The Real Deal: What to Expect When Starting Your Own Business

By Sarah Winfrey on 19 December 2007 (Updated 26 April 2010) 10 comments

It's easy to list "Start Business" as a goal for the new year, but do you know what that actually means? About a year ago, I asked myself that question. Over these last months, I've done a ton of research on what it would realistically take to start a small business. I've had various ideas and have researched them all, and the list below contains items that seem to be true across the board. There are business for which these are not true, but those are the exceptions rather than the rule.

You can expect that...

1. You will lose money.

It's easy to list "Start Business" as a goal for the new year, but do you know what that actually means? About a year ago, I asked myself that question. Over these last months, I've done a ton of research on what it would realistically take to start a small business. I've had various ideas and have researched them all, and the list below contains items that seem to be true across the board. There are business for which these are not true, but those are the exceptions rather than the rule.

You can expect that...

1. You will lose money.

Hopefully, this will not be long-term. However, you could be facing a year or two of losses even if your idea is eventually successful. It just takes that long to make contacts, acquire customers who return time and time again, and drum up enough recognition for your product and your brand that people know it and trust you. This is why it's so important to plan ahead and make sure you have the money, either from savings or other streams of income, to cover your costs while you're getting things going.

2. Things will not go as planned.

Something will go wrong. Sometimes those wrong turns become the very thing that makes the business so successful. Most of the time, though, wrong turns slow down business growth. You can't plan for these, but you can expect them and take them in stride when they appear. They're particularly common when a business is new, because you don't have working relationships with suppliers, shippers, vendors, etc. You'll do your best to make it all run smoothly, but you don't know them and they don't know you and that can cause problems.

3. Some customers will be unhappy.

No matter how good your product or service is, there are always people who don't like it. They will probably complain vociferously and harangue steadily, and there's not much you can do about it. You can't make everyone happy, and you don't have to try. While it's probably best to try to pacify an unhappy customer, you can't let their opinion get to you. Just because the vocal few don't like what you're doing doesn't mean it doesn't have value or won't ultimately be successful.

4. You will have to dig deep.

Being an entrepreneur takes a lot of social, emotional, and physical energy, and it requires you to sustain high levels of those energies over long periods of time. You will be tired, cranky, and emotional and there's not much you can do about it, no matter how good your self-care is. It's just not possible for a human being to sustain high levels of energy in all these areas for a long time. If you're not willing to suffer these effects, entrepreneurship is probably not for you.

5. You will have to adjust your prices.

Almost every case study I've read about an entrepreneur mentions a major price change somewhere in the formative stages of the business. You can do all the research in the world, but you still can't know for sure what someone is willing to pay for what you have to offer. Go in knowing that things could come out differently. Often, this is for the best as businesses with correctly priced items or services tend to do the best. The actual change, though, can be difficult for some business owners.

6. There will be slow seasons.

Your product takes off, and you can't believe the ride you're on. Six months later, business is in the doldrums and you're not quite sure what happened. Every business has this happen at least once. Sometimes, it's a season thing, and business will pick up in a couple of months. Other times, it's an economy thing and you just have to ride out the low points until consumers are buying again. Whatever the reason, you need to expect that you won't have the same income all the time and plan accordingly.

7. Someone else will have a similar product.

No great idea is created in a vacuum, so it's invariable that someone else will come up with something similar to what you're selling at some point. This can require anything from some minor tweaks to a major overhaul of your product or business model. Since great minds think alike, take this as confirmation that you're doing something special and important and that you'll find your way around the obstacle eventually.

8. Your family and close friends will face stress.

If you think you're the only one who will pay a price to get your business started, you couldn't be more wrong. As an entrepreneur, you will miss important events. You will not get enough rest, and be tired and cranky. This will influence your personal relationships. This doesn't have to be something negative and can be a chance for your friends and family to rally around you with their support, to help you out when you hit a deadline, or to do something special to help relieve the stress.

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9. You will pay more taxes.

What with a self-employment tax on top of your normal tax contributions, you will give the government a larger percentage of your money than you have before. When you have employees, you'll pay even more. This fact has drastically altered some business plans and can make the difference between turning a profit and declaring bankruptcy. If you expect it ahead of time, you can plan better and remember to incorporate these expectations into your thoughts from the very beginning.

10. You will burn the candle at both ends.

Starting a business takes time, particularly at the beginning where you're the one doing everything--contacting vendors, advertising, making the product or performing the service, working on packaging, building an identity for your business, working with suppliers who may well be located in other countries, invoicing, etc. There are a lot of tasks that go into forming a successful business that you may not think about ahead of time, and you'll get to do them all. While running your own business may sound like an easy way out of the 9-5, rest assured that you'll work more hours doing your own thing.

11. Your work will be more rewarding.

When you're working on something you care about, it doesn't matter how hard it is. The long hours, the stress, and the highs and lows will have meaning for you if you're doing something that fits in with your personality and personal values. Make sure your product or service falls into these categories, and you'll find the energy to pull your business off.

12. You will change in the process.

You can't step out on your own, try something new, put yourself and your family on the line and not be changed. Entrepreneurs report being stronger, more resilient, more process oriented (instead of results oriented), and more at peace with themselves than they were before they started their businesses. If you're not open to change, or are one of the few people who are perfect already, this can be the most difficult part of the entrepreneurial experience.

13. You will always have something to talk about.

Your job will be different from what most of your friends know, and this will mean that there are conversations to be had. While they might get tired of hearing about the business eventually, being an entrepreneur make you interesting to most people. You need never fear small talk at a cocktail party again.

