Business is about dealing with the future. And the only thing we know about the future is that we don’t know anything about it and that it would be different, as Peter F. Drucker have said. The future is uncertain. Had the future be certain, than there is no need for entrepreneurs and thus businesses.
When you are reading this, then I assume that you are perhaps looking for ideas on how to start a business, or you have already started and wonder whether you are already doing the right thing, or you are already desperate – that you would try anything to get out of the hole. Or you just happen to stumble on this web page for some reason. A bit of caveat, I too have started a business that is still trying to be successful. Also, I’m also still seeking for the right answers.
So you want to start a new business – you want to be an entrepreneur. There are 1+8+1 of
“creeds” laid out for you to think about, composed from what I have gathered so far.
Perhaps you already know about these things. However, the basics should be stated again and again. People tend to forget things, not because they are nearing senility but simply because they take things for granted.
The primary creed of business is to get the intention right. It should be grounded on strong ethics and morality, to be beneficial, and to do good to other fellow human. If your initial intention is to benefit yourselves without any regards to others, stop here. All the rest will be irrelevant.
The first creed of Business should be to create customers and retain them. The Customers are those are the ones that a business provide value for and in exchange they give some money to the business. They are the ones that define a business, so take good care of them.
A side note on this: Business is not established to provide money or wealth for the owners. Money (profit, if you will) and wealth is an effect, not the purpose. It can be considered as a measure of how you conduct your business affairs. If you conduct business successfully, money will come anyway – it’s a causality.
As simple and naive as this may sound, people do get distracted to treating money as their purpose, even if it is the basic resource of business. But still, psychologically we must put everything in its correct perspective.
The second creed of Business is – to be able to create and keep customers, a business must produce “something” that the customers like and want as such that they be willing to pay an adequate sum of money for that. Be cautioned that the “something”, the “it” is something that the customers like – not what business owners think people will like. It does not matter whether you think that your product or service is great if nobody wants it because they don’t think that it is great. So it is important to pay attention to Alberto Savoia when he says:
make sure you have the right “it” before you make “it” right
Don’t waste money, time and energy on doing something that nobody (or only a handful) wants. This has got to do with business experimentation that Savoia called “pretotype“-ing. Find out the “it.”
Make sure that you also know how much are they willing to pay for what they want (the technical marketing terms for this is WTP or Willingness to Pay). This involves surveys and questioning. Don’t be overwhelmed, lots of resource will help you do this the cheap way.
After you have figured out what they want and how much they are willing to pay for it, make sure that you tell them that you have what they want at a price that they are willing to pay.
An important side note on this is a permanent address to do business on. If customers google you, there should be a map showing where you conduct your business, especially if they street-view your business address make sure that they do not see a hut in the middle of nowhere land. At least show them that you are someone that inspires credibility and responsibility.
The third creed of business is that you have to ensure that the cost of producing or making available or performing that “something” is less than the amount of money people are willing to pay for. The difference of the payment and the cost is what we generally know as profit, or profit margin, or (gross) return from sales if you want to get a bit technical. If it cost more than what you will be paid for, then perhaps you are setting up a social institution, not a business.
The fourth creed of business is that you have to know what you are doing. If you really do know what you are doing, that’s great. But you can settle to move on if you don’t know in depth, but you need to know just enough to be able to get the right people that you know possess the necessary skill or expertise to help you.
The fifth creed, and this is important. You have to love what you do. It’s called passion. There are lots of opportunity out there to make money, but you may not like it or even despise it. I suggest: don’t do it. It will drain the life out of you.
Acknowledging the first up to the fourth creed combined with the fifth will make you shine with the light of confidence that will help you to get customers and helping hands – because you believe in what you do and therefore they too will somehow be inspired to believe in you. There’s a psychological term on this but I can’t seem to find them at the moment.
The sixth creed – is my personal favourite, Adequately finance your business. You’ll need money to set up and run a business, of course, but stay away from banks! Don’t use your credit card or mortgage your house or car. Do not drain your life savings or your children’s tuition savings. Better be save than sorry. More importantly, stay away from those that have the word “interest” and “collateral” written somewhere – do watch for those fine prints. Do not be tempted to follow the dramatic stories of those successful ones that tell you otherwise. The business world is paved upon the tombs of the businesses that flops. Only because they are flops, they are not properly accounted for – that is why we don’t know much about them. There are mentions from reputable management consultant and researchers that 80% of new business start-ups fail.
You need money, sure. Then ask it, lend it, from the ones closest to you – family is your biggest bet, then closest friends, and acquaintances that believed in you, or those whom you can get to believe in you. Those ones that will not come to you and break your knees when you missed on your promise. It is crucial that you build your credibility by showing them that you know all the creeds including the following that I have and will put out. And the most important of this, referring to the primary creed, should you miss on your promise, don’t hide. Promptly meet your lenders in person and tell them that you are still around and highly spirited to pay what you owe as soon as you are able to. Update them of the progress of your endeavour regularly – you’ll be surprised of the psychological effect this kind of positivity does for you and your lenders. After all, they are in fact your investors if not share holders.
You need a bit of spread sheet cash-flow projection skill on this, but as a rule of thumb, make sure you raise twice the cash you think you’ll need, or at least make them on stand-by so that you can use them when you need to. Business is about uncertainties of the future.
Stay away from those that have the word “interest” and “collateral” written somewhere
I also suggest here another good resource for you to start a business that can assist you to succeed from Alexander Oesterwalder and Yves Pygneur from their website: strategyzer.com
The seventh creed is taken from the advise of Professor Rita McGrath : Parsimony, parsimony, parsimony! Spend only what you can’t avoid. Do most of the things yourselves. Roll out your sleeves, get those hands dirty and sweat a bit more. Hiring admins, accountants or janitors are for established business. Only hire the ones that you really can’t do without. Think of out-sourcing, or web-sourcing. Do find free tools on the internet to help you start your business. Another advise from McGrath is something that is popular in Silicon Valley circle of entrepreneurs and companies: Fail fast, fail cheap, and move-on.
The eight creed is called “The Discipline of Letting Go.” We hate to loose, we hate to fail. It would be considered defeat to acknowledge that we are wrong in the first place. People are just not built with the feature of accepting failure or loosing. This is a mental skill that we need to train ourselves. The trick is to know when to quit and stop pouring resources on something that is not going to go anyway.
The final creed is the most difficult: be modest be humble. As Adam Smith mentioned that there is an invisible hands at work in the market. Start believing in that there is a single Superior Being, a Causa Prima that will determine the result of your effort. If you are not religious, start to be one. You are not a super-human. You will need all the help you can get in order to succeed in business – again, be modest be humble.
So, by starting a business we deal with uncertainties. There is no guarantee that following all the creeds that I laid out above will take you to success. There are too many variables at play. But, even if you fail anyway (which we do not know for certain), you’ll find that you failed fast and cheap with minimal or no grave casualties. Therefore, you can take the journey of failure that you have taken as a lesson learnt, so that you’ll not fall in the same hole twice – and move on.
Finally then, what if you eventually become successful in the business that you build? Then this another topic that I shall discuss, because people are more prone to be overwhelmed by success rather than dealing with failures.