When you own your own business, you can be on the top of the world one day, and stressed to the max the next. When you put yourself on the line to create something new, you will hit points of both utter elation and unimaginable frustration. Throughout my career as an entrepreneur and executive coach, I’ve seen successes and failures time and again across multiple industries. I know first-hand that running your own business can be one of the most rewarding experiences you ever have, but it can also be devastating. You should prepare yourself by knowing the possible downsides and learning what you can do to minimize them. But first, let’s talk about the upside—the reasons we take these fantastic leaps of faith in the first place.
As an entrepreneur, starting your own business allows you to get behind the wheel and take charge. The decisions are all yours; you are the one making things happen. The freedom to structure your business how you see fit is one of the great joys of being an independent business owner. Additionally, it is up to you to convince others of the value of your ideas. Whether it’s securing funding or finding the right staff, people need to believe in your product or service in order for you and your business to succeed. There is no greater feeling than when your company starts achieving and exceeding the goals that you set—and knowing it all started from you and your ideas.
As you gain market acceptance, whether by having the best products, the low-price leading products, or a product that is the first of its kind, you will begin to see the impact your company is having on the world. Often this reward can be even greater than the financial success. CEO and serial entrepreneur Magnus Melandar once said:
“Entrepreneurs are people who have passions and are prepared to make sacrifices for them. If money is your objective, you’ll ruin the business.”
If you’re not passionate about the products you’re selling or the service you’re providing, you won’t find the success you’re looking for.
This ties directly into the idea of creating an inspired company culture. Have you created a culture where people are excited to come to work and feel like a part of a team? When you successfully foster a positive company culture, you will see it reflected in the performance of your team and in your bottom line.
No reward worth having comes without risk. After all, failure is not the opposite of success, but part of the process. What can cause failure for an entrepreneur?
Often there simply isn’t a market for your product or idea. Perhaps it’s too late and something better has come along. Perhaps there simply wasn’t a need for it in the first place. Regardless of the reason, this is one of the biggest frustrations a business owner can encounter as they’re just starting out: putting time and energy into a new product, only to have it crash and burn due to lack of demand. An even bigger frustration, in my opinion, is having the great idea and being unable to sell it. When raising money to fund your venture is difficult or impossible, maybe it’s because you’re having trouble selling your vision. Even the best ideas still need a great pitch to get funded.
Of course, even with a great product in a seller’s market, internal frustrations can harm your business. One problem found in startups is a lack of confidence from the board. If the board doesn’t feel that you, as CEO, are 100% confident, capable, and committed to the company’s vision, you can easily be replaced or even fired. It’s their investment on the line, so they are quick to protect it. As such, it is critical to project this confidence at all times, even if you’re having doubts internally. As CEO you must face down risk with a steady gaze and inspire confidence among the executive team, the board, and all employees. You need them all to think that if you’re not scared then they shouldn’t be.
The last peril of entrepreneurship is one almost every business owner has experienced: running low on cash or completely running out. Startups are inherently prone to big swings in cash flow, so solid cash flow modeling should be at the core of any strong business plan. You should know exactly when your cash will be at its lowest, and always have a sufficient buffer to avoid having to extend your accounts payable days, incur late fees, or over-leverage yourself. Even so, I have seen business owners time and again who are unprepared to handle the cash fluctuations that come with running a business. And it’s not a pretty sight.
In order to avoid these entrepreneurial pitfalls, it is critical to be a strong leader with a strong business plan, a clear understanding of where your product fits in the market, a solid sales pitch to attract investors, and a detailed understanding of how much cash your business needs. Anyone who is brave enough to start a business will run into some of these downsides at one time or another, but it’s worth it when you feel the joys of entrepreneurship: the satisfaction of knowing you created something new and turned it into a success.
This article was originally posted on Linkedin Pulse.
Share this Post