Want to Start a Business? Consider These 5 Invaluable Lessons Before Diving In

by A Manly Guest Contributor on October 24, 2013 · 30 comments

in Money & Career

young businessmen

Editor’s Note: This is a guest post from Justin Spring.

On Friday nights, most testosterone-driven high school guys head out to the football field to either put on the pads or chase after the girls in the stands. I went to turn a profit.

At 16 years old, I started my first business among the throngs of a community gathered on muggy summer nights to cheer on the home team. Cheering means one thing: yelling. And yelling means that people will have tired, sore, dry throats.

For the penny pinchers unwilling to spend concession stand prices for their carbonated relief, the school had conveniently provided a pop machine in the stadium that would deliver an ice-cold can of heaven for 50 cents.

This pop machine had a particular quirk that lent itself fantastically to my young entrepreneurial spirit: it stubbornly required exact change. 

A lot has changed since 1998, but one thing hasn’t: nobody carries exact change. I set up shop beside that beautiful, glowing, humming machine and offered people exactly what they needed: exact change.

For a small fee to compensate my kindness and service, I’d sell them two quarters. Because they needed to soak their thirst, they’d gladly give me one dollar and I’d kindly give them two quarters, easily turning a $10 profit each home game.

It wasn’t much of a payday, granted, but I learned five invaluable lessons from that pop machine that helped me build the two successful businesses that I’m running today. 

Lesson #1: Be Necessary

If I’d sold can-koozies at the game, I have a hunch that I would have had far less success. Why? Because people needed a cold drink, not a holder for one. In my experience, I’ve learned that there are two types of business ideas: 1) “It would be nice if” ideas, and 2) ideas that make necessary things better.

Here are three questions to ask yourself to figure out if you have an “it would be nice if” idea or one that makes necessary things better:

  • Does this help someone do a necessary action more easily? Does it make someone’s job, responsibility, or task less of a pain in the neck?
  • Does this idea save someone money? What about time? Will the idea provide a way for people to do something more efficiently?
  • Is this idea a game changer? Does the idea change the way that people behave, operate, or think? Will this idea revolutionize an industry? How?

If you can’t answer yes to at least one of these three questions, you have an “it would be nice if” idea on your hands. Proceed with caution.

Lesson #2: Do Something You Know Something About 

Over the years, I’ve had hundreds of seemingly great ideas for a moneymaking business. Some of those ideas have since been discovered and turned into great profit by someone else. I should be bitter, right? I’m not. Here’s why:

I wasn’t the right man to lead the companies that would be birthed from those ideas. 

Over the last two years, I have raised over $1 million in investment capital for my technology start-up. All that nerve-conquering, sweat, presenting, and hustle served to teach me an invaluable lesson: the leader’s story (read: your story) matters.

Your background, experience, and education must align with the business that you are creating. Your business must be a part of you. I was able to raise the necessary capital for my start-up because I spent seven years preparing myself. Before building a digital marketing software product, I built a digital marketing agency. That means that I prepared myself to be the one person capable of executing my new business model.

Everyone has ideas. Successful people aren’t measured by the amount of ideas they have, but by their ability to execute a chosen few.

Lesson #3: Resolve Is Your Biggest Asset

Despite anything that you’ve heard or seen on TV, starting your own business isn’t very glamorous. It’s a grind that involves obsessive dedication and an unrelenting amount of effort and resolve.

It took five years for my digital marketing agency to fit into the “successful” label. I wanted to quit every single year before that. There were too many hurdles, too many unknowns, too many obstacles for the company to thrive. Many late nights, I laid awake justifying walking away from it all.

I can’t tell you how glad I am that I stuck it out. Here’s the lesson: Your resolve is the real “X” factor for your business.

Every start-up will encounter obstacles that will threaten to shut it down. Every beginning business will face seemingly insurmountable odds. Getting your idea off the ground will require your weekdays, weeknights, and weekends. There’s no getting around any of that.

To be successful, you must be resolved. 

If you’re launching out to start your own business, you must be able to answer one question without a hint of hesitation: are you prepared to fight? Will you be willing to stick to the plan even if it seems that it’s failing? Are you willing to make the sacrifices today that might pan out in 5 or 10 years?

Building a successful business from the ground up requires the resolve of Leonidas and the patience of Mother Teresa.

Lesson #4: Doing Something Awesome Requires an Awesome Amount of Side Hustle

When I started my first business (which failed), I had enough cash in the bank to support myself for six months. Young, and without the wisdom of the side-hustle approach, I promptly quit my full-time job and dove into the shallow end of the pool head first.

Two years later, I was renting a bedroom in a friend’s house for $200 a month, driving a downgraded car, eating off dollar menus, and living on a salary that brought in less than $1,000 a month.

