Over the past 5 years, I have lived and breathed business. My first main business experience began at age 18 when I opened a juice bar with a few other business partners. From there, it was off to the races launching a podcast, book, public speaking engagements and eventually Fulcrum – a community of entrepreneurs with the end-goal of opening up a business innovation center. All of this has amounted to the equivalent of an intensive college degree from the business school of hard knocks.
With my latest venture, Fulcrum, officially shutting down in July 2020 due to the irreversible effects of COVID-19 on our business model, my most intensive business experience yet is coming to a conclusion. I say intensive because in less than a year, I have sold and exited a business (NUYU Juice Bar) and had to shut down a business (Fulcrum). This experience has been the greatest career growth opportunity of my life that now leads me to the season I’m entering – a reflection and consolidation period.
In this article, I want to share 10 principles I wish I had known at the beginning of my entrepreneurial journey. In the past 5 years, following some of these has served me incredibly well. In contrast, not following some of these has cost me dearly. I don’t regret any of my experiences but if I can save some of you countless time and money by letting you learn from my wins and most of all, my losses, I’m going to do it.
Let’s dive in to the 10 principles I wish I had known 5 years ago:
- Choose your ONE thing
When you’re starting a new venture, choose your one thing. Yes, literally one thing that you’re going to become the best at in your industry. When we focus on one thing, we can pour all our energy, resources and focus into being the best in the market at that single thing. It will be your business’s greatest superpower. If you want to dive into this topic more, check out the book The One Thing by Gary Keller. A question from that book that will give you a start on defining your one thing is: “What’s the one thing I can do, such that by doing it, everything else will be easier or unnecessary?”
- Know your numbers (P&L’s, revenue model, tax and legal structure)
Once you have your one thing business idea, dive into what the numbers look like with a potential business model. Prototype what your revenue model, costs, KPI’s and tax/legal structures will be. It’s essential to realistically map out the financial sustainability of your business so that you go into your new venture with your eyes wide open. In business, you have to make core business decisions largely based on data and numbers. Once you get started, hire out areas that you’re not 100% competent in. This could mean hiring a bookkeeper service, CPA, etc.
- Get consistent mentorship from people who are 10 steps ahead of where you want to be
Mentorship and advice in the business scene is essential and will save you so much heartache along your entrepreneurial journey. Identify a few core individuals who are 10 major steps from where you are now. Why 10 steps? Because they’re close enough to help you fill in the gaps but they’re not so far ahead of you that you can’t even begin to relate to where they are and how they got there. Don’t worry, you should always be upleveling so eventually you might be at the place where that mentor who is 20 steps ahead will be relevant to where you’re at. If you can’t afford a 1-1 mentor, podcasts and books are a great first step. Surround yourself with individuals who you want to be like.
- Test your business idea using the Lean Startup Model
Once you think you’ve found a need that you can fill better than anyone else, test your theory using the Lean Startup Model. I wrote a whole article surrounding this topic but in summary, find the minimum viable way you can test your idea and get it out there so you can gather some real-life market research. Just because you’re passionate about your idea, doesn’t mean other people are. In fact, your personal opinion and preferences don’t matter as much as you might think – your customer’s opinion is the one that matters the most. Practicing the lean startup method will be the most effective way for you to change and pivot towards the most effective version of your business model. Know your ideal client like the back of your hand and make sure that you are providing them with a high value exchange.
- Lead with action, not just ideas
It’s easy to have a solid business idea, but it’s not valid until you prove it by taking massive unapologetic action to turn it into reality. Create objectives, goals and action plans that help you accomplish your one thing and run towards it for all you’re worth.
- Heed who you contractually align with
Especially when you’re first starting out in business, it’s easy to get swept away when people want to work with you. It’s a thrill to be wanted and needed. However, always question someone’s eagerness for involvement in your vision.
Don’t sign contracts, leases, or other legally binding documents until you’ve played out what your signature means in the best case and worst case scenarios. Really understanding the ins-and-outs of the contract by working with a lawyer will save you so many headaches in the future. Fully knowing how the document you’re signing affects your revenue model and business reality is essential so you can objectively weigh the pros and cons.
- Create strategy back-up plans
As a business owner, it’s your job to know the strategy of your business. However, your strategy is affected by external variables that you don’t have control over. With major initiatives and objectives in your business, always be 5 steps ahead of the current action you’re taking. Ideally, have a couple of backup strategies that you can pivot to in case the first option flops.
- Treat yourself as your most important business asset
When you’re in startup mode, you want to keep things lean, but also realistic. A common pitfall in the early days of business is to sacrifice yourself to burnout just to save a dollar. What most entrepreneurs take a while to realize is that YOU are your most important business asset. To a certain extent, you are selling your energy. If you have no energy to sell, you have no business. Therefore, be hyper intentional with your time and take care of yourself physically, mentally, and emotionally. Here are some practical tips for the mindset portion of this.
- Don’t be in a business that’s out of alignment with you
From the beginning, build a business that aligns with your core values and has the potential to give you the lifestyle you want to live. As a business owner, your business becomes where you spend the majority of your time. If every ounce of effort you put into it feels misaligned, you will start to develop a sense of bitterness and resentment towards what you do. This is a dangerous place to be. You’re not going to feel passionate about what you do 100% of the time, but at its core, you should be aligned with the mission you are trying to achieve with your business.
- Win big by cutting your losses
Sometimes businesses don’t work out. And often, we let our ego get in the way of letting go of something that we should have a long time ago. I got the details of this concept and questions from the book Essentialism by Greg McKeown. Often, we give into the sunk cost bias because the more time, energy and money we put into something, the harder it is to let go because it feels like such a waste of effort. However, some things aren’t meant to keep going. Making this call as a business owner can be much harder than trudging on. So, ask yourself this question: “If I weren’t already so invested in this project, how much would I invest in it now?” Next, ask yourself, “What else could I do with this time or money if I pulled the plug now?” Be comfortable with cutting losses because you know the opportunity cost is much greater than what you will lose by letting go.
So, there are the 10 principles I wish I had known at the very beginning of my entrepreneurial journey. Before you sink your teeth into a new business idea, play out the big picture by looking through this 10 principle framework. Ask yourself the hard questions and don’t just be swept away by the shiny object syndrome of wanting to own a business. Being a business owner is hard, but it’s the most beautiful experience at the same time. Success brings powerful lessons and failure brings the most meaningful ones.
I sincerely hope that reading this article gave you perspective and valuable tools to aid in the success of your entrepreneurial journey.