Iam thrilled about the increase in the number of newly launched businesses in America. As a person who has been in business for eleven years, and who has coached thousands of entrepreneurs through the process, I steep myself in the observation of what makes businesses succeed and what makes them fail. The truth is, anyone can start a business, but not everyone can actually manage and grow one.
The longer I observe, the more convinced I am that, on average, people who find out what they are getting into before they spend a ton of time and money always maximize their chances of long-term success. Sometimes this means no business at all — a smart decision made by two women I spoke with earlier this week. More about that later, but for now, I want to share what Carol Roth, author of The Entrepreneur Equation: Evaluating the Realities, Risks, and Rewards of Having Your Own Business (affiliate link) told me when I interviewed her earlier this week.
Carol offered honest advice for people thinking of going into business for themselves. To listen to my 30-minute interview with Carol, and to put her insights to work in your life, scroll to the bottom of this page and click the arrow. If you don't feel like listening right now, here is a summary of what Carol and I discussed, with time stamps in case you want to scroll forward.
- Assess the timing (4:50). Take a hard look at what is going on in your life at the time you want to start a business. What are your responsibilities? What is your mindset like? What are your finances like? Zoom out and take a look at your personal big picture to honestly assess whether now is the right time for you to start a business.
Evaluate the business opportunity in light of your life, and do not start unless you can document and validate assumptions that the rewards will greatly outweigh the risks.
- Avoid following your emotions (7:06). Carols says that too many people are “intoxicated” by idea of entrepreneurship. Emotions overtake good sense and they forget to do what needs to be done to stack the odds in their favor.
Passion is great, but you have to avoid what I call the “passion pit.” Carol echoes this sentiment when she says, “While passion is a critical component of being successful, there is no rule that you have to earn a living from your greatest life passion.” In other words, just because you love something doesn't mean you should start a business doing it.
- What to do if you feel like you “must” start a business (11:56). Carol empathizes with underemployed or unemployed people who see entrepreneurship as their last chance of replacing income from a lost job. But, she says, “[I]f you are having a hard time wooing potential employers, you may have an equally hard time wooing potential customers.” In other words, if you cannot sell yourself, you may not be able to sell anything else.
That's hard for me to swallow, just listening to it. But Carol is right. Asking the tough questions and accepting the tough answers in advance will save tons of heartache down the road. Put a magnifying glass on your life and be honest about what you can accomplish at any given time.
Oh, and be sure to enjoy the part of our conversation where Carol talked about how “bad competition is bad for business” (16:40) and how you can implement her “spinach in your teeth” philosophy (22:00).
Carol recommends looking for opportunities to learn the ropes of the type of business you want to start on someone else's dime, so you can find out what you're getting into before you start. One of the ways I help people do this is through an Apprentice Program where people who want to go into the cosmetics business can take advantage of INDIE Beauty University (12 hours of audio training) along with seminars and webinars presented by experts in the field.
Earlier this week, two former Apprentices told me that, thanks to the program, they had decided NOT to start cosmetics businesses. Through the training materials, they were able to see that now is not the time for them. I applaud those women, who can now focus on other areas of their lives, saving entrepreneurship as a possibility for another time and place.
To learn more about my Apprentice Program, click here.
About Carol Roth
Carol is an investment banker and business strategist. She graduated magna cum laude from the Wharton School of Business at the University of Pennsylvania and has helped businesses grow and increase profitability over the past 15 years. She also has her own Carol Roth fashion doll, which I think is terrific! Follow Carol on Twitter here.
How to Listen to the Show
This post contains my paraphrases of the information Carol shared. To hear it from the horse's mouth yourself, listen to the entire 30-minute show using one of these options:
- Download it on iTunes. (It usually takes a day or two for iTunes to feed the show there.)
- Click on the arrow at the bottom of this post to listen now!
- Because I have not had a chance to load all of my shows to this blog, you can listen to hundreds of interviews from 2005 to 2010, each one as relevant today as it was when I recorded it, at my Indie Business Radio site.
Question: What do you think of Carol's “tough love” advice? What are you doing (or have you done in the past) to “apprentice” or otherwise test the waters before you started a business?