Starting a new business is a serious undertaking, yet some aspiring entrepreneurs approach it as a fun project, get-rich quick scheme or perhaps an expensive hobby. Others quit their day jobs and commit everything to their new passion, without regard for their own well-being or the welfare of those around them. Neither of these approaches bodes well for success. As an entrepreneur, you need to start early to implement the discipline and business practices that will lead to success. Scott Duffy gives key actionable guidelines in his new book, “Launch! The Critical 90 Days From Idea To Market,” that could help start-ups achieve long-term success. Duffy emphasises the often overlooked personal side of entrepreneurship, including balancing finances, relationships and your health. Hereunder are some of the top failures and recommendations to mitigate them: Take the largest risk to get the biggest return. Startups always involve risk, but should not be risky. Every business move should be planned and well thought out, with milestones set in advance. Processes should be in place to ensure that even if something does not go as planned, you, your family and even your job are secure. Let your passion drive your cash flow projections. Moderate your optimism. That means coming up with revenue and expense assumptions that balance your natural optimism and determine how much cash the business will really need. Then take your revenue projections and cut them in half. Now take your expenses and double them. Your idea will attract the funding you need. Assume that raising money from investors to get started will be difficult, unless you have a track record in business or friends with deep pockets. Will key funding be your family’s entire nest egg, or just half? Are you going to bootstrap (self-sustaining) or will you borrow from personal assets? Pretend your family doesn’t matter. Discuss the plan and the costs with your spouse or significant other. It’s essential that the two of you be in agreement on key milestones and how much to invest in the venture. It is better to risk less and be on the same page than to risk more and have your spouse worried and resentful. Mix personal and business funds. Put your risk capital into a separate checking account before you start. Once you see it moved from your savings account to an account tied to risk, it becomes real. You now have a clear financial framework to help you make better decisions, and you will act more strategically, less impulsively. Use personal credit cards for business. Keep your personal credit cards separate from the business. You need to do this as a way of tracking, accounting and leveraging business payments and expenses for tax purposes. Never commingle personal and business funds. Remember that credit card cash advances are very expensive loans. Keep business expenses in the bottom desk drawer. Hire a bookkeeper or setup a QuickBooks chart of accounts on your first day in business. If you don’t set up a system early, you will spend a lot of time and energy going back and forth trying to reconstruct business transactions, for you, your investors and who prepare your tax returns. Don’t formalise the business until you get revenue. Get a laywer to set your business up as a corporation, by the books, before the first transaction. We live in a very litigious society, so you need to at least protect yourself from liability. Set aside money to create a proper legal entity and get business insurance. It is not just about you. Strive for success before thinking about your own payback. Being unprepared for success is the fastest way to lose your first million. It is important to constantly expand your understanding of how investments work, so that as your business grows and you are able to manage personal profits. Hedge your bets by starting several initiatives or products. Decide to launch one business or product at a time. The best route to success is not to spread your energy and focus on ten things, hoping one will work. Give that one focus everything you have got, or you will likely not have the resources to do anything well. Obviously, avoiding all of these errors won’t guarantee success and won’t save you if you don’t have a viable business model. Being an entrepreneur may start with passion and an idea, but turning that idea into a great business is all about smart execution. Don’t let a million dollar idea turn into a million dollar loss, for lack of proper discipline, personal balance and business execution.
