Lessons for life
April 4, 2011
It sounds so glamorous; start your own business and be your own boss. But this can be career suicide if you're not honest about the risks you might face on the road to becoming an entrepreneur.
"You can do anything you put your mind to, but that doesn't mean you should," says Carol Roth, a business strategist and author of the book "The Entrepreneur Equation: Evaluating the Realities, Risks and Rewards of Having Your Own Business" (BenBella Books, $24.95). "Sixty percent of businesses don't earn a profit over their lifetime. And if you're a woman, the deck is really stacked against you."
Roth says while women are making strides, it's still very much a man's world in today's corporate America. Case in point, not one of the major Web 2.0 Companies (Twitter, Facebook, Groupon, or Foursquare) has a woman on their board of directors.
Roth says to shift the tide, women need to do their research, and then start taking risks.
No matter your gender, one key point, Roth says, is that you have to be willing to do the heavy lifting.
"You must be willing to do every single job in your business. If you own a restaurant and a server doesn't show up, you have to step in and be willing to do the grunt work," she said. "This is not glamorous. It's the hardest work you'll ever do. So many people forget this and think it's about sitting back and watching the money come in. I call this 'business beer goggling'—where something looks a lot better than the reality."
Here are some of the biggest misconceptions about becoming an entrepreneur.
I get to be my own boss. "When you have your own business, you have to woo and keep every single potential customer happy," says Roth. "You have to report to more people when you're in charge than you ever had to before in your regular job."
If I start my own business, I'll be fulfilling my passion. "If you love being a hairdresser, and you open a salon, you most likely won't be doing what you love," Roth says. "You will be handling the bookkeeping and marketing and social media and all the things needed to get the word out about your business."
Ideas are valuable. "Business ideas have no value at all if they aren't executed. Even bad ideas go far if they are executed well. Look at Starbucks. They decided to open a coffee shop on every corner and charge over four times what you'd normally pay for coffee. On paper this is a horrible idea. But they took it to the next level and made it a lifestyle. Stupid idea—but great execution."
It's easy. "I don't know why enough people don't say how hard this is. The only overnight successes you hear of are the exception to the rule or the ones who really have been struggling for 10 years, but you're just now hearing about them. Business owners work more hours and make less money across the board. And 99 percent of new business owners underestimate the cost of starting a business, so making money out of the gate isn't going to happen."
I want to make it big. "If your motivation is to prove to someone you can make it big, or to just want to be rich, you will fail. So many people want to run a company because they don't get along with their co-workers or they're tired of a boss taking credit for their work. When your ego is running the show, it's doubtful you'll be a successful entrepreneur."
I'll be good at it. "Do you have the personality for being an entrepreneur? Be honest with yourself. Are you willing to go door to door and pitch your idea to potential investors? Can you be nice to customers at all times? Can you handle rejection? Are you willing to make no money when you start out? What about putting up some of your own money to get your idea off the ground? Not everyone fits all of these criteria, yet despite incredibly high failure rates over 6 million people start a business each year."
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