I could have saved years of my life if I started growing my business while staying employed somewhere else. If you’re toeing the line and thinking of starting a new business, consider keeping your current job. You’ll keep your income and benefits, which will help you to make more level-headed decisions about your start-up and its future.

There should be one important caveat here: If you’re side hustling, don’t cheat hours on the clock. Your priority is your current job, and a man with integrity takes that responsibility seriously. Respect the person who took a risk to hire you, keep producing at your desk, and be a valuable contributor to your current company.

Once you get your start-up off the ground, you’ll expect the same from your employees.

Lesson #5: Ideas Are Cheap, Execution Isn’t 

I once had a friend approach me about a business idea that he was ready to set into motion. He wanted to build a company that would rent high-quality packing/moving crates in order to keep people from buying (and, more importantly, throwing away) boxes when they had to move. Letting him work through his business model and pricing structure, I noticed an unfortunate flaw: to make any real money off the company, he’d need to have several thousand boxes in circulation. Per week.

It’s unbelievable how the excitement of an idea can cloud our senses of judgment. It happened to me. And it happened to my friend above, who, despite my caution, dove into the shallow end of the pool head first and quickly realized there was no water.

No matter how great the idea, the numbers must add up if you’re going to be successful. Work through your overhead costs and schematics. Factor in your salary and the costs of your production. Know up front how many sales you’ll need to consistently make (and maintain) in order to turn a profit. You’re starting a business, after all, not a hobby.

The old adage holds true: You must do the math.

One Final Word

There’s one final lesson that the soda machine taught me during those humid summer nights: most people are addicted to convenience. That’s what helped me get away with charging a dollar for two quarters. Sure, I was saving them money because my product was cheaper than the concession stand, but I was also saving them time.

A lot of people will talk about starting a business and day-dream about being their own boss. Very few people will actually take the leap and invest the time. And a ridiculously small amount will actually see their dreams come to life.

That’s because building your own business isn’t convenient.

You’ll be misunderstood and frustrated along the way.  While your friends are busy buying nice cars and going away on fancy vacations, you’ll be pinching pennies to pay the bills and staying up late to answer emails. There are times that you’ll feel isolated and a bit foolish, and will be close to giving up and walking away from it all. When you have these moments, remember this quote, which I used to keep on my bathroom mirror and read to myself every morning:

“Every adversity, every failure, every heartbreak, carries with it the seed of an equal or greater benefit.” – Napoleon Hill, Think and Grow Rich

Plant those seeds and hang in there. It’s worth every second.

____________

Justin Spring is the Co-founder of Adept, an internet marketing company and BringShare.com, a SaaS application.

{ 30 comments… read them below or add one }

1 andyinsdca October 24, 2013 at 4:59 pm

You forgot a very, very important element: You MUST have a good bookkeeper/accountant. All of this stuff is well and good until the tax dudes show up at your door and you need to know where your $ are coming from & going to.

2 Buck October 24, 2013 at 6:07 pm

The other VERY important issue is to have enough cash to sustain you throgh at least twice as long as you think necessary. BTDT!

3 Jessica October 24, 2013 at 6:13 pm

“Getting your idea off the ground will require your weekdays, weeknights, and weekends. There’s no getting around any of that.”

It can be difficult to keep the big picture in focus through all the sacrifice. Thanks for the reminder that staying focused through the sacrifice is necessary for success.

4 Peter October 24, 2013 at 9:44 pm

Informative article!

5 Beemo October 25, 2013 at 3:22 am

I’m making plans and building a dossier (required for the gov) for my idea to make a web-designing company.
This covered some things I hadn’t (necessarily) thought about, even though coming from a rather poor family, struggling and striving through is something i know

Great read and well written, obligatory share x)
I can’t wait to read more from Mr. Justin Spring

Thank you

6 Brent October 25, 2013 at 8:00 am

This article was really helpful to me. I’ve been thinking about a consulting firm; and with these suggestions I think I should give it a shot. I just need to know where to start.

7 Brock October 25, 2013 at 4:02 pm

Justin,

First off, thanks. Awesome article, and it looks like you’ve fit a lot of experience into your career so far.

Question – you went from a services business to a SaaS business. (I’m not assuming you’re not continuing to run the marketing agency, but I am assuming this was the progression).

If you could do it again, would you go the product route over the services route? Or did the agency experience inform your product? What do you say to people who want to start a consulting or freelance company, versus a product/app/SaaS?

Thanks again,

Brock

8 Bucolic Buffalo October 26, 2013 at 11:34 am

I loved this article. You made many important points here. In my experience (as an accountant and small business consultant), I believe the most important include getting outside help in determining how wide and deep the market for your idea is at a pro-forma price point. Starting a small business makes people optimistic and a healthy dose of reality is crucial to success. Don’t abandon your primary source of income until you are on solid ground, making money and with good prospects for future growth. Good luck!