Some of the items on this list can seem so discouraging! It's easy to wonder what the point is of starting your own business if you're going to be tired, poor, emotional, and stressed all the time. If this looks like the doldrums to you, take some time before jumping into a new business to ask yourself if it's really something you want. If you went through all of these things for your business and it ultimately failed, would you still have wanted to experience the process or would you wish you'd never had that brilliant idea in the first place? If you can answer "yes!" to this question, go ahead and jump in (with, of course, the proper planning). If you answer "no!" take some time to figure out what makes you answer negatively and if there's a way to turn that around. Being able to say "yes!" to this question means your business has a better chance of success because you believe it's important enough to try for, regardless of the outcome. That creates a special kind of energy that nothing else will.

Be well, have a happy holiday, and best wishes for your entrepreneurial endeavors, next year or whenever!!

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Guest's picture
valletta

You are right on every one of these points!
I own a restaurant with my husband and it has transformed my life, I love it more than anything I've ever done but the first two years of course we "lost" money (part of the business plan).

If I were to give ONE piece of advice and one alone:

Double the amount of capital that you think you need. Get credit lines BEFORE you need them.

Okay two: Also, hire a good accountant and have a good lawyer at the ready, just in case.

Take the dive. It's worth it!

Guest's picture

That sounds like a great advice to double your capital because things happen and you gotta' be prepared. Good advice.

--
Money-Lessons.com

Guest's picture
Dan

I find it counter-intuitive that entrepreneurs become more process oriented than results oriented.

Guest's picture
Guest

I think you become process oriented because many things are routine (like bookkeeping) and other things don't bear fruit for a long time (like advertising, or long contracts, or royalties). Unlike in companies, where management give you strokes, bonuses, and announcements at meetings to celebrate (if it's a nice company), nobody is around to do this for you. You have to be your own back-patter.

Guest's picture
Arohan

As I am now finding out. I did plan well enough and took my time in the pre-acquisition stage to cover all the bases (that I could think off) but there are somethings that surprised me as well.

- The monthly ups and downs in the business can strain any amount of working capital you may have in the business, even if overall the business is profitable over the year. Great planning and strong cash management skills are needed

- Family thinks now that I don't have a job and work for myself, my time is very flexible. It couldn't be further from the truth (Family fully supports, just they have not fully adapted to this yet)

- Finding capital is difficult in current environment, even if acquiring an existing profitable company with history is less risky than a startup. This can be more difficult for someone like me who is hell bent on keeping 100% equity in the business and so will only consider debt funding

- Those pesky taxes!

Arohan
http://arohanvalue.blogspot.com

Guest's picture

This is a really useful post, and relates well to a friend of mine who has recently set up a real estate business in the UK - Timing couldn't have been worse!

I relate to so much of what you say and perhaps your readers might like to read my post Management buyouts which talks about my general experience as a member of a team who emabarked on a $50m buyout because it gives a real life example.

Guest's picture

Great article - so to the point, I wrote a similar post earlier this year and some people thought I was being negative. It takes so much out of you - it is worth it to me, but it is NOT for everyone. Some people can not take the toll or sacrafices it takes to do it.

I would also reccomend not putting "All eggs in one basket" - if you have a huge customer and that customer goes away, or sales decline steadily year after year (happened to us) you need to make sure had have other revenue to replace that one customer.

Going to go check out your blog now!

Guest's picture

As a technical writer, my start-up and running costs appear to be very low BUT: There is nothing worse than having a potentially huge client asking you to take their money while at the same time not having the immediate cash to replace faulty hardware so that your computer actually works well enough to do the job!

I cut it way to fine in my first year and suffered losses as a result. Bad cash-flow planning and poor liquidity lost me some good deals. I made it though and the experience was worth it.

The only other thing I can say is that it really pays to specialise. If I were still working as a copywriter, business writer and technical writer, I would still be competing with three times as many people in the same trade (probably more as good copywriters abound in Cape Town).

Since I pared down to just technical writing I can spend more time and effort marketing to software houses and other product creators instead of trying to be all things to all people. I also have more energy to dedicate to research and learning new open source tools that help me create really usable documents at way lower costs.

Oh yes, you'd better get used to skimping on sleep on occasion. You can always catch up after your deadline!

Guest's picture

thanks for this great article! when i was researching to start my own small business a year ago, i came across these same points again and again. and though i hoped that i would (miraculously) somehow not face these troubles, my business was the rule, not the exception.

i'm very happy with the way things are now, though.

but i find it strange that entrepreneurs should become 'process-oriented', not results-oriented? that's not what i found. for myself i was results-oriented all the way, and it seemed to pay off.

Guest's picture
Guest

Thank you for the Great Advice. I'm in the first of year of my businesses, I started two new business at the same time and I've experienced a lot of the points mentioned here. At some stage I thought maybe I'm getting to negative to continue, I'm not getting enough rest, I have no time off, no time for myself or any one else and the daily ups and downs made it scary to go on. And all this time I thought I'm doing something wrong, maybe it's just me. But now I know I'm not because my business has not been costing me money, it's been generating income from month two. All the other ups and downs are being experienced by businesses world wide, it's just the way it goes.

I would love to write and article about what to expect when rendering services to customers on a daily basis, because I've not been in this industry before and was shocked at some peoples behavior. I can tell some hair raising stories now and I would like to warn any new entrepreneurs about the pit falls, the good and the bad of the industry. I'd also like other to feel that however abnormal the customers behavior is, it's really the minority of customers who misbehave. But it happens, you can arrive on site and find customers drunk, half naked, Abusive, drugged, sometimes stone cold sober and abusive, physically and verbally. At least now I can look back and laugh about most of the incidents, but it can get very stressful at times.

One thing I can say is that I have a great support group of family and friends that's done this before, they have been there for me every step of the way with advice and help and it's priceless.

Always knew it would be hard work, never realized just how hard it gets! I have new respect for business owners today.