6 Things I learned in my first 5 years as an Entrepreneur
I began my entrepreneurial journey about 5 years ago. I have launched and/or run many different businesses. A virtual 24/7 hotel fitness system, custom abstract artwork, home-building and remodeling, Native Root Coffee, and FitQuest Media just to name a few. Most of my journey has been trial and error, and I have learned more about building a business in the past 5 years than I could in ∞ lifetimes at school. But that topic is for another day.
Today, I want to share 6 important things I have learned to build a successful business. Remember, I am still learning, so don’t expect these to solve all your problems. I am simply sharing what I’ve learned in hopes that it will help you reach your goals faster.
1. The market doesn’t care
The market has no feelings. It will chew your idea up and spit it back at you. If you are starting a business, it’s important that you go in knowing this.
Everyone has ideas. Some may be great, most aren’t. A lot of people will tell you “it’s not the idea, it’s the execution”. The fact is it’s more than that.
It’s both… and even more. First, you have to have a great idea. That idea must actually solve a problem. You must then plan and execute that idea in a way that builds a sustainable business.
I think this is why Mr. Wonderful from Shark Tank gets a bad rap. He is trying to tell the pitchers what he believes the market will tell them. Obviously Mr. Wonderful is human, so he gets it wrong sometimes, but there is no emotion attached to his response.
This unfortunately grim message brings me to point number two, where there is redemption!
2. Pivot, don’t abandon
Let’s say you launched your MVP, and it was a success. Now you are trying to grow and the market is giving you a hard “NO”. Don’t completely abandon your idea. If you truly believe in it, look for a way to turn lemons into lemonade.
Our friend from before, Mr. Wonderful, says the number one characteristic he looks for in an entrepreneur is the ability to pivot. This is important because the market is constantly rejecting ideas, and it takes a combination of grit and flexibility to find something that works. I believe the word “pivot” perfectly describes that balance.
A perfect example of this is Kanye West. Kanye was getting rejected over and over by his record label, Roc-a-fella Records. But he never stopped believing he was going to change the rap game.
After being in a terrible car accident, he had his jaw wired shut. He could hardly talk. But, instead of sitting in his hospital bed abandoning his dream completely, he turned lemons into lemonade.
Kanye recorded his breakout song “Through the Wire” from his hospital bed. It was radically different. He poured his soul out in that song, and it finally clicked in everyone’s mind that Kanye was special. So, if you are losing hope for your business, don’t immediately abandon it, try to radically differentiate. (Check out my Market Radically project to learn how the best brands in the world are differentiating)
3. Systems are key
Once you have found something that works, how do you efficiently grow it without adding tons of extra work hours? Systems.
Systems are basically consistent processes your business uses to get work done. In the early stages of a startup, not everything should be systematized. Actually, quite the opposite. You must be able to find what works without being stuck within the confines of your systems.
However, while you are iterating and finding what works, you need to record data and prepare for the systems you will eventually create. For example, if you go through 3,000 sales calls, it is a perfect opportunity to test different scripts and record the data so that, later, you can see which ones worked the most. During this stage, you are looking for that famous 80–20 rule. What 20% of your efforts is bringing in 80% of the revenue.
Once you know what works, here’s how to create systems to scale in a nutshell:
- Create a flowchart or mind-map of your overall process.
- Write EVERYTHING you can about each step
- See which tasks you can outsource to other people
- See which tasks you can automate with tech
- Create a new map including the details of the workflow (who does what when)
- Form habits around these systems
- Make sure everyone deeply understands them
The last 2 bullets are unbelievably important. If you don’t use these systems, it’s like they don’t exist. For that reason, don’t start at 100. Start small and get everyone acclimated to these systems. Build habits slowly and adjust.
Remember, the goal of systems is to create a well-oiled process that allows your business to grow without adding extra work. Use this statement to check in and see if your systems are actually doing their job.
4. Don’t get stuck early (make an MVP)
This is a trap I fell into hard in the beginning of my entrepreneurial journey. I would get obsessed with things like systems, logos, websites, apparel, signage, design, etc. These unimportant things would suck so much of my time that I should have spent getting my product or service out into people’s hands.
As I mentioned before, the market doesn’t care. People just want their problems solved. Once you create your minimum viable product and get it out into the market, you will be able to see what people like and don’t like. Not only will this help you make a valuable product or service, but it will give you clarity on all the details like brand design and systems.
I completely get it, these things are fun! That’s exactly why I would get sucked into them, I love fresh new designs, and I love scalability. But if you start here, brace yourself for (1) burnout and (2) a lack of progress. You can’t let your biased love for your product blind you from what the market is saying!
5. Understand the books
Finances can paint the full picture of your business if analyzed properly. Just by looking at numbers, a financial investigator could tell you exactly how your business has played out. At its core, a business represents a flow of money. The only reason we have “companies” is because we sent a form to our state government and attached a payment. They only exist on paper and in our imagination.
When you understand how to look at the financials of a company, you are able to make better decisions. When it comes to running a successful business, money IS everything. You and your team may have goals and aspirations that don’t involve money, but your business doesn’t.
If a business is not profitable, it will fail. After all expenses are accounted for, operating expenses (overhead), salaries and wages, taxes, depreciation, cost of goods sold (COGS), the goal is for your business to (at minimum) break even.
On average, businesses aren’t profitable for the first 3 years. I totally get it, there are tons of startup expenses, and not much revenue. As you are getting off the ground, it is totally okay to have red months and even red years. But make sure they are tracking upward towards profitability.
The only way to grow a business is if your invest more resources into it. Whether you invest time, money, manpower, or expertise, if you are not profitable after expenses, this investment will only take you further into the red and may do more harm than good.
6. Different is better than better
In a world where nearly everything has been commoditized, it’s tough to stand out. Being better than the competition hardly gets noticed anymore. If a client is looking for design, they could get on Upwork and find a freelancer to knock out the project at phenomenal rates.
“But, I am sooooooo much better than those freelancers,” you say. Who cares? I mean really. Who even knows the minor differences that make you better than them?
First, you need attention. You need to be a “scroll-stopper”. Being different helps you grab people’s attention. Then, when you do quality work, they will hire you or use your product indefinitely.
So, how do you become different?
- Read Tinker Toys summary
- Read Purple Cow
- Radically change small things and get feedback
- Increase your price (substantially)
- Do not charge hourly
- If you laugh at a random idea, it’s probably a good one to try
(To learn the formulas behind differentiation, check out my Market Radically project)
If this helped you at all, check out my free resources below, and share with a fellow entrepreneur!