This was written by Bend Soap Company Co-Founder, Marilee Johnson.
We get questions all the time from people who want to start their own business and thought we’d share a few tips we’ve learned over the years. We’ve included questions for you to ask yourself as you pursue this dream.
It’s been said that 9 out of 10 businesses fail for two reasons: a lack of capital and lack of knowledge of the industry. We hope these tips and tricks we’ve picked up along the way can help you get on the fast track to success! From knowing your strengths and weaknesses to hiring a team (and key attributes to look out for!), read on to learn more.
Find Out Who You Are
One of the best exercises you can do is determine what kind of person you are. How do you operate? What do you enjoy doing? What things do you naturally gravitate towards and what would you rather avoid? You probably know exactly who you are, but it's important to recognize the differences between the two.
The Businessman or Businesswoman
- Wants to start a business, often seeing something another is doing and wants to do it better or different.
- Willing to put in the time and effort.
- Likes to follow a roadmap of how to get there.
- Wants some upside; compensation, recognition, status, etc.
The Visionary Entrepreneur
- Tons of ideas
- Often starts things yet frequently fails to finish them before starting the next thing.
- Black and white (can usually see things very clearly).
- Risk taker who’s willing to go all the way on any idea
- Knows exactly what needs to be done in order to get started.
It's good to identify your strengths and weaknesses, your risk tolerance levels, and your vision. There are several resources for discovering things about yourself, including our favorite: the Kolbe Test. This doesn’t test “personality”, but rather your natural inclinations towards operating. For example:
- Do you like to research?
- Do you prefer working with your hands?
- Do you have massive follow through or none at all?
- Do you like perfection or just progress?
- Are you administratively inclined?
- Do you need to be around people?
Once you have your operating tendencies, it's good to consider how that plays into your business ideas.
Discuss Things You Enjoy
What do you enjoy? Have you ever thought about this? Thoroughly? Doing something that you really enjoy is most likely a winning situation. Or more importantly, consider if it's something you really don’t enjoy. Better to avoid that line of work, industry, or position. Here are some questions to consider:
- Would you enjoy serving people?
- Would you enjoy making things?
- Do you enjoy computers?
- Do you need to be outside?
- Do you enjoy leadership, guiding people, or training others?
The book What Color is Your Parachute by Richard Nelson Bolles is a fun exploration book that can help you discover interests, capabilities, and potential skills you may have overlooked.
Disqualify Bad Ideas Ahead of Time
Do not charge in on an idea without first looking at any numbers. There are a ton of good ideas out there, but often there are ideas or services that no one wants to pay for. Perhaps the consumer will take care of it themselves? Or perhaps there’s not a huge need?
Be very aware of these considerations before you jump into the idea. Often people hear a good idea and jump right in. But it's important to think through some serious questions about yourself, the product, and industry. You can save yourself time and frustration, if you disqualify the bad ideas first. Wait and search for a good idea.
Here are a few questions to help you qualify and disqualify business ideas:
- Consider your passion: Is it something you’d enjoy? (See above)
- Is it a product or service? Service companies are very different from product companies. Do you have an interest in creating a service-based job, a manufacturing business, or something different?
- What about a product? How many can you sell? Can this grow beyond your own labor? Consider these things in terms of scalability: Is it a one-time purchase item or a consumable? Can people buy it online? Is it scalable? Are sales limited by location?
- Consider the industry. Does it take a specific license or education to be credible?
- Think about capital. Would your idea take a large amount of startup capital? Most businesses will require all of the profits to be reinvested into the company for the first 3-5 years. Do you have other income? Do you have money set aside for living expenses during this time? Or perhaps loan options from relatives in a pinch?
- Determine if there is a real need for it. Do people want it? Will they pay for it? Do some market research to determine if there’s real potential, or if it’s just a dream.
- Consider the market. Does the industry exist already or are you trend-setting? Will you be starting from scratch in determining a market? It is easier to offer a product to people who are already looking for something similar, than to educate everyone on their need for your product.
- How would you be different? Are others doing it already? Consider the need to differentiate yourself from similar products or services in the market. How would you do this? What is unique to you? Is it enough to get a percentage of the market?
- Research the numbers. What would people really pay for it? What would your cost be? Double that to include overhead if needed. Would there be any profit left? If not, the idea may be a no go.
- Consider the time commitment. Do you really have the time to take on what is needed to make it succeed? A business is like having an additional child. They’re “living” and take all your attention, no matter how self-sufficient you try to make them. Consider what you’ll be sacrificing to get it on its feet.
- Think about operations. Who will run the business? Are you a husband and wife team? Consider how this may affect your marriage and family. Who will be doing what?
If you’re offering a service, most likely you (and more importantly your time) will be tied to the revenue. If you’re a music teacher, dance instructor, mechanic, dentist, contractor, blogger, videographer, etc, your profits are a direct product of your labor. Unless you scale your business by adding instructors, other mechanics, bloggers, assistants, etc, you will only be able to create as much revenue as your time will allow.
