One of our goals here at Vested Wealth Investment, LLC is to empower individuals through education. We believe that through education, we can empower individuals with financial principles and open their minds to possibilities/opportunities which are unapparent. Hence, this issue highlights some business lessons learned about starting a new business, particularly in 2016.
Profit is not the ONLY Reason to begin a business
Ever watched the Netflix Original series “Marco Pollo”? If you have, you would recall Kokochain, the blue princess (fake blue princess) who had been chosen to marry the prince of Mongolia. Just to put things in perspective, marrying the prince would effectively put Kokochain (a slave girl) in royal line. Sire, Great Khan of Mongolia was at the time consolidating his power across the region and was on an unstoppable path to ruling the whole of China. One can therefore deduce that someday, Kokochain may perhaps become Empress and even mother to a King. Kokochain, however, falls in love with Marco Pollo, son of a Venetian merchant who travels to China and is ultimately left there by his father as a slave to Sire, Khan of Mongolia. After several attempts by Empress Chabi (Sire’s wife) to separate Kokochain from Marco Pollo (a “nobody”), one day, Empress Chabi finally gives Kokochain a piece of her mind. In her words, “Peasants marry for love, royalty marry for a cause greater than themselves.” She encourages Kokochain to seize the opportunity of her marriage to achieve greater than herself.
Apologies for the lengthy narrative but I believe there is an important illustration to be made from this show: Starting a business is very similar to this lesson described by Empress Chabi…your purpose for starting a business must go beyond getting rich or making a profit. My experience has shown that if you are unable to turn a profit on time, you will be quick to give up for lack of perseverance. Even if and when you reach profitability, you will also be quickly disappointed at how short-lived the satisfaction of getting profit is. You have to pick a business that provides solution to an issue you are most passionate about in order to be absorbed in the process, the people, the brick-by-brick building of something great over a long period of time. I found out that this is where true fulfilment and satisfaction lies.
Be Prepared for The Rocket Launch-
It’s a well-documented fact that a rocket expends the most energy at takeoff. This is because the Rocket at launch needs to escape the Earth’s gravity i.e. the force pulling objects towards the Earth. For this to occur, the rocket must generate a huge amount of thrust to pushes the rocket to a point in the OutSpace where the rocket escapes the force of gravity. Before you begin any business, ensure you have counted the cost and determine exactly how much fuel you will need to propel your business pass the point where the force of gravity no longer applies. Business expert say that for most business, it takes approximately three years to break even. For some, it may be less but being prepared is the key to ensuring you have enough to withstand the storms that may lie ahead. If you must borrow to start your business, borrow enough otherwise don’t begin at all. One important lesson I learned in 2016 was this- your analysis of capital should include your own salary, yes your own salary. My perspective as a business owner was that I didn’t need to pay myself as long as the business will pay me one day. The only problem with this perspective is that the cost of running your household while running a business never seizes. Thankfully, I was still gainfully employed otherwise, I would have been buried. Lesson learned.
Be Prepared to Deal with Failure-
Listen, I know we all like to talk about success and hardily about failures but as you read this, I want to give you the permission to consider the possibility that your new business may not make it. Don’t judge yourself as not smart or business inept, the other successful business owners probably failed at some point. Starting a business is has much about the experience as it is about the success and regardless of how it turns out, every failure you encounter, from the inconspicuous errors, to massive heartbreaking ones, will teach you something, offering you a platform to do something better with your next opportunity. To minimize the stress that comes with this journey, it’s usually a good idea to have your family finances in order (6-12 months of household expense) with no debt if you can. The fact is first-time business owners have fewer resources than their more experienced counterparts which often means they’re less capable of tolerating financial instability.
Be the Technical Mind or Find a Technical Partner
My advice is that you should never get into business where you do not have the inherent technical skill or license to operate. Just to be clear, I am not referring to skills that can be learned. For example, I see many non-CPAs open a tax practice and there is no doubt many have succeeded. I am referring to businesses that require a more unique technical skill set like starting a medical practice without being a doctor. If you must get into a technical business, I encourage you to have a technical partner who is just has committed to the business as you are. I call it “having something to lose or some skin in the game”. This will ensure that no employee or staff can hold you ransom because your technical partner (who has some skin in the game) will do their best to ensure they cover the void created by the sudden departure of a technical staff.
Get the Right People on the Bus- Weed Out the Bad Ones
Jim Collins in his book “Good to Great” explains how great companies are built. In his words, focus on “who” first before “what”. Consider yourself the bus driver and your business as the “bus”. By first identifying the right passenger in the right seat on the bus based on a clearly defined vision, you won’t have to worry about motivating anyone and you’ll be much faster and smarter in responding to changing conditions. I agree with this philosophy! It takes too much energy and effort to motivate anyone. I would even dare to take it a step further by saying it shouldn’t be your JOB to motivate your team, they should be self-motivated.
Where most business owners fail is not being sensitive enough to identify when there is a wrong person on the bus or the absence of courage to get the wrong person off the bus. On day one of acquiring the business, we wasted no time in get the wrong people of our bus. In fact, it took us over 7 months to completely replace the weeds and we were now ready to drive. We brought on several new team members who were self-motivated and shared our vision. By month two, we had begun to feel the positive impact of the new team. Unfortunately, one of the new team members seemed to be a wrong person. As the co-bus driver, I noticed it but every fiber of my being wanted to give the passenger the opportunity to improve. Instead of addressing her performance issues, she began to influence the rest of the team negatively. Our lack of courage to take a decision based on what was right for the business almost derailed the success of the new team we had put together. She ended up resigning but not before she had done some damage. Fortunately, with a little bit of damage control, we were able to course correct.
