You're done with school and are trying to figure out what do. You'd much rather be your own boss than a wage slave but you're scared. After all, you know that most new businesses go out of business. Here's how to maximize your chances of success.
Status is the enemy of success. Most top graduates are too prestige-conscious to start low-status businesses. So, they start la-di-dah ones like a software company or they become doctors or lawyers. So, if you start a low-status business — for example, mobile home park maintenance, chain of espresso carts, used truck-parts brokerage — your competitors are likely to be lightweights, and so you're likely to eat their lunch. Also, low-status businesses are simple so there's less to go wrong.
Don't innovate; replicate. Come up with a new idea and it might work and it might not. You're the guinea pig, and while you might not die if your experiment fails, you might go broke. I had a client who invented a new product. To keep costs down, he found an overseas manufacturer. The overseas manufacturer simply stole the idea, ignoring U.S. patent laws. Suing was prohibitively expensive so our hero went bust. Of course, even if he hadn't, there are a zillion other reasons his innovative business could have failed: cost overruns, the product may not have worked, failed to impress consumers, or soon was superseded by a better or better marketed competitor.
Better to copy a proven concept: knock off a hot or long-selling product or website, or find the busiest type store in town and clone it in a similar location. If, for example, you see a number of burrito shops doing ay-caramba business, incorporate each one's best features and open yours in a great location.
Beg for honesty. The oldest business axiom is "Talk to your customer." But that's not good enough. Customers lie, especially if they're your friends and you're asking, "Is this a good idea?" You have to beg them to be honest with you: "Better to tell me you wouldn't buy my product now than after I've invested a bundle in the business."
Okay, so you have a workable idea. Now you need excellent execution. What does that mean?
Be a cheapskate. Making six figures as your own boss doesn't require a lot of capital. Indeed, the old saw, "It takes money to make money" is dead wrong in running a simple, low-status business. Sure, you need big bucks if you're trying to create the next Olive Garden, but what's needed to maximize your chances of making six figures in a simple business is that you be a cheapskate: Work from home, hire help only on a just-in-time/by-the-hour basis, buy low (for example, use price search engines such as shopzilla.com and bizrate.com to get the cheapest price on zillions of items) and sell high (never try to compete on price. Market to clientele that will pay for service.)
Hire wisely. Hire people you already know and trust or who are recommended by those people. There's too much lying on resumes, interviews, and references to trust a stranger. Test candidates out, not with B.S-able interview questions like, "What's your greatest weakness?" but with simulations: Ask them to show you how they'd tackle the tasks they'd be doing on the job.
Hire people you like personally and who will stay with you. Not only is replacing and perhaps retraining expensive, it's fun to work long-term with someone you like. How do you determine who will stay? Often, it's someone with a flaw that will make them unlikely to land better work: no college degree, physically unattractive, too shy to do an aggressive job search.
By hiring them just-in-time and by the hour, if despite that careful selection process, you guessed wrong, you can fire a bad worker with little worry of a wrongful-termination lawsuit.
Treat everyone like your lover. Whether it's the people who work for you, your customers, or vendors, treat them with kindness, respect, even love. Ask their advice, criticize sparingly and in a face-saving way, and show concern for them as human beings. They'll do much more for you and be loyal, even if you pay modestly.
Work long. No matter what the work/life balance cheerleaders say, most successful business owners don't just work smart; they work long. I know that advice will never get me on Oprah, but it's the truth.
Rebound. Stuff happens. Losers then quit, prematurely. Winners struggle for solutions, and only if the struggles come too often, do they know when to try a different game.
Never do anything you couldn't tell your mother. The bottom line is only half the bottom line. The other half is — at the risk of sounding like your mother — doing the right thing. You may or may not be as successful if you're a sleazebag, but you don't want to sell your soul for money. Trust me on this one.
