I am a HUGE fan of small businesses. The ingenuity, creativity, and entrepreneurial spirit of small business owners makes them a favorite group of people to hang out with.
One thing I see in most small business owners is a passion for the work they do. One thing I see lacking in most small business owners is knowledge of the "business-side" of doing business. With this series, I will be teaching some principles that have helped me be successful in my small business.
Part Three Test The Waters
I have known a lot of people who have quit their job and launched a small business without ever testing the viability of their business model. Now, there are some cases where it makes sense to jump full-bore into a new business, and that is when the individual has saved a significant amount of cash to cover the first year or two of start-up costs/salary.
BUT most people do not have the luxury of a pile of cash laying around such that they can just jump into a business that is profitable from day one. In fact, jumping straight into a new business without any other means of income is a recipe for financial disaster. It is a scenario played out over and over again.
This is why over 90% of small businesses fail within the first five years! They neglect the fact that it takes time to build a successful and sustainable business and run out of cash. Most businesses do not fail for lack of a good idea or marketable product. Most fail due to a lack of cash.
If there is any way possible, test the waters. Tinker with the product. Trial the service. Use a couple of evenings each week to work on it and improve it. Use one day of each weekend to focus on it.
Does it take sacrifice? AB-SO-LUTE-LY! But I have found that it allows me to test whether or not this interest is a passing fancy that is a cool hobby or whether it is a passion that I want to pursue full-time!
It also allows you to pay the bills with a regular job which allows you to reinvest any and all business income back into new products, materials, and marketing. That will give you a competitive advantage over start-ups that are strapped for cash because they are having to pull full salaries from their revenue.
Test it. It is worth it!