New entrepreneurs know fear is a part of success just like a cramp is a part of winning a marathon. Sadly, fear is also a part of failure. Fear-based decisions, like neglecting marketing, DIY bookkeeping, and solo decision-making, can kill a practice before its third anniversary. Worst of all, the fearful owner of a struggling young practice may start to see each client as a dollar sign rather than a relationship. Don’t get me wrong; fear will be your constant companion on the road to success in business. You just can’t let him drive. In this blog, I’ll cover the number one tool that will help mitigate new-entrepreneur fear and replace it with confidence: cold hard cash.
Cash Bridges the Gap
Cash bridges the gap between the startup phase of a new business and the profitable phase. With a financial safety net, new business owners can be creative and take more risks. They will focus less on the desperate “PLEASE give me referrals” attitude and focus more on building a brand and networking in the community. Best of all, a FSN allows new business owners to take less from their profits and actually invest back into the business. Ideally, when the new business owner is ready to grow he will be debt free.
Let’s take Bob as our example.
Bob has a great job at a supermarket but he’s ready to join the entrepreneurial world and open a real estate office. He has read lots of business books and knows:
• Mistakes are inevitable and expensive.
• It takes time to market and develop referral sources.
• He has to keep the lights on and the rent paid.
• He doesn’t have the expertise to do every job by himself so he will have to hire help if he wants to stay out of trouble and grow.
• He has his own rent to pay and groceries to buy.
Where can Bob get the FSN net so when costly mistakes happen they don’t tank his new business? How can he keep the lights on until the community starts banging his door down? What can he do besides get another credit card or bank loan in order to grow?
Here’s what I recommend:
1. Enlist your supportive partner. Bob’s husband Stan has a great job in the oil and gas industry and he fully supports Bob’s decision to go into real estate. They agree that for one year Stan will carry a heavier load paying the family bills so Bob can put any profit he earns back into his business. Because he is less pressed to take home an income, Bob can build his brand, enhance his business skills with continuing education, hire an assistant to take phone calls when he’s with clients, and purchase software to stay organized.
2. Don’t quit your day job. While Bob was going to school to get his real estate license, he kept his job managing a supermarket. Once he became fully licensed and ready to start the business, he managed to reduce his schedule to part time. If the supermarket had refused to allow Bob to work part time, Bob had already decided he would take a job working nights so he could work on building his business during the day.
3. Live on the feathers not the chicken. Bob knew about the cyclical nature of business from working at the grocery store. He and Stan sat down and looked at the family finances and created a lean-but-comfortable budget. They agreed to live off this lean budget even when Bob’s business was booming and put any extra profit into a FSN savings account. Since the family’s basic needs were always met, Bob didn’t panic and make fear-based decisions when cash flow was down.
To be a successful business owner you must realize mistakes are inevitable and expensive; it takes time to build a network of referral sources; and you must reinvest in your business not leach from it. There lots of resources to help you build your FSN. Why not schedule a consultation with Kate Walker Training and create a strategy today?