Becoming an entrepreneur is a nerve-wracking experience. You don’t want to go into it knowing your odds of success. Only 25 percent of companies make it to the 15-year mark. Everyone else shuts down and gets wiped out.
These headline statistics, though, hide a deeper issue. It’s not just the case that the company fails. It’s also that the entrepreneur themselves gets wiped out financially. Even after ten years of hard work, many don’t have a penny to their name.
In this post, we take a look at how you can avoid getting wiped out and live the life of a business leader without running the risk of financial disaster.
Pay Yourself An Official Salary
Don’t go into entrepreneurship like you’re right out of the Wild West. Instead, pay yourself as though you’re a regular employee, out of the startup capital you have, even if it is your own.
The reason for this is simple: you need a regular wage to tell you whether you are spending your time well. If you carry on for years, failing to generate any money, you still have cash left over in the bank, as though you were working a regular 9 to 5.
Don’t Skimp On Insurance
Make sure that you’re fully covered. Never skimp on insurance. Workers compensation claims can sometimes run into the millions of dollars, enough to bankrupt your business. Take out all the policies required and protect yourself from disaster.
Double-Check The Market
Entrepreneurs can sometimes be their own worst enemies. Many fool themselves into believing that opportunities exist when they do not.
Always double check the market to make sure that there is an audience for whatever you are selling. Ask yourself whether you would be willing to hand over your hard-earned dollars for what you sell. If there’s any doubt in your mind, reconsider your plans.
Not Enough Financing
Even if you have a great idea and plenty of energy, it’s hard to be successful without adequate financing behind you. You need a critical mass of money to buy all of the things you need to bring your ideas to fruition. If you haven’t got it, it can make life very hard indeed.
Be realistic about the amount of money you need to make your business a success. If you don’t know your requirements, speak with someone who does. Avoid guesswork.
You might have a great business idea, but if you’re in the wrong location, it might not work out. You may not be able to access the customers or workers you need to keep your enterprise afloat.
To avoid this, carefully consider your location beforehand. Do your research and find out how much trade you can expect. Also, research locations that offer people with the right skill sets.
Lastly, many entrepreneurs fail because they have a rigid idea of what success looks like in their minds. They believe that they have to proceed in a certain way, even if they don’t. Being a business leader is a learning process. You need to swim in the direction the market is flowing, not against it.