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Lost Over $200k Trying to Start a Business

This post on Reddit talks about how an entrepreneur lost over $200k trying to start a business brings up excellent things to consider when starting a business.

Every business is different, but some key lessons that apply to almost all businesses are numbers #3, #7, and #9.

Lesson #3: Don’t Build Everything At Once

As an entrepreneur, you are likely the CEO and janitor. In other words, you have a lot to juggle and little cash to spend. Getting the core product/service to market takes precedence over spending time and money adding bells and whistles.

Lesson #7: You Can Be Either Low Frequency or Low Price, but Not Both

In other words, you can make infrequent big sales or frequent small sales, but not both. Most businesses fail because of illiquidity (i.e. not enough cash). Expenses never stop and must be paid even in between sales, so make sure you are always generating sales. A SaaS/user-base business is slightly different because the revenue model is based on data and advertising, but a similar maxim still exists.

Lesson #9: A Founder’s #1 Job is Sales

Once the CEO is done with janitorial duties for the day, it’s back to the phones making calls. For example, one of the main jobs of a partner at a law firm is increasing yearly revenue. They might not be doing contract review or picking up trash, but they are rainmaking.

See the full Reddit post below:

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Emerging Young Entrepreneurs

Your Startup Guru Managing Director, Joon Hong, recently had the opportunity to advise the 2022 cohort in the Emerging Young Entrepreneurs (EYE) program on their pitch decks.

The National Minority Supplier Development Council’s Emerging Young Entrepreneurs (EYE) program is a year-long program uniquely designed to provide the next generation of minority entrepreneur participants ages 19-35 with support to enhance their growing business. Business owners will receive guidance from corporate sponsors, MBEs, and additional stakeholders. EYE will utilize an interactive pre and post-conference curriculum along with five days of hands-on training and practical application. Participants are provided the skills, tools, and strategies to start or grow their innovative businesses.

About NMSDC’s Emerging Young Entrepreneurs Program

Founded in 1972, the National Minority Supplier Development Council Inc.® (NMSDC®) is the longest-operating business growth engine for the broadest group of systematically excluded communities of color (Asian-Indian, Asian-Pacific, Black, Hispanic, and Native American)and our impact goes far beyond supply chain. It’s about upward mobility for the emerging majority of Americans, an equal shot at participating in the American experiment of free-market capitalism and entrepreneurship. Our work is about correcting the unequal access to wealth-building opportunities.

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Pitch decks are a fantastic document to raise capital for your business. Contact us today to get started on your pitch deck.

The Case for Small Businesses

The case for small businesses is a strong one. From job creation to patents filed, small businesses are a major driving force in the economy.

Small Businesses are an Engine for Job Creation

Despite losing 9.1 million jobs in the first two quarters of 2020, small businesses’ job growth rebounded swiftly following the COVID-19 recession. In the four quarters following, small businesses have gained 5.5 million jobs, making up for 60 percent of the decline during the early pandemic. Small businesses have generated 12.9 million net new jobs over the past 25 years, accounting for two out of every three jobs added to the economy. Source.

Small Businesses are Drivers of Innovation

Experts often use patenting activity as a proxy for innovation. Data from the National Science Foundation show that small businesses that engage in R&D generate more patents per employee than larger businesses that engage in R&D. However, small business patenting activity fell significantly following 2010.

The decline is now reversing. Small businesses recovered to two-thirds of peak patent application levels from 2015 to 2018 and recovered to half of peak patents received levels in the same timeframe. Source.

Small Businesses Need Support

Unfortunately, more than 90,000 restaurants that have closed across the U.S. in the past two years. Restaurant industry sales in 2021 were down $65 billion from 2019’s pre-pandemic levels. A touching article in High Country News tells the touching story of the last day at DeDe’s, a mom-and-pop restaurant in St. George, UT.

She suffered a stroke a year ago and hadn’t been able to visit. “When DeDe found out, she made my mom’s favorite meal — a ham, mushroom, and spinach omelet with Swiss cheese and a slice of cantaloupe — and delivered it to the care facility,” Feesago said. “It’s more than food. DeDe made us feel like family.”

This type of value-added service without an exorbitant surcharge would be unheard of in a corporate restaurant scenario. The personal touch is also gone. Optimizing for profit results in diminished customer experiences. The typical story of a small company that grows until it catches the eye of a larger firm is common. The value and brand that the small company created are gutted to make room for shareholder value creation. The original loyal customers eventually leave because the magic is gone. This is done over and over again until Main Streets throughout the US begin to look exactly the same with the same 15 corporations.

