Going Into Business: Mind-Set Is First Hurdle : Where Some See Risk, Entrepreneurs See Opportunity
There is a dream that beats secretly in the hearts of employees everywhere, a dreamthat whispers of freedom: The heck with this job. I’m going to be my own boss.
As alluring as self-employment might seem, however, it takes a certain amount of bravery to venture down that road. The anxieties and uncertainties can easily mount up and produce the conclusion that you just don’t have what it takes to run your own business.
But two experts in entrepreneurship say that in many cases, such conclusions are based on myths, psychological barriers and simple lack of information. With a little insight and preparation, people who yearn for their own businesses can feel confident of success or, at the very least, decide rationally that they shouldn’t start them.
One of the most important ingredients to business success is having the right state of mind. Lloyd E. Shefsky, a Chicago lawyer whose own firm specializes in assisting entrepreneurs, interviewed 200 self-employed business people for his 1994 book, “Entrepreneurs Are Made Not Born.” He says that would-be entrepreneurs must accept that their venture might fail.
“You have to get over the fear of failure or you’re dead,” Shefsky says. “You must be able to learn from whatever happens. Successful entrepreneurs don’t see what they’re doing as a risk. They see it as an opportunity, with all their other alternatives less fulfilling.”
Among the keys to the right state of mind are:
* Viewing your venture as an opportunity, not a moneymaker. William J. Stolze, a Rochester, N.Y., consultant and author of “Start Up: An Entrepreneur’s Guide to Launching and Managing a New Business,” says people who start a business to get rich should rethink their motives.
Since wild financial success is hardly guaranteed, Stolze says, it’s best to enter a new business for the chance to run it, even if that means you have to raise capital from outside sources and own only a minority share.
He cites his own experience as an example. An engineer, Stolze and several partners began manufacturing military radios in 1961. They sold stock to raise money. By the time the company was sold in 1969, Stolze owned only 10%, but it was 10% of a much bigger company than it would have been if he had insisted on keeping a larger share of stock, he said. He got rich, but the important thing, he says, was that he had the chance to launch the business.
* Original, can-do thinking. Entrepreneurs must be able to take a fresh approach to solving problems.
Shefsky recalls a Chicago woman who started a business sewing wedding dresses in her condominium. She was convinced that she could not expand into a real success because she couldn’t afford to rent a store and still make her mortgage payments. But Shefsky helped her see that she could take the equity from her condo, rent an apartment and lease retail space. Now her business is booming.
“Don’t assume that what you’re doing is the only way you can do it,” Shefsky says. “Sometimes the answers are right under your nose.”
* Passion and knowledge. Both authors agree that would-be business people must be passionate about their idea in order to withstand the rigors of starting out.
It’s also important to be aware of what you don’t know about your product or running a business and team up, if necessary, with others who do. Stolze, for instance, brought marketing and management experience to his team. An attorney brought financing expertise and two others helped design the product.
* Hard work. Both Shefsky and Stolze warn never to underestimate the emotional and time commitments of starting a business. It requires giving up substantial control over your hours and time with family. Successful entrepreneurs see it not as a sacrifice, but as a matter of priorities, Shefsky said.
“It’s like going from a 9-to-5 to a 5-to-9,” Shefsky says. “And it’s not just the hours . . . , but the commitment and the focus to do whatever it takes to get the job done.”
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There are two kinds of myths about starting a business: falsehoods that encourage people not to try, and ill-founded beliefs that encourage them to try when perhaps they shouldn’t.
These myths include:
* It’s easy. Both authors say starting a business is never easy, even though some successful entrepreneurs, such as cookie queen Debbi Fields, make it look easy.
* You don’t need any preparation. On the contrary: The experts say you can never be too prepared. Stolze and his partners spent seven months at their old jobs doing market research and developing a prototype--all in secret--before going out on their own. Shefsky advises would-be entrepreneurs to hang around with owners of successful businesses to see how they approach their work.
* You have to gamble everything. Starting a business isn’t gambling; it’s careful preparation and calculated risk, Shefsky says. One businessman who made a huge success of distributing office products told Shefsky that he didn’t view it as risky to give up his job and kick off a business in his garage because he figured he could always get another job.
“It’s how you think about risk,” Shefsky says. “If you say, ‘My God, I could lose my job or my nest egg,’ that’s overwhelming. But if you say, ‘Well, it might take X number of months to see if this works, and X number of months to get another job, and we could apply for a college loan or a scholarship for Johnny,’ then you can get your hands around it.”
* You have to be a super-person. With the right preparation, many ordinary people can run a business, the authors say.
Shefsky cites Sybil Ferguson, an Idaho homemaker who sought a doctor’s advice about losing weight. She did so well that her doctor asked her to advise other patients. Ferguson was soon counseling so many people that she had little time for anything else.
When the doctor suggested she go into business, she demurred, saying she was “just a housewife.” But she eventually founded Diet Centers, one of the largest weight-loss firms in the country, Shefsky said.
* The only time to start a business is when things are going well. That isn’t necessarily so, Stolze says. When he set out on his own, he had six children ages 4 to 14, a mortgage and a car loan. His wife didn’t have a paid job. Despite the financial hardship, he saw the opportunity for a more rewarding life.
The key, he says, is to tailor your strategy and timing to make the risk appropriate for your circumstances. Several kids in preschool or college? Maybe it’s best to wait a few years. But that’s not the same as killing the idea altogether.
* I’m all alone out there. Stolze says many entrepreneurs feel they must succeed or fail completely on their own. But there is a lot of help to be found. He suggests simply calling other business owners and asking their advice, or taking college courses or turning to some of the many books, pamphlets and videos that deal with running a business.
There are also several hundred small business development centers operated by the Small Business Administration that aid entrepreneurs. They can, for instance, direct an aspiring business person to venture capital groups, where pitches to interested investors might be made. Chambers of commerce often have programs aimed at helping small businesses get started, Stolze says.
Both authors say that the most important thing to do before launching a company is to sweep away the misconceptions that cloud one’s judgment. Only then can you assess clearly if the dream of self-employment is right for you.
