the Wharton School and World Economic Forum is clear on these terms: “The key message for entrepreneurs is to think just as much about their people as the product, especially during the early days of the business.” They also note that poor management structures can “kill a business” regardless of how promising the concept is.
They recommend finding a balance between a flat organizational structure (which fosters collaboration and innovation) and a vertical hierarchy (which mitigates conflict and helps businesses stay on task). Before you build your business, give thought to how you want your business managed.
Building a business is challenging. However, if you are clear on what to expect (and what’s expected of you), you can set yourself up for success.