As co-founder and CEO of The Northridge Group, I weathered the storm as an entrepreneur and have acquired invaluable insights that have helped me run a successful, viable business. Leaving behind a corporate job and starting your own business is always a risky decision that one can never be entirely prepared for. With time comes experience, but advice can help you tackle unforeseen hurdles in the midst of the early days of your company. Here are five things every entrepreneur should know when launching their own business.
Learn to define risk differently.
When I first began seriously thinking about building my own business, I had two toddlers at home and had to think about the security that large corporations offer with their compensation and benefits. I battled the idea of staying on the corporate track for that security and peace of mind, but ultimately I knew I wanted something different. My bosses strongly encouraged me not to leave and warned me about all the risks of going at it alone. I realized not being in control of my own destiny was a bigger risk than the lack of financial stability inherent with a small startup. I took the leap and decided to work for myself, with my eyes wide open to the risks.
Work and learn what business is about before you try to run one.
Let’s say you’re a born entrepreneur- you have a high tolerance for risk and ambiguity. That’s great, but maturity and life experience are still essential. Before I started Northridge, I worked for a large corporation in several key functional roles – marketing, sales, operations, customer service, and finance. I managed thousands of people, learned the importance of teamwork and the value of diverse opinions. I gained knowledge and built my credibility so that when I started Northridge, I understood how to run a business and customers valued my business acumen. The lesson here is that there is no short cut to gaining business experience.
Your paycheck will be variable and sometimes zero.
As an entrepreneur, you quickly learn that cash is king. It’s the fuel that keeps your business running. For me, I had no interest in an infusion of venture capital (VC) funding. That meant I had to carefully manage the cash generated from my business. For the first year and a half, I didn’t take any pay, which allowed me to put that money back into the firm, investing in the future and building up equity. [pullquote]As an entrepreneur, you’re always focused on the needs of the business rather than your personal interests.[/pullquote] You have to weather many storms – economic downturns, industry upheavals, competitive surprises. Your company will be vulnerable and the unexpected will happen. Your finances might look rosy one day and you may be struggling to make payroll the next. You must be willing to ride those waves.
You will carry the lives of your employees on your back.
As an entrepreneur, your employees are your best asset. They are often your face to the customer and are at the heart of the service you deliver. Every decision you make impacts the people on your team. For example, if you fail to innovate, your firm may become less relevant in the marketplace, and your business itself will not prosper – impacting the livelihood of your employees. Yet if you make risky decisions that cause the business to falter, you will also impact the livelihood of your employees. It’s a balancing act and a humbling responsibility. Similarly, your talent needs will evolve as your business grows. Sometimes the people you need to establish a startup business are not the same talent you need to advance the business. Always value the work your employees do, and yet be mindful that at times you may need to guide them in career moves that take them outside your business.
Have an outside board of advisors.
Sometimes outside eyes can give you the best advice. While at a hotel pool in Tucson, I sat down with a long-time, trusted advisor who owned the hotel and numerous others along the West Coast. Our conversation took place during the recession when my partners and I were thinking of scaling back our workforce to almost nothing to keep our business afloat. He advised me to keep my employees and cut my own pay. When the economy turned around, several of our competitors were out of business because they had lost their employees. Our phone rang off the hook and we were able to serve clients because we had retained our talent during the tough times.
Outside advisors are invaluable. Sitting at the top of an organization can be a lonely place. Finding advisors whose sole interest is you and your success can help you overcome challenges and think about new ideas and concepts that can further the growth of your company.