Monday, October 27, 2008

Becoming an entrepreneur: How to avoid disaster

I read an inordinate amount of things from online. While I do frequent one or two social networking sites (Facebook and LinkedIn mostly), the vast majority of my reading is made up of blogs somewhat tied to personal finance. I frequent a number of high volume blogs, but I find the more interesting and quirky stuff comes from stay at home mom's and debt laden college students looking to share their stories and maybe get a couple of AdWords click throughs to line their pockets. These people typically have well below 100 readers.

The most common theme I seem to find is a strong desire to make money through unconventional means, like blogging or starting a small business. While I believe these people have their hearts and minds in the right place, you inevitably see a wide array of failed plans, plots and schemes.

This is a shame. These one person microbusinesses run from desktop computers and raw ideas are not necessarily bad. All too often people just make a couple of cardinal mistakes and let their potential fall to the wayside. While these microbusinesses may not exactly earn these folk a $100,000 a year income, they could make a poor situation a little more bearable and foster a sense of intellectual curiosity that could potentially lead to self improvement. I've convinced myself through research and positive feedback that my newest endeavours won't fail due to negligence.

Here are a couple of points I've seen made in the past and some I've made myself.

  • Time: A lot of small time entrepreneurs have lots of ideas. Ideas can be thought of in a wide array of situations. On the bus, while in the shower or while doing a particularly mind numbing work related task. This is great, but if you feel you need to allow an idea to grow the primary ingredient is time.

    You need time to flesh out ideas without distraction. You need time to set up the framework of your microbusiness venture. And you need to sit down with pen and paper and work out a timeline.

    This is how microbusinesses fail the fastest and hardest. If you don't have enough time to maintain an endeavour such as a microbusiness, you wind up wasting the hours you initially invested in it to begin with. Not only that, but you find yourself disheartened against future experiments.

    So when you start a small money making project, make sure you start as tiny as possible so you don't become overwhelmed.

  • Capital (money): This is the life blood of any business. And you'll need a lot of it if you intend on starting your own hole in the wall restaurant or retail space. But the good thing about being a small time entrepreneur is that you don't really need it. A lot of people don't realize this and wind up investing a fair bit of hard earned money into a venture that will ultimately fail.

    Try your best to invest as little money as possible in the beginning. Utilize tools already at your disposal, you'll find a surprising number of them. If you need business cards for your brand new apartment decorating business, don't have them professionally made. But instead use some card stock and your old laser jet printer that's been sitting in the closet for three years.

    If the venture ultimately fails and you invested little to no money, you'll wind up in a better position to try another idea out in the near future both mentally and fiscally.

  • Motivation: This is a finite resource. You start with a lot of it but eventually your supply becomes depleted.

    It's easy to become disheartened when you don't see immediate success. Or your immediate success turns out to be a bust. If you're going to do anything, remain as motivated as humanly possible. If you plug away at something eventually it'll play off, no matter what is it.

    If you have a partner, meet with them frequently to discuss possibilities. If you don't, discuss the situation with a friend you know will support you. Set small and realistic goals you know you'll be able to meet with a little work and celebrate them.

  • Research: All too often not enough of it is done. Do a lot of it and do it weekly. It's nice to have the time to build your newest eco-friendly creation, the intelligence not to spend $5,000 advertising it right away and the motivation to make a thousand of them, but if you don't do your homework you'll inevitably find yourself abandoning your venture. Whether your items or services are over priced, don't fill an immediate need or may not be as clever as you think you'll find all three of your most precious resources depleted.

  • Promotion: You need to be seen. Humans are hardwired for networking and if you're working under the radar you're not going to find any success in any microbusiness. All the time, money, motivation and research in the world isn't going to do you a lick of good if you toil in the dark.

    Promote yourself and your project. It can be just to family and friends if you want, or you can take out a newspaper ad. But the important thing is to be seen.

  • Failure: Sometimes it is inevitable. But that's okay. Failure is part of life and just because your microbusiness didn't take off now doesn't mean it can't take off six months from now. And it certainly doesn't mean you should forgo future experiments with earning an extra little income on your own.

    Sometimes the situation is beyond your control. But it's always a learning experience for next time.
If you have additional points to make, post them in the comments and I'll place a permanent link to your blog in my side bar.


Ruthie said...

I like the cinder blocks, they cost roughly $1.20 each, and are nice to sit on and don't rot in our very humid climate. :o)

joan said...

great read ed! keep up the good work!


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