Starting a business is an exciting time in any new entrepreneur’s life. The thought of being your own boss and controlling your own destiny while doing something you love really gets the dopamine flowing. Just as any new adventure, starting a business holds its share of pitfalls. Here are five tips to starting a business that I have collected while starting my business as well as coaching others to do the same.
Tip 1 – Turn on Your Business Radar
Once your business radar is flipped to the “on” position, you see life differently. Going to Starbucks is no longer fitting in our caffeine fix. Your business radar begins to calculate customers per hour and average ticket price. You start to crunch the cost to open a location and its monthly overhead by adding up insurance, taxes, labor, maintenance, utilities, music licenses, cleaning services and more. By the time that hot cup of brew hits your hands, you have a decent understanding of how much profit each location pulls and how to improve that bottom line.
Turning on your business radar is what allows you to more quickly identify and evaluate business opportunities in the market place. Many times, those opportunities are right in front of our faces, but if our radar is not activated 24/7, they pass us. Understanding the different types of pathways into entrepreneurship is essential. Your radar is not just on, but calibrated to the opportunities that best fit your strengths and desired lifestyle.
Tip 2 – Manage Down Your Risks
Let’s face it, spreadsheets are boring for most people. Entrepreneurs learn to love and embrace those nasty things. Entrepreneurship as a career is about identifying and managing risks. There are a class of entrepreneurs that behave more like gamblers. You have to find your own style. My style and tutelage under Rice University’s Dr. Al Napier has been to scrutinize and analyze any business model I plan to invest or be involved in. The rubber meets the road in a spreadsheet. The ability to draw up an accurate forecast of a potential businesses’ future profits is paramount to vetting its true potential and identifying the strategic and tactical pitfalls. A good entrepreneur knows their numbers “inside, outside, and upside down” to quote one of Dr. Napier’s lessons.
Tip 3 – Build Your Support Network
When starting my first business, Pinot’s Palette, it was a hard transition emotionally and mentally. Having worked so hard for so long to build a career in one direction, only to quit and start a painting and drinking business, seemed crazy for many of my close friends and family. I occasionally wonder if Pinot’s Palette would exist without the encouragement of my Rice professors and friends. Beyond professional guidance, we need to give each other the emotional support an entrepreneur needs when saying quits to the direct deposit fairy. It is an absolute necessity to build a network of seasoned and new entrepreneurs. They are going to better support your entrepreneur experience.
Tip 4 – Check Your Energy and Passion
Co-founders of Pinot’s Palette, Charles and Beth Willis are shown in this picture from 2009. I reference this because it reminds me of the deep passion and infinite energy we had when starting the business. While it seems like the most glamorous thing in the world, starting a business is a grind with tough odds. Energy and passion for what you are doing is what gets you through.
Have you looked at your watch to see that it is 3 p.m. and you haven’t even thought about lunch? Have you tossed and turned at night because you can’t stop thinking about the next idea for the business? These are basic gut checks for being in the certified energy and passion zone. I’m not saying you can’t make a business work without it, it is just much less likely. Identify businesses that fit your passion. As taught by Dr. Napier to Rice MBAs for over twenty years, I like to use the BEST analysis to evaluate potential businesses and how they fit with my goals and passion.
Tip 5 – Play Monopoly
Once you have spotted your opportunity, managed your risks, built your support network, checked in with your energy and passion, it is time to play monopoly. If you have never played Monopoly, please go buy a set. It may just become a prerequisite for the courses I teach. When you play Monopoly, you are encouraged to spend your fake cash quickly to invest in properties to hopefully make a return to buy new property. Over the last nine years of coaching more than 200 new entrepreneurs, I have found that many do not trust their analysis and are overly conservative with their investment, risking the entire venture. This is understandable because we have are trained to be conservative with managing our money for daily life. At first, it is an uneasy feeling to spend money to make money.
Ultimately, confidence in your diligence is what helps you strike the balance of cash preservation and properly investing. You have to find, evaluate, and invest in the right opportunities.
Craig Ceccanti, MBA, is a founding member and CEO of Pinot’s Palette, Houston’s first upscale BYOB painting studio. As a pioneer in the newly developed and rapidly expanding sip and paint industry, Ceccanti directed an innovative start-up business from one location to a concept now being sold nationwide. He earned an MBA from the Jones Graduate School of Management at Rice University and dual-undergraduate degrees in MIS (BBA) and computer science (BS) from Louisiana State University.