People want to start a business, but they are afraid and don’t know where to start.
We talked to experienced entrepreneurs, and learned how to overcome the fear of failure and open a long-lasting business.
How to overcome the fear of failure in business and act
1. Accept responsibility
There is no life in business from 8.00 to 17.00 with weekends and holidays. Get ready to work 24/7 and take full responsibility for failures and mistakes. And everyone makes mistakes, but entrepreneurs can learn from them.
This is the opinion of investor and mentor Colin Douglas:
“There are no mistakes in business, there is only experience. It’s just that the experience can be negative. A person can choose a niche that is no longer relevant and is already dying. There are common mistakes when choosing a business partner. Beginners constantly make mistakes when choosing an advertising platform, offer, pricing, or sales pitch. In business, nothing is ideal – everything needs to be improved and things need to be done constantly. There is no perfect business. Processes need to be constantly improved. In fact, these “mistakes” should be treated as experience. It’s not the end of the game, it’s something that will give you more over time.”
Take the advice of Jeff Bezos, who founded Amazon. He, too, was familiar with the fear of failure in business, he forced himself to imagine what his life would look like at 80. And asked himself – If he doesn’t try to start a business, will he be happy with his life?
2. The unknown is scary! Start a business in a familiar sphere
You should not start a business in a sphere that’s new to you. This would only scare and slow you down from taking action. There will be less fear if you start your business in an area you are familiar with. For example, you used to work in a spare parts supply department, and then opened your own company in this industry. You will have full knowledge of the specifics of the business processes. This will help you avoid many mistakes.
If you still want to try your hand at a new business, find experts who will tell you the nuances. Or try to work in this area for a while.
A curious fact is that public catering attracts novice entrepreneurs most of all. And experienced businessmen even have a saying: “Everyone once opened a failed restaurant.”
3. Build a financial model
To understand whether it is worth starting something new or whether it is better to wait, use a financial model. In fact, this is a simple table where the main business indicators and starting figures of expenses and income are recorded. Even with minimal initial data, it will show you how much money it will take to launch and when the business will start paying off. To make it easier to understand, we have prepared a free financial model template. Download the document, fill it with your own data, and evaluate the prospects of your new business.
4. Take small steps towards a big goal
Business scares aspiring entrepreneurs with its monumentality. But this fear is easier to deal with if you break down the entire task into actions and steps. Small tasks are not so scary, and solving them helps you move on.
Before starting a business, study information about how to run a business and what it takes to do it, and check the viability of the business idea.
The founder of several companies and mentor John Ruff considers this particularly important:
“An entrepreneur must constantly test hypotheses. Before starting a business, you need to understand whether potential customers need it. It’s not that expensive. Advertise on social media about your product or service. See if there is any demand. Also ask your friends or acquaintances, but don’t just get an opinion. It is necessary to sell it. If they want to buy, you can develop the idea further”.
5. Start with your own money
Every business needs start-up capital. It is better to save it yourself. Because your own money mobilizes and forces you to move towards the goal. And in case of failure, it is always better to lose your own money than to remain indebted to friends or banks. If you start your business with your own money, the fear of failure in business will be much less. Co-founder of the Country Building Center Jan Barnfield is sure of it:
“Of course, you can start a business with investor’s money, but I believe that a successful business is built on your own funds. Because there is more responsibility, you start to monitor all financial indicators and constantly think about how to improve them. There is no time to be afraid, you need to constantly do something to earn money”
If you find funds for a business, the fear will recede. There won’t be time for it anymore. You will have to think about how not to close down and lose your investment.
How not to get stuck when after opening your business
Starting a business isn’t everything. It needs to be constantly developed so as not to go bankrupt in a couple of years. There are different ways to do this:
1. Force yourself to do what you don’t like
The business owner is responsible for everything that happens in the business. You won’t be able to relax and get paid. William Barsky, Co-owner of a chain of stores believes that this is one of the basics in business:
“I like the way Elon Musk talked about it in his interview. Running a business is like looking into the abyss, that is, watching every day what could potentially destroy your company. And it’s the same as eating glass. That is, to solve the most difficult and unpleasant issues. You need to understand that no one else will do this for you”
It’s the same with sports and dieting: you constantly push yourself for 21 days, and then a habit is formed. After a while, you will get used to constantly solving problems.
