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Episode 20 – How Risky Is Starting Your Own Business?
This is a super interesting subject and to show you why we’re going to start with a little experiment.
I’d like you to ask your gut the question, so literally check in with yourself, ask your gut – How risky would starting my own business be?
What answer did you get?
You probably got the answer that it’s quite risky, don’t do that please and it might be a companied by a kind of cramping or uncomfortable feeling.
Even if ask my gut, and I have a business that I love, I get the “it’s risky” answer.
So your gut probably thinks this is a BIG risk. Why is that?
Probably because you’ve read about or heard about, over your life time, hundreds of stories of crashing failures.
How people made huge fortunes and lost them all, how technology advances killed companies overnight – think Kodak and Blockbuster video.
I mean we had a Blockbuster in our high street when I was growing up. Not there any more.
You’ve also probably heard of stories of people losing everything and becoming homeless.
So when you ask yourself that question your brain goes searching for everything it knows about business and risk and comes up with A LOT of information.
Most of it you can’t even remember the details of, but you get a ‘feeling’ of the risk and it ‘feels’ high.
Yes, you know some success stories too but mainly what your brain knows is the information it’s been exposed to, which outside of your own experience is what you’ve seen or heard in the media.
“genuinely lovely person starts home-based business and no longer needs to work for the man” is not head line worthy.
Obviously for you and me it’s the kind of great news we want to be hearing about all the time but most news outlets are not going to run it.
Then there’s the failure statistics…
So firstly you’ve got all of that background info to content with. Then you’ll likely know the statistics about how many businesses fail. The statistics vary depending on where you get them from but they all look bad.
A high proportion of businesses fail. Likely around 90%
Plus your lizard brain
On top of that your lizard brain, your self talk, the voice that says “you can’t do that” “why do you think that will work for you?” “Don’t be ridiculous, you’re no Elon Musk for Christ’s sake and even he was close to failure at one point!”
And then once you start down this path you’ll likely write the whole thing off.
But let’s dig deeper here…
What are the assumptions behind all these thoughts of risk?
Assumption 1 – First the assumption is generally that we are talking about brick and mortar businesses.
Brick and mortar businesses are by definition riskier because they involve higher costs. You will have the cost of renting the premises, potentially the rent or purchase of equipment, maybe even staff.
The higher your capital outlay, or costs, the more money you need to be able to make back to cover it. Which gives you less margin for error.
It’s just higher risk.
Assumption 2 – Second the assumption is that we are going to sink a huge amount of money into the business to get it off the ground.
Now, even with an online business you can still do this if you want to. I absolutely recommend against this.
The only money I would consider well spent in the early stages of business would be on getting the right mentoring to get you ahead. No need for fancy custom built websites. No need to hire anyone to do anything for you.
I recommend that you TEST your idea before you invest in any business assets.
And by business assets I mean business cards, letter heads, graphic design, website etc. Find out if people are really going to buy it. You can listen to episode 16 – Why What You Need Is Not A Business Plan to hear more about that.
Find out if the money earning potential is there before you buy a ton of stuff that you might end up throwing out anyway. I literally still have the same box of business cards 70% full that I ordered in 2013. You just don’t need most of the stuff you think you do.
Assumption 3 – On top of all of this it is our natural tendency to assume that if this goes wrong we would lose everything we have and never be able to get a job again.
So, I don’t recommend quitting your job until you have income from your side hustle anyway. But even if you did do you think it’s realistic that you’d never recover?
None of these assumptions are true
Here is how I get people to start their businesses in a nutshell.
- Go through the process of figuring out the right niche
- Work on the messaging, which is how to communicate the idea to other people so they get it
- Create offers
- Test them ON THE SIDE
- If it needs adjusting, adjust until you get clients
- Then with a proven business concept grow it on the side
- Build out all the business assets
- Grow your income
- Quit your job
So when you look at this way – what’s the risk?
A little bit of your time, some emotional energy… Like, no one even needs to know what you are up to if you don’t want to tell them.
It’s totally low key.
So to answer the question – how risky is starting your own business? Here are the key takeaways:
- The more you spend on stuff (not mentoring, which will help you), the riskier it is
- The more complex the business you start (online is simple, brick and mortar is more complex) the higher the risk
- The more you change in your life that is giving you stability (like your job) the riskier it is.
So, don’t change anything, don’t get buy any business stuff YET, test your idea, get it working and risk practically nothing.
See? I had a positive answer to the question!
Ask a different question instead
But the thing is – I think it’s the wrong question to ask.
The question really should be:
How risky would it be to see if, with guidance, I could put a simple, streamlined offer together that a couple of people might buy?
Because that’s where you start.
And that really is no risk at all.
To learn more about how to start up with minimal costs watch my free Zero to Paying Clients Masterclass at http://catleblanc.com/masterclass.
That’s it today from Your Business, Your Rules. I hope you have a wonderful day!