The Dirty Truth About Starting Your Own Business
It takes a special person to be an entrepreneur. For most business owners, the concept of “work-life balance” is just a fictional story that people write about. It’s a fun concept to think about, but even when you are on vacation, you are constantly concerned or thinking about your business. You will lose sleep over your business and likely prematurely age. After the first year of operating my own business, I swear I looked ten years older than I actually was. Many resources are out there that help you along the way to start your business. The Small Business Administration has many great resources explaining the nuts and bolts of starting a business. I’m going to share a few things I learned along the way from the School of Hard Knocks.
1) Do a self-inventory before you jump in
Do you have what it takes to start a business? You may have the greatest idea, concept, or plan in the world, but it takes certain personality traits to launch and run a business. Are you self-motivated? Confident? Resilient? Self-disciplined? Humble? Goal Oriented? Do you have a good support system? There is a certain amount of inner emotional strength that you will need. I can’t begin to tell you how many highly emotional moments my business created for me.
When they say blood, sweat, & tears, that is not just a saying but is very literal for many entrepreneurs. I put all three of those into my business. I clearly recall the Saturday morning I came into work to find my entire center flooded out from a burst pipe. I had an entire schedule of parties booked that weekend (one even traveling down from Canada), and the full team was looking to me for leadership. After calling a restoration company, an insurance company, and breaking numerous little kids' hearts when I had to cancel their birthday parties, I went into my office, locked the door, and cried. It was a devastating moment. Another very emotional moment for me was when we had a terrible month, and the cash flow just wasn’t there.
While I was transferring money from my kid’s savings accounts to make payroll that month to pay employees, many of whom were ungrateful for the job, and others were stealing from me…I couldn’t help but cry. Not all moments in business are sad or hard, but those are the moments when you depend on your support system and your internal fortitude to get you through to the next high moment.
There are moments when you feel like quitting and giving up, but it’s not like a job where you can just put in your two-week’s notice. You must have the drive to push through and keep moving forward. Your staff and customers depend on you, and it’s a heavy load to carry by yourself. Before I opened my business, one of my good friends said, “Careful, it’s really lonely at the top.” Boy was she right! You never really know the accuracy of that statement until you are living that life, but anyone with their own business knows exactly what she means.
2) Write a business plan & identify your market
This is harder than it sounds. The trick here is to offer what people want to buy, not what YOU want to sell. These are sometimes different. This is where a very accurate feasibility study comes into play. Especially in the amusement industry, what you want to offer and what your area will support may be different. I encourage you to focus on a niche. One of my biggest mistakes was thinking I’d have a better chance of success if I tried to be everything to everybody. That is typically not true. Even in the restaurant industry, it’s much better to be known as THE place to go for XX than to have such a diverse menu where everything is just average. So, figure out what people want to buy, create your niche, and be the BEST at that one thing rather than just average at many things.
Determine your costs and budget. Yes, I know this is more nuts and bolts of starting a business, but make sure when you are planning that you overestimate expenses and underestimate revenues. When you are excited and passionate about a project, you tend to get to the point where you are just trying to get the numbers to work for the bank loan. The banks have such strict guidelines because they protect their assets, as should you. Take a step back from the excitement, think about break-even, and think about failure.
96% of businesses fail within the first ten years. 80% fail within the first 18 months. Does that mean you shouldn’t start a business? No. It just means that you need to do your research. Have a plan B, C, & D. What is your plan to pay off debt if your business doesn’t make it? What is your plan to support your family if your business doesn’t make it? Pay special attention to ensure you have sufficient cash flow and working capital. Get the cash flowing into your business quickly. Vendors don’t care about your EBITDA or profits if you can’t pay your bills. After you are open, continue to find new ways to save money to exponentially increase your revenues. This is a relatively simple concept, but not always easy. Make more…spend less. To make more revenue, you have basically three options.
- Raise prices (get your customers used to this from the start). Prices should creep up with inflation, and your guests shouldn’t expect the price to be the same for ten years unless you set that expectation. Don’t do that. Your expenses will increase with inflation, so your cost of goods and services must also go up.
- Get people coming to your center to spend more. This can be done with promotions, packaging, and upselling.
- Get more people to visit your center. This can be done with sales and marketing.
- Don’t get into the discounting trap – add value.
I have seen businesses that open with a discount and continue to discount as they go and often discount themselves out of business. Again, you are setting an expectation with your guests from day 1. If they expect a coupon or discount every time they come in, you will soon see that they will be waiting for the following coupon or discount before they come, and they will not come without one. You also cheapen your product/service and attract a different clientele than perhaps you want. I’m not saying that you shouldn’t run promotions but be careful that they add value rather than discounting. These need to be pointed promotions with a start and end date and a call to action. This should either entice someone to spend more than they were originally planning to spend or entice them to come to your facility when they wouldn’t usually have come. Make sure you aren’t “discounting at the door” or offering guests a discount for something they were already prepared to pay full price for. Be sure to test and measure everything that you do. Get actual data on how your promotion did. Was it successful? How do you measure that?
5) Focus on sales & marketing
Marketing is becoming increasingly more complex, yet also simpler at the same time. What I mean by that is that social media makes it very easy for business owners to interact with their guests. It is also very easy for them to mess it up. There are many mediums to use; you must have the knowledge and skills to measure your sales and marketing campaigns. Again, just like specializing in your niche in the industry, if you are not a marketing expert, it may be more beneficial to hire an expert to take care of this for you than to try to do it yourself.
A good marketing campaign that is tested and measured is worth its weight in gold. The same thing goes for sales. Typically, in our industry, when discussing sales, we usually discuss group sales. Hire a good group salesperson and keep this as a main focus. Again, test and measure their success. Both positions will get more people in the door, which will raise your revenues. A good salesperson is like a good accountant; they will make you more money than it costs to have them on your team.
6) Learning more = Earning more
Earlier I mentioned being humble as a trait for entrepreneurship, but honestly, it is a trait that any great leader must have. True leaders don’t ever think that they know everything already. Einstein said, “Once you stop learning, you start dying.” I believe that is true, and you can learn something from everyone you encounter. My kids teach me lessons all the time… (although sometimes it’s a lesson in patience). It would be best if you were open to learning and actually seek it out.
7) Get a coach
Many top CEOs, politicians, and public figures invest in a business coach. Steve Jobs, Oprah Winfrey, and the CEO of Intuit have all used business coaches and admit that they serve a vital purpose. A good coach will not only provide you with objective feedback, but they can broaden your network and offer fresh ideas.
Although starting your own business may not be for everyone, these few things give you more insight so you can be more prepared than I was if you decide to take that leap. There is so much more to opening and running your own business that I couldn’t possibly discuss everything in this article. But if this is something you are considering and want someone to run ideas by, feel free to drop me an e-mail, and I’d be happy to chat with you more about my experiences.
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Amber Lambert is the Regional Sales Representative for Betson Enterprises. She began her career in the amusement industry 12 years ago when she started her own family entertainment center she built from the ground up. She also managed a corporate-owned family entertainment center, held a sales role with an industry supplier, and is active in industry associations.