Enthusiasm and great ideas are good starting points, but entrepreneurs need more than that to start a successful business.
It’s a dream come true: to be your own boss. No one to tell you what to do. Just start up your business and the money will pour in. That’s the way to get rich—by working for yourself, not for someone else.
But reality is very different from common beliefs about starting and running your own business. In truth, it’s very hard work, and success is not guaranteed. According to Statistic Brain Research Institute, 25 percent of startup businesses fail in the first year, and 50 percent are gone by the fourth year. They report that the leading management mistakes are: 1) going into business for the wrong reasons; and 2) advice from family and friends.
Not One Boss, But Many
Let’s start with the concept of the entrepreneur being his or her own boss. In reality, instead of having one boss, the entrepreneur has many. For example, customers are the boss because the new business will cease to exist if the entrepreneur does not deliver what they want to buy. The accountant is also a boss because he or she will require recordkeeping tasks the entrepreneur might wish someone else could do.
The entrepreneur’s “best friends” will also change. Those who will offer the best advice—and be most aligned with the entrepreneur in pursuit of success—will be those who ask some of the hardest questions and identify some of the greatest potential pitfalls in the entrepreneur’s chosen path. These (sometimes uncomfortable) allies include the banker who provides the financing, the accountant who prepares the tax filings, the attorney who advises on legal issues, the insurance agent who helps the entrepreneur manage risk... and the SCORE mentor.
SCORE is a national nonprofit association dedicated to helping small businesses get started, grow and achieve their goals through education and mentorship. The local SCORE Peoria chapter serves 10 counties in central Illinois with resources, workshops, and free, confidential mentoring by trained volunteers with real-world business experience.
The cornerstone of the assistance offered by SCORE is the written business plan. SCORE strongly recommends that every entrepreneur who wants to start a business create a written business plan. The process of developing a business plan is essential for the entrepreneur to develop the details for identifying the real business opportunity, anticipating all costs required to start and operate the business, and considering alternatives.
Outcomes and Expectations
Enthusiasm plus a great idea for a new product or service may be the starting point, but an entrepreneur needs more than that to start a successful and profitable business. Planning—including the written business plan—is absolutely essential. Research—such as market research—will help the entrepreneur avoid mistakes that publicly available data can warn against. Is the would-be entrepreneur a self-starter? Starting a new business requires working hard for long hours, often alone. In addition, the entrepreneur will “wear many hats”—scrubbing the front office for an hour, followed by completing spreadsheets for the accountant, followed by networking at a community event, etc. Support from family members is a requirement, for many obstacles and challenges will drain time and emotional energy from the entrepreneur. Financial responsibility and stability are also mandatory. The entrepreneur must understand basic financial concepts such as cash flow—a business can be profitable and still fail if the cash flow is not sufficient to support it.
“We have had excellent outcomes mentoring clients who go on to start successful businesses,” says Martha Campbell, a SCORE volunteer for many years and the Peoria chapter’s secretary. “We also consider it a success when we can help a client who has unrealistic expectations about starting a new business. We frequently see clients who… expect to start the business and get rich quickly. Our mentors help them understand reality.
“Some clients do go on to start very successful new businesses,” she adds. “But some, faced with reality, decide either to not start the new business or to adjust their plans and expectations. We consider this a success because they have discovered that being an entrepreneur is not what they want to do—before they lose their life savings and go into debt by starting a new business that fails.”
Connecting the Dots
In addition to the services offered by volunteers, SCORE partners with other organizations that offer services helpful to entrepreneurs. For example, the Turner Center for Entrepreneurship at Bradley University hosts the Small Business Development Center, which provides an excellent workshop titled “Starting a Business in Illinois.” The SBDC can also provide a wealth of market research data to help the entrepreneur understand competition and customer demand. SCORE understands these services and can help make the connections.
Entrepreneurship is exciting and rewarding. Starting a new business can deliver lifelong benefits to the entrepreneur and to the community. SCORE Peoria can help entrepreneurs succeed with training, tools and mentoring to help them understand the challenges and conquer the obstacles of startups. The entrepreneur has a trusted mentor in SCORE. iBi