It’s painful when you start a new business for the wrong reasons. As a mentor to aspiring entrepreneurs, one of my challenges is to make sure their idea is a match for them. For example, I have a friend who is a self-proclaimed “foodie” who wants to start a restaurant, but really has no interest or skills on the business side. Loving food does not necessarily lead to a happy business.
Of course, one solution is to find a partner who has the skills you are missing. I actually worked with Bill Gates back in the early PC days, and I’m convinced that Microsoft may have failed to grow without his partner Steve Ballmer. Bill Gates ran the technical show, but Steve Ballmer, business trained at Procter & Gamble, carried the marketing and financial side of the equation.
Many technical entrepreneurs still tend to believe that their technology and passion are ninety percent of the equation, and the business will happen by default. In my view, this mismatch of interests compared to key business drivers is the primary reason that the majority of new ventures ultimately fail. Here are some key questions I ask to get you started on the right track:
- Is there a real business need for your proposed solution? A business need implies customers with money to spend, that have a painful existing problem. Remember that customers buy solutions, not technology, and they rarely pay for “nice to have.” Your passion alone, for your food or your product, probably won’t change the world.
- Are you knowledgeable and comfortable in this domain? Don’t step into an arena you don’t know, just because it looks like fun or easy money. Match the business to your comfort level, such as franchising, multi-level marketing (MLM), freelancing, or a new product. Don’t forget that all business types require management and execution skills.
- Is your intent to maximize profit or maximize social impact? The business implications and expectations are quite different for non-profits versus for-profit entities. For example, I often find social entrepreneurs looking for investors. You can’t interest investors if you don’t intend to profit. Non-profits need donations and philanthropists.
- Are you primarily motivated by family or peer expectations? Don’t try to be a business owner just to prove something to a loved one, friend or sibling. There are no business types that I would recommend here, except maybe an existing family business that is already successful. If you must proceed, at least pick something you love.
- Do you have money for bootstrapping or require financing? If you really want to run a business your way without a boss or professional investor hovering over you, then start small, fund it yourself or through friends and family, and grow it organically. Banks and investors will expect a proven business model and some traction, so be realistic.
- What is your sustainable competitive advantage? Working harder for less margin is not sustainable. A thriving business requires value-creating products, processes, and services that cannot be matched by competitors now, with a plan to maintain that position. It’s no fun for me to mentor business owners who are suffering continuously.
- Are you working alone or with an experienced team? Many aspiring business owners prefer to work alone, and avoid the problems of partners, investors, and large teams. There are business models for these, including consulting and freelancing, which can simplify your life, and limit your risk, but also have limited growth and upside potential.
Thus you see there are new business types and approaches for every personal motivation and lifestyle expectation. In any case, don’t expect the work to be automatically easier or more satisfying that a corporate job. Success in any business requires a serious commitment, and learning from setbacks. Switching business models is not a shortcut to success and happiness.
I often recommend to aspiring business owners that they first take a job with another business in the same realm as the one they envision, to get some practical insight into the challenges, make contacts, and learn more about their own motivations. Then take the big step of starting your own business, with fewer surprises, some good connections and likely more accumulated savings.
Overall, it is important to remember that happiness breeds success more often than success breeds happiness. Every aspiring business owner should play to their strengths and interests, rather than listen to well-meaning advice from friends and experts. For long-term satisfaction, make sure you are driving your business, rather than letting the business drive you.