2. Continually improve your results
When the business is already operating and making a profit, you should not take a step back either. The economic situation, competitors, customer behavior — all force the entrepreneur to look for opportunities for development and kill the fear of failure. Bob Peacock believes that you should constantly develop:
“A business can work for 3 years or 5 years and make a profit. But if the owner has had enough and doesn’t think about expanding or scaling up, the business will close anyway. Sometimes it’s scary to take new heights, but it’s a trap. You need to constantly think about improving your business. There’s no way other option”
The Covid-19 pandemic has forced entrepreneurs to quickly look for ways to retain customers, even during self-isolation. Many people began to move their businesses online as a matter of urgency. Don’t be afraid of trends and new trends. It is better not to avoid them, but to understand them quickly.
3. Do everything quickly
John Ruff is sure that entrepreneurs are often led by the fear of making decisions:
“I see start-up entrepreneurs doing things very slowly. There’s a buzzword for procrastination, but I think it’s just laziness and the fear of making decisions. We need to get rid of this. Don’t be afraid to take responsibility and train your quick reaction time. Not only at the start of the business, but also after 3 or 5 years. It is important to constantly adapt to market changes and meet them in advance. To do this, you need to do everything quickly and not postpone decisions for later”
How to not close down in a year
A common reason for closing a business is financial errors. Figures always show the real picture of work. Few people find the courage to look at them and analyze how things really are. But this must be done in order to respond in time to critical situations.
1. Don’t be afraid to economize
There is an illusion that a new business is necessarily new equipment, an office in a prestigious location, advertisement on all channels. But an entrepreneur must make a profit, and to achieve this you need to constantly reduce your expenses. John Ruff he believes that this ideology is lacking in many entrepreneurs:
“I often see people solve everything with money. They choose expensive options, do not look for cheaper suppliers, and do not try to negotiate in order to arrange favorable conditions for themselves. This is either laziness or lack of necessary skills, but all this leads to extra costs.”
2. Separate your personal money from business money
In entrepreneurship, the main motivation is money. In business, you want to earn more than you spend. But a businessman also has obligations, not just income. Not everyone understands this and does not know how to separate money. William Barsky believes that this behavior often leads to the collapse of the entire business:
“It happens that aspiring entrepreneurs pull money out of business. They think that they’ve made a profit, and so they can buy a car or go on an expensive vacation. It’s scary to not look successful, because you are a businessman! But then, comes the time to pay salaries or buy materials for work, and there are no funds. You need to separate money and keep records of it. We also came to this conclusion and introduced funding. First, as a manager, I set my salary based on my results. Secondly, we distribute dividends according to funds: for a rainy day, for equipment. Only then do we take something for ourselves. In general, we do not collect dividends more often than once a quarter. I think that in the first year you should not take anything for yourself at all”
3. Do not forget about a financial model
A financial model is the economics of the project, i.e. calculations of all costs and possible revenues of the company. Calculations are distributed over a year to understand how the business will work. Roughly speaking, how much you need to spend in order to attract customers to earn the required amount. Usually, the model is made for each month, but if the business has a long sales cycle, you can do it quarterly. Having a Financial model is the main way to deal with the fear of failure in business.
Financial expert Alexey Boev thinks that a financial model helps to answer important questions of entrepreneurs who are just starting out:
“Some manage not to close down without a financial model, but not everyone is so lucky. If you want to attract investors, then you absolutely need a financial. Investors will study it, before deciding to invest. But you also need it for yourself — it dispels all illusions you may have. For example, you want to earn $200,000 a year. The model will show you what you need to do: how many customers to attract, marketing costs, equipment or materials. It will become clear whether your goals are real or whether it is better to adjust your appetite, or even not to engage in this business at all. “
A financial model can be done independently or using our template. Don’t be afraid to start a business, but do it consciously and based on numbers. This way you will have a better chance of becoming successful.
Learn to not give up!
You need to be prepared that the business may not go as expected. Entrepreneurs make mistakes, but there are also circumstances which they have no control over. For example, a pandemic or an economic crisis. Learn to not give up and start another business.
