Welcome to another edition of my Weekly Journal! I use this space to share a bit about jewelry, and a lot about my journey from lawyer to jewelry business owner. This week I'm sharing the 3 most critical things to think about when starting your own business. We are living in crazy, uncertain times but I think the instability people are currently feeling in the workplace is inspiring a lot of people to go off and do their own thing. There is no time like the present! The world is changing rapidly as a result of the coronavirus and the way people work, shop, and live is changing along with it. If you are contemplating starting your own business or recently launched your own business, this week's journal is for you. As you embark on your journey, you'll want to give a lot of thought to the 3 things I've outlined below. In my opinion, these are the 3 most critical things that make up the foundation of a successful business. If you nail these 3 things, your chance of success is going to increase dramatically.
1) How is your business different from all the businesses already selling or offering what you're selling or offering? Make sure you communicate this loud & clear and as often as possible.
To me, this is the literally the most critical aspect of establishing your business. We live in a global marketplace and there are most likely hundreds if not thousands if not millions of businesses already selling or offering what you hope to sell or offer. Today, it's as easy to order a sweater from a business in California as it is to order a sweater from a business in Australia. Think about it: just 10 or 15 years ago, people pretty much shopped within their own country. And 25 or 30 years ago, people pretty much shopped within their own state because e-commerce didn't even exist. Heck, email didn't even really exist! You actually had to go to a store to get that sweater, which means that shop owners were only competing with other shop owners within a certain number of miles. Today, shop owners are competing with other shops around the world. So this brings me to my point - how is your business different from all of those shops? You need to be 1000% clear on this and you need to communicate it clearly and often to your potential customers. Let me give you an example. Say you'd like to start a clothing company. Well, there are millions of shops selling clothing these days. So what makes you different? Why should I buy a pair of pants from you and not another shop? Maybe you use a revolutionary new fabric to make your pants. Or maybe your business hires women to sew the pants who were formerly victims of domestic violence and are getting back on their feet. What is it about your company and your pants that makes them stand out from the millions of other pants that other companies sell? If you aren't clear on what makes your company special, and if you don't communicate this clearly and regularly in your marketing efforts, it's going to be difficult to grow a profitable business. There are simply too many other shops from which I can buy pants, and the one that catches my eye and resonates with me is most likely going to get my dollars.
2) Establish a brand, not just a business.
Most businesses need a brand - an identity - to grow and succeed. A business is it's own entity - in fact, when you file paperwork to form your LLC or corporation, the state actually gives you a piece of paper that says your business is it's own entity distinct and separate from you. Some would go so far to call their LLC or corporation a living, breathing thing (when you start the business ownership journey, you'll understand this! It feels like you've just given birth to a newborn who needs every second of your attention and care). And this new little entity you're creating - this business - needs a personality. Just like a newborn, the things you do (or don't do) shape the personality of this business. And just like a human being, people are more likely to fall in love with a business that has some personality. Do you get the distinction I'm trying to make here? There are businesses, and then there are brands. A business merely tries to sell things. A brand, on the other hand, tries to connect with you, and serve you, and fulfill your need. They put a lot of care and attention into how they interact with you - it truly is a relationship, not just a one-way street for selling whatever item you happen to need or want. A brand is something you can interact with and engage with and hopefully, at the end of the day, it's something that resonates with you.
You may have already connected the dots, but point 2 strongly correlates to my first point. Generally, a brand is based on the thing or things that make your business different from every other business out there. Let's talk about the company that hires former victims of domestic violence to sew their pants. Perhaps that company's branding will center around the empowerment of women, and their marketing messages will be inspirational and focus on women's independence and resilience. And maybe they will donate a portion of their sales to a charity that focuses on supporting victims of domestic violence. You get the point? The company isn't just a company selling pants anymore. It's a company that's selling pants but with a much larger mission - a brand - that might resonate with a lot of women out there.
3) Have enough money in the bank or keep your day job for the foreseeable future.
My last point is a practical point. The unfortunate reality is that starting a business usually costs a lot of money. You have to file paperwork with the state to create your business entity (usually $100 or more), you might need to order inventory if you're selling a product (a lot of your money will be spent here), you have to invest in marketing (in the beginning, marketing costs can be huge because if no one knows about your new business, no one can buy from you), you might need to hire employees straight out of the gate (while some companies can wait to hire), and you might need to rent out a space or an office (while some companies can operate out of a home office to start). These are just some of the expenses you will face as you start your business. How do you intend to pay for them? If your business is new, chances are it's making no money because no one knows about you yet! And - spoiler alert - it takes a lot longer than you might think to build a business that can generate a steady revenue stream (we're talking years, not weeks or months). Generally, the rule of thumb is that a business takes 2 to 3 years to become profitable. That means that in the first 2 to 3 years, you are not making enough money to support all of your expenses and you need either (a) money in the bank or (b) an alternate way to generate income. Will you keep your day job for the foreseeable future or take on a part-time job so that you continue to have a stream of income while you build your business and your brand? Do you have enough savings in the bank to support your living expenses so you can work on your business full-time? What is your plan? For me, I had saved up a lot. I was at this juncture in my life where I could either buy a condo, or invest my money in myself and my business idea. I chose my business idea!
Let me say one more thing about this 3rd point. In this day and age, with social media, it's tempting for someone inexperienced in business to assume that all you need to start making money is a business Instagram account. You know, set up a website on Squarespace, post some pretty pictures on Instagram, and boom sales start coming in. This couldn't be further from the truth. There is absolutely no such thing as instant gratification when it comes to starting a business. It is a long journey. A marathon, not a sprint. Do not cheat yourself by thinking that you will be different from everyone else and start making enough money to live off of your business in the first few weeks, months, or even year. That is a huge disservice to you and your business. Instead, just like a newborn, allow it time to grow and mature. When given the proper care and time to grow, your business can flourish. If, however, you come into it with unrealistic expectations, you'll throw in the towel way too soon and you might throw away a business idea that otherwise could have been successful if you had given it 2 to 3 years to develop.
There you have it! In my experience, these are the 3 most critical things to think about and strategize when you're starting your own business. When you nail down these 3 things, your chance of success dramatically improves. Need help with them? I took an amazing business school course by Marie Forleo called B-School which educated me on these principles. She only offers her B-School course once a year, so check it out and see when it starts next. I also offer business mentoring services if you prefer one-on-one attention. You can read more about my mentoring service here. I'd be happy to help you establish a solid business foundation built upon these 3 elements.
If you're starting your own business, changing careers, or pivoting your career in some way as a result of the coronavirus, cheers to you! It will not always be easy but I do believe it will be worth it.