Starting a business, expectations versus reality
- Written by NewsServices.com
Entrepreneur James Sackl talks about what it takes to start a business, how to begin and what it takes to keep going.
Most people think that starting a business is their key to getting rich quickly. From your experience, what is the reality?
Starting a business is not the best pathway to getting rich quickly. There is a tonne of hard work involved and although it is very exciting when you start, giving you a high from the euphoria of venturing into something new, it’s a roller coaster ride of sorts, so you must brace yourself for the ups and downs. You must enter with the mindset that eventually, you will actually make more money than you invested. In a nutshell, the reality of the situation is that starting a business is not a way to get rich quickly. It can be quite a journey and resilience will get you to your destination.
Should business starters begin believing they can become profitable in a short span of time?
They should have that mindset. This is especially the case if you’re doing this on your own with no venture capital backing your business. You’d want to be profitable or at least break even quickly.
I was lucky to have an ‘overnight success’ type of experience with our COVID diagnostic pen. The product was a year into its making. But when we invested and launched it, it wasn’t well received. It then took off, quite suddenly when COVID hit us in early 2020. As sales picked up, so did customer complaints, leading to a dip in sales.
We had to refine our customer service and the product too and product sales increased again. So, the bottom line is that you need to deal with the growing pains and the roller coaster ride. It is easier to break even at least, quite quickly, with an online business, where the overheads are not very high. This may not be the case when working on an infrastructure project, for example.
How important is it to have a business plan and where can someone who wants to start a business get advice?
I think it's not wise to spend too much time planning when you're first launching. I think what you should spend your energy on doing is finding product market fit as quickly as possible. Once you have that product market fit, you can design a strategy around that. Your assumptions when you first start and what you end up with can be quite different. Besides, you don’t have to stick to the business plan, and can modify as you go.
Focus more on product market fit, what customers want and who they are, what they are willing to pay to keep your business afloat.
You talked about capital strategy and if you had venture capital backing. Do you think anyone starting a business needs to go in with substantial capital in the bank, say to cover potentially a year's operating cost, or do you think you can just throw caution to the wind and dive in, with very little capital backing?
I think it really comes down to where in life you're at. If you're a single man or woman and you've got rent to pay and don't really have too many other obligations, you’re in a good position to jump in. But if you've got a couple of kids and a partner and a mortgage, taking those risks becomes a lot harder. So that would sort of equate to having a decent stretch in the bank and in the company's accounts before you went ahead.
What were your expectations beginning your first businesses, and did they turn out to be realistic?
I started Young Media (an online advertising business) and didn’t have high hopes for it. I didn't think it was going to be successful. The launching of Facebook at that time attributed to its success.cIt felt surreal, I thought about when this was going to end? So, to answer your question, I had very low expectations.
Do you need experienced advisors or mentors to successfully start a business?
It makes it a lot harder when you don't have anybody in the sphere that you're able to gain advice from. With so much going on, your perception may be clouded. So, I think having a watchful eye, or a third party’s opinion, could in fact help you make more informed decisions. So yes, it's useful to have mentors. And if you don’t, your best bet is finding resources on the internet.
Many business owners try to do everything themselves when they’re starting out, to keep costs down. What advice do you have for this group of people and what tools are available that would help them manage marketing their business better?
Business owners must wear multiple hats, but I think a good way to sort of put some metrics around that is to value your time, or how you can get something done at a cheaper price. You can outsource a lot of the graphic design work as well as marketing and accounting work. You can find help quite easily and at low prices on the internet.
What can a person expect in terms of their work-life balance in a start-up? This would possibly differ from one person to another, but how many hours should you expect to work a week to reach your goals?
I think that question may be best answered by what you'll do to sustain the business ‘torture’. So, if you spend seven and a half hours a day five days a week, that ‘torture’ is going to be a lot longer than if you were prepared to do 10 hours or more, seven days a week. I've always thought if all things go to plan, our revenue in say three years’ time should be x per day. So, the longer that takes, that's opportunity to generate revenue that’s lost or delayed. So, I think you need to be prepared to work extraordinary hours to keep the wheels spinning, and to keep the ship moving. You need to reach a point where you could step out and defer some of your duties to capable people because the longer you're doing things yourself, the more it’s going to wear you out quickly. No one is superhuman- you can put in a whole lot of hours, but too much of anything doesn’t work for anyone and could in fact be counter productive. Besides, no one has the skill sets to do everything on their own, so outsourcing some of the work is sensible and sets you up for the long haul.
On that note, what advice do you have for mums who want to start a business because, maybe, the corporate world no longer aligns with their life and needs after having a family?
I think it's great that they want to venture into something new. One of the best things about doing this is that it gives them a sense of purpose, apart from being a mother, and a sense of personal satisfaction. With being a parent, it is no different to having a full-time job and working on the side hustle in the night.
How important is branding? Some small starters may think that it would be alright to do this ‘as they go’? Should this be one of the first steps in establishing the business?
If you're launching with no brand, you're spinning your wheels until you build a brand because there's nothing that really differentiates you from a competitor that they can't copy. You’d want to have a brand and protect it. So, yes, branding is important when starting a business.
What are some factors should people consider before launching their product/ service?
This may sound somewhat contrarian, but I think it's best not to dwell too much or to get into too much detail because, more than likely, the product will be fine in its first iteration. So, I think getting it to market as quickly as possible, and then getting feedback and improvising. That will be your best bet. Try not to think about it too much because you get into a state of ‘paralysis’ when you overthink it, and you’re not learning from your customers and their needs.
Is starting up a business about trial and error? What can you do to minimise the errors?
Absolutely! Business is about trial and error. You should be trying new things and keep reinventing yourself and your product. You don’t want to stagnate.
Having dealt with success and failure yourself, what advice would you have for first timers wanting to make their dream a reality?
To sum it up in one word, resilience. So even if you find initial success, be prepared to experience downturns and failures. You need to push through in the toughest times. There’s always sunshine after the rain, so keep your head up and keep going. Resilience will breed success.
Daily Bulletin
