Small business entrepreneurs never seem to lack vision, big ideas, or ambition! The vast majority of entrepreneurs I encounter in my practice believe they have a product or service that is so much better than what’s on the market already; they believe that if they can just roll it out, they will be able to just count the money as it comes in the door.
They believe that customers will come as soon as they learn their offering is available. Many even envision “going public” with the intent of cashing out within a few years. These entrepreneurs figure they’ll just incorporate now as a C Corporation so they are ready for their exit before they even start.
The news, movies, and even novels are full of “rags to riches” stories of the hard-working entrepreneur who strikes it rich. The message is pretty simple, right? Just launch a business and as the owner gets some experience under his belt, spectacular growth will just happen. In reality, growth (if it ever does happen) is often a slow and very laborious process. Usually, it takes twice as long as expected and requires more money every step of the way.
With a history of demonstrated profitability, getting a bank loan is possible. Even at that, banks insist on personal guarantees from small business owners and require a sizable cash investment by the owner before they’ll seriously consider a loan. Banks may be willing to take a risk but only if it’s shared by the owner through a sizable down payment.
So, what’s the best way for the founder to get their grand idea off the ground? My best advice to a new entrepreneur with limited business experience is to focus their product or service on the narrowest niche possible. By limiting their product or service offering to a very small customer segment, they can launch their business, learn what they didn’t know, and confirm what they suspected before they drain their most valuable asset: their money. Big ideas require big money. In contrast, focused/niche ideas require much less money and the money itself will be much more efficiently allocated.
As I like to say, “You can hit a target with a machine gun, but can you afford the ammo?” If you can only afford a few bullets, you better use a single shot rifle and focus your aim. As Bill Cosby said, “I don’t know the key to success, but the key to failure is trying to please everybody.”
After all, owning your own business is about staying in the game and surviving long enough so you can keep playing and eventually get good at it.
Are you looking for a home run the first time you bat or will you take a few walks and a few singles as you learn the game?