9 K. Stover October 26, 2013 at 3:37 pm

This article is a great primer for anyone wanting to take some good risk in life. my Grandad started his own business in a small town a couple of hours from where I live. With the money he made, he risked opening another store right next to his. The small town is shrinking yet both stores are doing alright. Wish he was still alive to talk to him about it.

10 Alex October 27, 2013 at 10:26 am

Oh wow. This is exactly what I needed to hear. It’s been a frustrating week for my business and I’ve never been closer to giving up. You’ve inspired me to get my head back in the game. “It’s worth every second.” Damn right it is.

11 Justin Spring October 28, 2013 at 11:39 am

@Buck – You are exactly right. I like to look at the worst case scenario, then make it twice as bad and those projections are still likely to be optimistic.

@Jessica – I always remind myself that if it were easy, everyone would be rich.

@Beemo – Thanks for the feedback.

@Brent – One important tip for your consulting firm, never do anything without a 70% gross margin.

@Brock – Great question. I do still have the consulting business because it is a great platform for launching product businesses (among other things). In hindsight, I’d do it the same way. It is much easier to earn enough money to support yourself doing some form of consulting or freelance work. It sill may take a couple years but you can probably replace your salary much faster with a consulting business. I created the product business because I wanted a business with more scalability. The consulting business is difficult to scale. We have 20 employees now and hire each time we hit a growth spurt. Finding super talented people is very difficult and the primary limitation to rapid growth. On the other hand, while a SaaS business is highly scalable with leveraged human capital, it can also take MUCH longer to get off the ground because you’ll be building it vs. selling it for quite a while. Additionally, if you are not a developer (I’m not), then investing dollars to hire developers can be extremely expensive and set you back.

Ultimately though, it all depends on your skills and business model. Lots of entrepreneurs are successful starting with a SaaS model who would probably never recommend a consulting business. These people tend to be developers though. The rest of us have to find a way to pay for development and consulting income may be a way to fund the business.

@Bucolic – Well said.

@K. Stover – I love stories like that. I’m sure he was a great guy.

@Alex – Never give up… sometimes you have to “pivot” but that isn’t the same as quitting. Adept was a pivot for me and BringShare didn’t find success until we made a pivot to target the digital agency market. If you aren’t getting the results you want, experiment and try new things and you’ll eventually, almost certainly, find success. Keep grinding!

12 Jake Long October 29, 2013 at 5:03 pm

Fantastic lessons. At this point in my life, I especially like lesson #2. I have known many people(including myself) that want to start a business just from an idea although we know little to nothing about the actual business. Sometimes we get a great idea, but we are not the ones to execute it. I mean, if you’re going to pour so much of yourself into a business, there needs to be a driving passion for it. Thanks for the great lessons, I will have to consult them every so often.

13 David October 29, 2013 at 8:01 pm

Justin – Thanks for the post, it made me start thinking.. How rightt you really are you don’t start out at the top it takes time and to develop something great the mistakes are part of growth. So thanks for the inspiration and wish you the best!

14 staubber October 30, 2013 at 10:56 pm

Thank you for writing this. Well done. Seed planting while reading this.
love it.

15 Michel C November 1, 2013 at 12:55 am

Hello, just wanted to say you may need to rethink the first one, at least I am pretty sure most of the stuff I buy are not within your concept or a necesity, therefore there is a market for those ( the again Im just an student whose bill are paided by dad or the state).

16 Justin Roane November 3, 2013 at 11:44 am

I have been working in IT for over ten years, and have recently branched off to work for myself. I applied the side hustle approach since I was 14. I am now 26 and capable of supporting myself (and my girlfriend, our two dogs, etc) with my very own business. This arcticle is amazing. I was constantly frustrated in the beginning, but I knew I had to keep my full-time job in order to pay into my new business. Investing in myself has paid off. I am directly competing with the local tech companies and am looking to expand my business model State-wide (with almost no increase in overhead)

Thank you for providing quality information on your website!

17 Brian Manning November 3, 2013 at 9:12 pm

“Everyone has ideas. Successful people aren’t measured by the amount of ideas they have, but by their ability to execute a chosen few.”

Very true.

Do something you are good at or that you know is a key to making a business work. It also makes it easier.

If you’re a natural at a particular trade or skill it’s gonna be a lot easier to go into business, expand or grow within that industry because it comes naturally to you rather than trying to force something that you don’t mesh well with.

18 Somraj November 5, 2013 at 9:53 am

Success favours those, who strive for it.