The tragic irony in all this is that corporations spend a considerable amount of resources trying to recreate a “we treat you like family” environment that customers want. Unfortunately, it is just marketing, and the user experience is not genuine. The corporations would do better as a holding company that lets the small business operate with minimal interference. The parent company could provide occasional funding for expansions, hiring, and process improvements.

Small improvements can lead to significant benefits. Our blog post Competitive Advantage and Coffee talks about how a simple gesture such as remembering regular customers’ names can result in higher coffee sales. Another example is DK’s Donuts a small independent donut store in Santa Monica, CA that has been in business since 1983. Even when mega-chain Dunkin’ Donuts opened a block away, business did not suffer because the user experience, customer service in other words, was not there at Dunkin’ Donuts.

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Contact us today to discuss how you can start your own small business.

Fail Better

Fail better. The only way to accomplish anything is to try. However, unless you are incredibly lucky, you will fail. A lot. This is when you decide to quit or to try again. This time, you try again with a different approach. You look at what those that succeeded did. You find and ask mentors. You fail again but now you are failing better. You keep trying again. Eventually, you will no longer fail.

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The dominos are starting to fall in the U.S. economy.

From NPR’s Morning Edition:

The dominos are starting to fall in the U.S. economy.

As the Federal Reserve pumps the brakes on the economy, many American companies are retrenching. There is a growing fear that as the central bank aggressively hikes interest rates to fight high inflation, it could tip the U.S. economy into a recession, and executives are cutting back.

A host of companies have announced job cuts or hiring freezes in just the last two weeks. They range from Tesla and JPMorgan Chase to Redfin and Coinbase.

Netflix last week announced a second round of job cuts for the year, this time eliminating around 300 positions. Earlier this year, the entertainment company announced it had lost subscribers for the first time in more than a decade. Since then, Netflix has eliminated roughly 450 positions.

Read the rest of the article here.

Contact us to find a strategy to weather this upcoming storm and put you in a stronger position.

Some Pain is Worth it

“If you get tired, learn to rest, not to quit.”~ Banksy

Many clients complain about getting burnt out and not having the motivation to keep pushing through the struggles of entrepreneurship.

In this great article from the Harvard Business Review, University of Pennsylvania psychology researcher and best selling author Michelle Gielan discusses how effective recovery periods is the key to resilience.

We often take a militaristic, “tough” approach to resilience….However, this entire conception is scientifically inaccurate.

The very lack of a recovery period is dramatically holding back our collective ability to be resilience and successful…We “stop” work sometimes at 5PM but then we spend the night wrestling with solution to work….The key to resilience is trying really hard, then stopping, recovering, and then trying again.

So how do we recover and build resilience? If you’re trying to build resilience at work, you need adequate internal and external recovery periods: Internal recover refers to the shorter periods of relaxation that take place within the frames of the workday by shifting attention or changing to other tasks. External recovery refers to actions that take place outside of work – e.g. in the free time between the workdays, and during weekends, holidays or vacations.

Another great book on the topic of resilience is Grit by Angela Duckworth. In it she discusses that the secret to outstanding achievement is not talent but a special blend of passion and persistence she calls “grit.”

Comfort is the Enemy of Growth

Time to get uncomfortable and grow.

Stop doubting yourself

You can create something great when you stop doubting yourself

The COVID Small Business Boom

brown wooden framed gold open printed decorative signage
Photo by Artem Beliaikin on Pexels.com

The Commerce Department said on Thursday, July 15, 2021, that business applications reached a seasonally adjusted 448,553 in June, 2021. In total, Americans have started 6,714,318 new businesses since the pandemic began last March, which is an all-time record.

According to Julia Pollak, an economist with ZipRecruiter, COVID created a very unique set of circumstances that made ideal conditions for people to start a business.

  • Many people were laid off on furlough and suddenly had time, but they didn’t have time that they needed to use to spend desperately searching for work because they also got a little bit of fiscal support. So there are many people who took that stimulus check and decided to take their $1,000 and use it to start a business.
  • Also, starting a business now is really fast and really cheap. You can register your business for just a few hundred dollars. And a lot of these companies are really little. It’s like a little store on Amazon or on Etsy. The startup costs for these businesses are super-low, so a stimulus check for $1,000 can make it happen in a way that it couldn’t have even 10 years ago.

If you are ready to start your business, contact us and let’s discuss the right path for you.

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