Whenever you get to the business segment of the news, the amount of jargon thrown around can make running a company seem like a complex concept well beyond the comprehension of the ordinary person. However, the things you need to do to become a successful entrepreneur are fairly straightforward.
In fact, the principles of enterprise aren’t that outlandish (though the terms may make it seem so). It’s possible for you to thrive as a small business owner with little external support. The following are the must-have habits that can help you do that.
1. Prioritize the Steady over the Spectacular
A small business owner must be focused on steady growth as opposed to spectacular returns. It’s all a matter of mathematical probability. Every once in a while, someone will make the news for founding a startup in their garage and selling it for millions or billions of dollars just a few years later. Yet, this is a rare occurrence which is in fact why does make the news.
The overwhelming majority of people who run successful businesses see their company’s revenue grow gradually over several years. Ergo, practice setting realistic goals that prioritize consistent gains. Looking for spectacular growth is the fastest way to see the business unnecessarily go belly up.
2. Plough Back Profits
What do you first think of when you have some decent profit left after paying all your expenses? If you are like most people, you’ll probably be dreaming about a vacation, a night out, buying new clothes, and if the profit is significant enough, buying a new car or house. If you are going to succeed as an entrepreneur though, you have to practice ploughing back your profit.
That doesn’t mean living a miserable life. Rather, define a percentage of your annual profit that should go toward growing the business then you can leave the rest for personal growth and entertainment. Putting more money into the business is not something you wait to do only after making enormous profit. It’s a habit you have to nurture from the get go.
3. Have a Cash Reserve
Running a business is a long-term project. However, long-term projects can be a risk to your present quality of life. That’s why you have to plan for hard times.
Think about what would happen if the business went bankrupt or went for long periods without making a profit. Would that leave you in a personal financial crisis? What if you have a major personal emergency? Do you have a cash reserve you could tap into to address this pressing need?
To brace for such desperate scenarios, never invest all your money in the business. Always have a substantial cash cushion that you can quickly dip into when faced with a medium to large unexpected personal expense.
4. Don’t Follow the Crowd or Hype
See that news story that screams there’s an insatiable demand in the market for product X? Ignore it.
The average individual receives finance tips on their phone, watches business news and will go with the flow. Since this same information is being disseminated to a large number of people, you’ll likely have long lost the first mover advantage when you venture into the said line of business. The market will already be saturated with the product thus slowing sales and forcing down prices.
If you are going to make it as an entrepreneur, always maintain a healthy suspicion over any business idea that’s suddenly popular. Chances are it’s a bubble or, in the worst case, a Ponzi scheme. You don’t have to be a contrarian (though that does help sometimes) but don’t buy into hype.
5. Read, Read, Read
As the founder of the business, the responsibility for making the right decisions rests squarely on you. This requires that you keep tabs on market developments that could negatively affect your business or open up new opportunities. Follow major news and read business advice on a regular basis.
Keeping track of the news may seem contradictory to the previous point on not following the crowd. However, it comes down to your ability to distinguish between hollow baseless advice and solid long-term tips. That’s why you should arm yourself with data as that’s the only way to determine the truth.
Walking the entrepreneur journey alone can seem scary at first. But as with any skill, it’s all about practice. The more you do it, the better you’ll get at it.