In some cases, it’s impossible to scale a business if there is something “magical” or unique about the founder. Perhaps the founder has created a unique platform and following or they are a surgeon or instructor with specific accolades. However, if you can train people to replicate what you do and the brand is not affected by this, then the business is scalable.
Enter the concept of leveraging your time and creating residual income. In other words, creating a way for money to come in even if you’re not the one doing the selling or service. Leveraging involves reliance on other people to participate in the income creation process.
Have you ever heard of this concept before? I was introduced to this in college when reading Robert Kiyosaki’s book, Rich Dad Poor Dad. It's a fascinating concept. If you’re interested in “time freedom” or a more hands-off approach to a business, then creating a business with residual income is something you should look into. It is easier to accomplish in certain industries, so if this is something important to you, choose wisely.
The Skills You’ll Need to Get Started
Basic skills are very helpful but you don’t need to know everything! In fact, you might not know much, but you should be aware of what truly is important to your successful business. You may have the best product out there, but not know where to sell or how to get a following. Likewise, you may know how to build an amazing website, but not have a killer product.
After years in business, we’ve found the most important skills for being successful in business to be the following:
- A passion: Burning desire to see it come to fruition.
- Determination: Drive and ambition to make it happen, day in and day out.
- A “why”: Something that motivates you to keep going even when it gets tough.
- A great idea: A killer idea and/or product that’s passed the tests above.
- Communication skills: You need to be able to communicate and sell really well. It won’t matter how good the rest of your business is, if people aren’t buying, you’re toast.
- Administrative help: Someone has to be able to get things done online, get a business license, make spreadsheets, keep records, passwords, all the busy work… Crucial!
While you can potentially hire the last two positions, you simply cannot succeed without personally having the first four.
Direct Selling Experience
The ability to create sales is a key component to a company’s success. We recommend you learn communication, how to share value, and how to close a sale by first joining a direct selling business. Direct selling businesses typically require a low startup fee, but can offer immediate return on investment while also allowing you to track and fine tune your successes. It is THE BEST training ground.
Succeeding proves three things:
- You have what it takes to succeed.
- People obviously like buying from you and trust you.
- You’ll have a residual income for phase two of your start up.
If you can’t succeed in direct selling, it could be your product or you just haven’t learned how to communicate value to others in a way they can understand. If you believe in the product, then reach out to successful people in the industry for advice and mentorship.
Finally, choose a company whose product is all of the following:
- Affordable, and
If it fails any of these tests, it will be difficult to scale and succeed quickly.
And, choose a company that:
- Has integrity
- A history of success, and
- A proven long-term model, not a front-loaded fake-it-til-you-make-it model.
We recommend the company that we’ve been a part of for the past 20 years and can attest to its viability and longevity as it has supported us as we built Bend Soap Company.
Know Your Strengths
When you first start out, you’ll most likely be filling all the seats on the bus. However, as you go, determine what areas you perform that are absolutely crucial to the success of the company? It may be different than you think. And it will most likely change over time.
When we first started out, Dwight made the soap and then went to shows to sell it. He also hired web designers and marketing vendors. As time progressed, he began hiring people to replace him in areas he deemed were not crucial for him to be a part of. First, he hired and trained a soap-making team. Administrative help quickly followed.
While many other positions were created along the way, Dwight, as the owner, has always kept a pulse on the finances, facility, and direction of the company. The one hundred foot oversight is crucial to keep the company on course.
Hiring a Team
Since you can’t do it all, bringing in help in the form of aspiring entrepreneurs and experts will also be key to your success. But hire carefully! A character fit is often more important than ability.
- Hire only what you can truly afford.
- Hire vendors, when possible (instead of an employee, at first) who are experts in their fields.
- Hire for your weaknesses.
- Hire those that work well with your leadership style (AKA hands off vs micro-manager, etc)
We consider the following attributes to be crucial to the character of a good employee or partner:
- Humility: Can they receive instruction, take counsel/advice, and be led whether they agree with the direction or not? Pridefulness in their own ideas or understanding can often drive a wedge between you and your team, especially if it's a leader in your business. Instead, choose confidence and capability, without the ego.
- Have your best interest at heart: Find people who want to work with you, not for themselves. Everyone who joins your team has to join your vision and be ready to move with you, as you change directions. Businesses can go through many shifts and changes, including some rough times, and when the boss changes directions, those that have their own agenda will often get left behind. People that are working for their own interests can often stand against the leader’s direction as it changes, causing entire culture issues as well. Instead, choose people that believe in you and where you’re going (not just the company).
- Scrappy: A desire to work hard without the need to be pampered or compensated extravagantly. If the company is profitable, it can grow. If it’s not, no one benefits.
- Self-motivated: Having the ability to think, move, and accomplish without being babysat or given exact instructions is super necessary in a startup. You’ll spend so much extra time attempting to train “initiative” into someone when they don’t have it to begin with. Better to hire right in the first place.
- Integrity: There’s no place for shadiness, dishonesty, lack of discretion, or fudging. Period.
Back to You
We hope this blog post helps you as you endeavor to forge into a new space or adventure! If you have any questions, drop a comment below. Dwight and Marilee will be answering your questions during a Facebook Live happening September 10, 2021 at 2pm PST.