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Does "Luck" make a Successful Entrepreneur?

SPIRIT_OF_OKANAGAN's picture

“The harder I work, the luckier I get.” A simple quote by Gary Player (the golfer), sums up our answer when we ask if luck makes a successful entrepreneur.

Statistics tell us that 75 percent of new businesses fail within the first year, and 90 percent will have closed their doors within five years. As a consultant who operated two service oriented business, one a failing mess and the other a surprising success, I can tell any aspiring entrepreneur that whatever happens to the operation, she or he will come out of it a stronger and wiser person.

So how can we beat the odds and turn a business dream into a triumphant reality?

Most small businesses fail because building a money-making enterprise takes far more than the ability to make a certain product, or provide a simple service. Successful entrepreneurs have skill, money, determined passion, and the personality of a leader. Sound intimidating? Read further because you might surprise yourself. The following four questions should tell you if you have what it takes to make your business idea profitable:

1. Do you have the skills to wholly operate a business on your own? YES NO

To actually run an entire enterprise we need to be expert financial planners, accountants, marketers, sales representatives, collections agents, public relations whizzes, and more! Without a foundation in some significant areas of business operations, the risks of failing increase considerably. Both of my businesses gave me a humbling insight to how much I do not know.

The good news is that if you have a strong enough desire and passion to work through any personal weaknesses, just taking a few simple steps can help groom you for success. Initial beginnings can include taking night school or on-line courses in small business management, reading books about starting a business, researching internet resources, attending informational interviews with small business owners or bankers, or seeking out free government agencies specializing in supporting small business.

2. Do you have enough money to sustain yourself for at least a year? YES NO

Of course you answered yes! Starting up a business is a full time commitment. Not only do you need operating money, but also without your regular income from a structured job, a healthy cash flow to survive is necessary. Hence, without some money in the bank or a wealthy partner or parent to support you, chances are your “no more bosses” idea will not look as appealing a few months down the road when the bill collectors come pounding on your door. Think about all the money and time wasted if your business folds before it has a chance to take root!

Several government agencies exist for the expressed purpose of assisting new or growing business owners by offering grants and loans, financial planning, training, and other helpful resources. Just looking at the statistics, we have to wonder if the government enjoys throwing our tax dollars away on such bad odds. In truth, the people in charge of the public purse hope that one day you will either save the world with your invention; or you will employ other people, OR, be so successful that you contribute to the public coffers by paying higher taxes! However, before you skip your way to the government or bank with only good intentions in your pocket, remember my words: financiers will want to see how much you are willing to invest in yourself before they decide how much money or time they are going to risk on you.

What is that? You have a great idea, and the skills to make it happen, but no money? Okay, personally, I still believe in you. However, you will need “something” to take to the bank if you want financers to believe in you.

3. Developing a three-year business plan forecast is easy. YES NO

This is where a lot of people trip up; myself included. At first I really did not need a loan for my business since I started it out of my marital home and my spouse was able to pay the mortgage for the time being. Six months into my own self-employment, it became clear that I had tapped into a much-needed service in my community, and I could potentially make some real money if my business “looked” a little more professional. My financial resources were limited but I knew the big business people would have more confidence in my enterprise if I moved to commercial space. That meant a whole new set of problems to work through and conquer.

I could not remember long division let alone come up with a three-year business plan formula that would be impressive enough to convince an unsmiling, MBA academic to lend “me” money. Fortunately, I have a lot of nerve and did not let anyone intimidate me with logic. In my mind, I had to present an extra-ordinary, visually appealing (and readable) business plan that exceeded the expectations of whom I had to present it to. One of the many barriers I encountered was that the very nature of my business was service oriented. Service is a goodwill business and not on the top of any banks list of good loan risks. If I needed money for equipment, the bank at least had some security that if I defaulted on the loan they could recover at least part of the loss by repossessing my assets. As a service oriented enterprise, I had a tougher task ahead.

I did a Google search, went to various banks to see what their business plan forms looked like, and talked to successful business owners to get planning ideas. I joined community business associations and the Chamber of Commerce (a wealth of information and networking leads are everywhere if you look!). In addition, I took an inventory of the assets I had accumulated in the home base, and looked at the condition of my personal cash flow and lines of credit. Once I had gathered all of the background information, registered my proprietorship, paid for a city business permit, I was ready to go.

For the next six weeks, day and night, I sat over my computer crunching numbers and continuing with my research including checking out what my competitors were doing. Finally, I had a very compelling 40-page document complete with every single answer the bank would question, and back up plans in case they did not like the first one.

Writing the business plan did not come easy to me, and although I had never performed such a challenging task, I was shocked to learn from my banker that my document was in the top 5 percent of all the ones the bank receives. As a result, he increased my original loan request by 40 percent – with no security other than my sweat and tear soaked business plan.

My point is, we cannot possibly all be rich or have every skill involved in running a business, but we can always get out the books and learn how to do things for ourselves. Bankers like that, and, preparing the initial groundwork made me a better proprietor than if I paid someone else to do it for me. From that point forward my business revenues and profits increased yearly. I continued to learn and prepare for any problem that came my way. Except one detail I never imagined would be a problem: loneliness at the top.

4. If your business is a success, are suitable for the position of President? YES NO

Starting up and operating a business needs to be looked at in the same way one would choose a job. After six years of progressive business growth, I learned I am not a person who works best as the sole controller of a growing organization. Sitting behind a desk crunching numbers, and putting out fires all day long, was not my idea of a great career, based on my personality and interests. Bottom line? I was not suitable for the advanced job! Therefore, I put my business on the market and sold the employment agency for a profit. Now I am back doing the functional jobs I love, and with far more respect and empathy for my employer.

“And since you know you cannot see yourself,
so well as by reflection, I your glass,
will modestly discover to yourself,
that of yourself which you yet know not of.”

William Shakespeare (1564-1616)

I have listed the following resource links to help get you started in your business development dreams:

http://www.biztest.com/bdtbusiness.htm

For under $20.00 you can take the entrepreneur success profile test to see if you have what it takes to start and operate a business. As a human resources professional and senior recruiter, I highly recommend this self-assessment test to see if you are suitable for the role of business operator BEFORE risking your time, energy, and money.

http://smallbusinessresources.com/

A site written by and for entrepreneurs who share their first-hand knowledge of how to succeed in small business. Free, helpful advice from small business and Internet experts.

*I am not personally associated with, nor do I have any stake holding interest by referring the above organizations.

By Cherylann Teboekhorst
2007