Becoming an entrepreneur is rarely accidental. Most entrepreneurs have known for a while that they wanted to have their own business. Because of this, thoughtful entrepreneurs don’t just up and say, “I’m going to start a business,” and do it the next day or week. Creating a successful, sustainable business begins with a preparation phase that may be brief or lengthy, very structured or flexible. But how you optimize this phase will make a world of difference once you shift from planning to opening.
Looking back to the start of Erwin Penland, I had known for a few years that I wanted my own advertising agency. And while I was learning advertising at two terrific ad agencies in my youth — one in Greenville and one in New York City — what I didn’t know was the first thing about starting or running a successful business. So I consciously decided to become a student. Not in the classroom sense, but by reading, learning firsthand from experienced business professionals, and developing a keen understanding of the legal and financial options available in this new life I imagined.
When it comes to reading, I’d recommend reading as much as possible about the kind of business you want to own and manage, and the business functions to help you make smart decisions. What I wouldn’t recommend is spending valuable time studying the endless supply of self-help and general leadership books. I never found that these helped prepare me for starting, running, or growing a company to higher levels of success.
For me, firsthand learning meant “going to school” on the people I knew in the industry – in my case, business people running and managing marketing agencies. I asked questions, invited them to challenge my thinking and plans, and just as important, I listened. Most successful entrepreneurs I know are happy sharing lessons learned along the way – including some of their failures. By learning from experienced entrepreneurs, and allowing them to help you see the potential faults in your thinking, you can avoid a lot of the painful mistakes that many encounter early in their entrepreneurial journey.
Legal structure and funding are both critical elements, and here, you truly want to be conservative. Don’t think that money comes easily. It doesn’t. While there are many angel investors and banks, most look to put their money into already established early-stage businesses. So when you’re starting out, you’d better have enough cash to make it through the early years, which are often very lean.
My advice? Save all the money you can while you’re planning a business, and use your own funds whenever possible. For one thing, that’ll prove to you and others that you’re committed to your plan. And while we’re at it, a note about business plans. I once received a 78-page business plan from a would-be entrepreneur. That’s not a business plan; that’s a thesis. Really good business plans can be written on two pages.
Every successful entrepreneur I’ve met – myself included — had an idea, a skill, and a dream. But that didn’t necessarily mean they were ready to run a business. The good news is that they were able to get ready. And you can, too.
As simple as it sounds, make a checklist. Be able to clearly answer fundamental questions like where’s my location, who will we bank with, what access do I have to a sharp business attorney and a good CPA, and how long can I run the new company without a second infusion of funds? Who will my customers be and why will they come to me as opposed to a competitor?
If you can’t answer every one of these with clarity, you’re not ready. And if you don’t have the stomach for failing, you’re not ready either. That’s something most business books don’t even tell you. Especially in the early years, you have to be prepared to fail — with the understanding that failure isn’t permanent. If you have the confidence to get back up off the mat after short-term failure, then you’re emotionally ready for your next, even better, entrepreneurial journey.