Starting a business is a leap of faith that many professionals embark on to chase a dream such as being your own boss, achieving financial independence or leaving a positive mark in the world. But, as more employees are leaving their jobs in the current labor market to become entrepreneurs, they also must face the stark reality that not all businesses make it past their first year.
The stone that makes entrepreneurs trip up in their first year is the idea of becoming their own boss. A plumber who leaves a job to start a plumbing business soon finds him- or herself doing all the plumbing jobs versus growing the business in other ways. The truth is, you need to play three roles in your business: the visionary entrepreneur, the accountability manager and the service provider. When an entrepreneur spends too much time in one area, the likelihood of the business failing is high. Learning how to balance these roles will be the key to operating a business in a way that meets all the demands of growing the business.
What does each role require? Being the visionary entrepreneur is the role a business owner plays to think about the future and goals for the company. The accountability manager reflects on the lessons of the past to avoid derailing from the goal. And the service provider is the technician who delivers the service to meet the demands of today. Each role has a different responsibility as well as different goals to achieve. Thus, creating the likelihood for an inexperienced business owner who eventually goes down the path of business failure.
The best way to succeed in business is to acquire more experience, just like any other career. A big difference between building a career and a business is the personal stake an entrepreneur makes to launch the business, so it is critical to create something on solid ground. How do you accomplish that? By working on the business, not in it.
According to the book The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It, the author, Michael E. Gerber, offers three key areas a business owner must focus on to succeed: innovation, quantification and orchestration.
This is the core of every successful business. A small business that practices innovation is asking one key question: What is getting in the way of my customer getting what he or she wants from my business? Time spent on working this out requires looking at a problem from your customer’s point of view. It is critical to make things easier for your customer, so spend time innovating up and down your service process. This becomes the mechanism by which your business identifies itself in the mind of your customer and establishes its individuality.
Innovation can take you only so far; you now need to be able to measure your success. This includes monitoring your lead times, production schedule, customer service incidents, revenue and much more. Successful business owners manage to quantify everything and adjust along the way to make sure the business makes money and does not lose more than it has to. Without measuring your success, you will not know how far you are getting.
As a business innovates and adjusts to its growth, it becomes time to think about how to keep the business on its trajectory. Orchestration means to look at the things that are working in the business and replicating them as much as possible. It is the way you do business, similar to a franchise, where there are policies, uniforms and systems to help deliver the same predictable results to a customer.
With so many entrepreneurs chasing their dreams, a few new rules like these will go a long way toward making it past the first year. Nowadays, you can start a business in just about any industry, and reflecting on the 30,000-foot view of what it will require to succeed is time worth spending before starting.
EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor, and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.
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