How to Become a Successful Entrepreneur

Build a Runway For Your Business & Save Your Money

The first step in becoming a successful entrepreneur is learning how to save money. If you can save enough to cover your living expenses for 3 to 5 years, this will help you tremendously. The majority of businesses fail within the first five years, so just staying in business long enough will put you ahead of the rest.

There are multiple ways you can support yourself financially as you start your business:

  • Personal savings – This can be money that you’ve accumulated over the years. You might also have a significant other who may be able to support you in the early years.
  • Gifts or Loans – Money can be gifted or loaned to you from friends or family.
  • Banks and/or Investors – You can go to a financial institution such as a bank or credit union and discuss your financial goals. Funds can also be raised through outside investors like angel investors, venture capitalists, or other businesses.

Your vision and goals will determine the best course of action when building a runway of cash.

For example, a freelance graphic designer will require much less capital than a tech startup that needs multiple employees to help develop it’s product and get it off the ground. These businesses have different objectives and therefore different cash runway needs.

Entrepreneurial Objectives

As I mentioned previously, your objective will dictate your plan and path forward. Entrepreneurship can come in all shapes and sizes. Many people think that you need to be a startup in Silicon Valley with multiple rounds of funding from venture capitalists to be an entrepreneur.

This simply is not the case.

America has been built on the backs of small business owners. In my opinion, that is what makes it such a great country. It provides an entrepreneur with the opportunity to build something of their own and receive the rewards that go along with its success.

You can be extremely successful by buying a business or starting one of your own. You don’t have to recreate the wheel. For example, you can buy into a franchise or buy a book of business from a retiring owner in your industry.

My point is, decide what you’re interested in and good at and then go from there. There is likely someone who is already doing it or someone who has found success so use this as the foundation for your business.

Generate Revenue and Keep Expenses Low

Profits are a sign of a healthy business. As an entrepreneur, this is an important element to keep in mind.

While a business can generate a lot of revenue, it may not necessarily be profitable. Some entrepreneurs go years and years without being profitable for various reasons.

When trying to acquire new customers, the key is to understand your costs when creating or delivering your product or service. Determine how much you need to sell to have a healthy margin. This will be different for every industry but you can easily find averages online. When determining what kind of business you want to get into, you can use this as a starting point.

Every expense needs to be tracked. It can be easy to take on unnecessary expenses. Every decision should be analyzed to determine if it’s needed in the business or not.

The higher your expenses, the less profitable you will be.

Pay Yourself

It can be easy to reinvest everything into your business to accelerate its growth. I wouldn’t recommend falling into this trap from the start.

You need to eat.

You need to pay bills.

You need to live a little.

You will stress yourself out if you don’t have some money coming in to cover these things.

Pay yourself a reasonable wage and then reinvest the rest into the business. If you do this over time, it will grow and you can pay yourself more.

 

Pivot as Needed – Don’t Be Afraid to Add Services or Products

Markets change constantly. Consumer demand ebbs and flows. A business needs to be able to keep pace with these changes and provide new and relevant products or services to their customers as needed.

This is easier said than done but new solutions shouldn’t be completely dismissed. If you don’t learn how to pivot, you could get left behind by your competition and start losing market share.

It is important that you stay on top of industry trends and technological advances in your field. That way you can see if there are more cost-effective or efficient solutions that could make your business run smoother.

We all know those people that are too set in their ways. Don’t be one of them.

You will eventually succeed if you do these things for long enough. It’s only a question of time and if you want to wait that long for success.

The hardest part of being an entrepreneur is staying in business long enough to build a proper foundation.

There are many different businesses and models on how to make money but when it comes to entrepreneurship, I would suggest doing something you are knowledgeable in or have experience with.

If you know people who can help you get started in some way, that’s even better. Utilize your network and build relationships.

Above all else, remember to work hard and stay positive!

If you’d like an objective second opinion about your finances, please contact Michael Shea, a CERTIFIED FINANCIAL PLANNER™, at Applied Capital. Email him at [email protected] or fill out a contact form.

DISCLAIMER
This blog is provided for informational purposes only. Such views are subject to change at any point without notice. The information in the blog should not be considered investment or tax advice or a recommendation to buy or sell any types of securities. Some of our blogs or information therein have been obtained from third party sources believed to be reliable but such information is not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. No reliance should be placed on, and no guarantee should be assumed from, any such statements or forecasts when making any investment decision.

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