19 jr November 23, 2013 at 8:34 pm

been in business many years.., trying to give my two cents to help .. starting a business from scratch WILL be difficult.., if you knew how difficult, you may not start.., but Everest starts with the first step, so start & keep stepping.. if its been a solid real dream for you, you must try.. trying and failing is more fun than sitting on the sidelines.. by far the best thing I had going for me (besides all the necessary elements that make a business idea viable) was a mentor.. a long time business owner, whose advice helped me avoid mistakes, recognize opportunities and fine tune my business machine (it is a very complex engine with many many parts that all need to operate properly).. this 1 guy saved me about 10 years of time and a very large pile of money that would have been wasted on mistakes.. so read article above carefully, its valid and a bit daunting, but running a successful business is more fun (for me) than all the vacations, extra cash, expensive crap, cars, blah blah etc ALL combined.. and by far.. I love it.. so, be nice & good luck..

20 James November 25, 2013 at 1:57 pm

andyinsdca – That’s ridiculous. You don’t need to be a good accountant to be a successful businessman. Most people I know (myself included), just find an accountant to do their taxes for them.

21 Sam December 9, 2013 at 8:17 am

#1 Be Necessary.

This says it all. No matter what you do, business or work, if people need you or the skill you have you’ve got it made.

22 Joshua Jordan, KSC December 10, 2013 at 2:46 am

Lesson #4: Doing Something Awesome Requires an Awesome Amount of Side Hustle

This is the most important for me. This is the one thing that I had to learn through bitter experience. I wish someone had pointed it out. This is a most insightful post from a successful entrepreneur. Full respect, Brother.

23 Joshua Jordan, KSC December 10, 2013 at 2:49 am

I noticed something interesting. This post has been up for a while and other posts are much newer and yet this post has 22, and it will have 23, comments.

I’ve lamented the lack of interest in business among Americans, especially men, in 2013. It’s hard to find business partners, investors, and people who are willing to put in the effort to make their lives better. Certainly, government regulation is prohibitively taxing, but you can overcome that by doing what Brett did and finding a niche that you can fill that hasn’t attracted the Eye of Sauron — excuse me — the politicians in Washington. =)

Is there something we can do to get others interested in small business again? Small business is manly men doing manly things and womanly women doing womanly things. =)

24 Kervin December 13, 2013 at 6:55 am

Very good points here, particularly the part about starting while holding a real income source. I’ve tried the opposite and faced the pains for a couple years. Building a business requires patience at each stage and for each step of the process, and if you are impatient, you make your way a lot tougher needlessly. Glad you’re spreading the gospel.

25 Alex Delbeau January 4, 2014 at 8:45 am

@andyinsdca Very true, but these are the five invaluable lessons he learned from that pop machine which lead to his career now.

26 andreas January 9, 2014 at 1:56 pm

i’m looking at starting a small business of designer handmade quality leather goods.
i don’t wanna go big just want to have a hobby that makes some side money, while i finish my studys(still got 5 years to do).
but the stuff i need is not the cheapest and i don’t want to take out a loan, it’s against my principles.
and the fact is it’s not something people need, it’s luxury items.
got any ideas on how to market this, something to give an edge against all the big luxury businesses ou there?

27 Robert May January 14, 2014 at 7:57 am

Thank you. I needed that.

28 Alex January 15, 2014 at 1:01 am

A few years back the “you can do anything!” line motivated me to start my own business doing exactly what I loved doing: helping ordinary people get moving on a Paleo diet.

Fast forward 2 years and I’m struggling nearly every day to manage the choice I’ve made. Lesson: I wish more people would entertain the possibility of starting their own business, but the fact is that some of us simply aren’t cut out for it.

I’m glad I gave it 100% but am ready to leave it behind for something more compatible with my strengths and skills.

What I’ve learned from being self employed will hopefully serve me as I search for a more traditional job that will actually give me the life I desire.

29 peter pen February 3, 2014 at 2:00 pm

In my modest opinion – The oldest #1 business Lesson on Earth – “Start working at the Oldest Pro in your niche – and in 2 – 3 years of learning and experience slowly and step by step try take his place in that niche”.

30 Dave February 6, 2014 at 9:23 pm

Justin – great post.

I think you are absolutely right with point #1 – be necessary. But I think potential entrepreneurs need to also consider their potential customer’s passions.

Inventing a longer driving golf club, a more sensitive fishing pole or a better carving snowboard (watching the Winter Olympics) is not really “necessary,” But it is something people who are passionate about golf, or fishing or snowboarding – will pay for.

While I don’t have supporting facts at hand, I imagine we would all agree the average individual is more likely to pay a higher price for something they “want” as opposed to something (we think) they “need.” Which, to your point, is the difference between selling them two quarters for a buck instead of a can kookie.

Find out what trips your potential customer’s trigger – whether it’s something that seems necessary or not.

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