Have you ever wanted to become your own boss but the fear of failure stopped you? Serial entrepreneur and small business coach Henry Lopez gave us his tips on how to overcome your fears. Plus learn about how to create simple systems that keep you from being consumed by the business and maximize the value you can sell the business when you exit.
I always aspired to start my own business but starting out I didn’t have the resources, knowledge, or courage to do so. I started in entrepreneurship by dipping my toe in the water via a partnership with a friend. We took over a pizza delivery franchise while I continued to work my day job and he ran the daily operations. A line I love to repeat from Dan Sullivan is, “we cannot wait for confidence, we don’t have confidence, we have to have the courage to go try something and then confidence comes”.
When you are considering going into business you first need to determine if you prefer to work solo or in partnership with others. If you choose to work in partnership my recommendation is you start with what I call a memo of understanding. The biggest mistake I see people make is they go into a partnership not considering what happens when there is a disagreement.
The biggest obstacle people often have to overcome when starting a business is the fear of failure. The problem is we are typically surrounded by others that haven’t taken the leap into entrepreneurship and often, unknowingly, they project their fear of failure on us. You have to find a way to get over the fear of failure or entrepreneurship isn’t going to work for you.
A key misconception people have when starting a business is that they will be successful because they love or enjoy the problem they are solving. The reality is we have to be prepared to fail but our goal should be how to minimize those failures. Another misconception is the amount of work it takes to make that business successful. When your business is starting out you will work harder than almost any job you’ve ever had.
Small business systems don’t have to be some big elaborate process or complicated tool. However, a lack of systems is often the number one reason a business struggles to grow. Start with the simple things you do every day and turn them into a checklist. Then as you grow you can identify where you could bring in tools that help you automate your checklist items.
As it relates to should I buy or build a business? In the simplest terms, if you build it will they come verse if you buy a business at least you have an idea of what it might look like. It is true you will pay a premium to buy a business but it can minimize the risk of product-market fit. The rule of thumb when it comes to buying a business is to look at the average revenue, expenses, and profit for the past 3 years. Then apply a multiple anywhere from 1 up to 3 or 5 times profit.
When you are looking to sell your business there are a few things to consider. If the business success is dependent solely on you then you have not created a business you can sell. You should have the systems in place that allows someone else to come in and run the business, which will make the business more valuable.