Many people start companies to chase a dream. But too often, they never dial in their product offering or how to sell it. They become too emotionally attached, with 8 out of 10 companies failing before they ever truly get off the ground. You might think I am being harsh, but it’s the cold, hard facts.
In my career, I’ve bootstrapped three companies in three different industries. With each, I had a clearly defined exit strategy – to sell the company. You can accomplish this too. But first, make sure to avoid the fundamental flaws of dream chasers.
Here are the problems you see when people aren’t building a company, but instead, are chasing dreams:
1. They are so busy developing the company and brand that they forget about the customer. Your goal MUST be to build a long lasting, engaging relationship with customers.
2. You remember the old 80/20 rule? Most dream chasers spend 20% of their time on sales and 80% building products, websites, processes and managing people. Flip this equation, and you’ll be ahead of 80% of the people in business.
3. They are so stuck on their big idea, they forget to take time, do research and differentiate their products and services.
4. They are TERRIFIED to invest in sales and marketing, especially when money gets tight.
5. They have a fantasy view entrepreneurship. They are shocked to find out how much hard work it actually takes.
I don’t mean to be hard on all the dreamers out there. We all have dreams and it’s great to chase them. But you will achieve them much quicker by taking the knowledgeable, thoughtful path forward.
We’ve talked about what NOT to do. Now, let me tell you about WHAT WORKS.
Invest your time and money in a smart business – don’t just start it based on your favorite cookie recipe. Consider if there is a market for the product or service you’re offering? Are there other people successfully running companies in this area? More importantly, determine a specific target customer and be sure your product is satisfying their needs.
Choose wisely, my friends. You’ll be working on this dream until the wee hours of the night, growing it tirelessly for at least the first 2 years. Yes, you want something you’ll be passionate about, but you would also be wise to choose something you know can be successful. And be prepared to become a sales person, no matter what business you are in. If you can’t sell your products, how do you expect anyone else too? Finally, be sure to clearly differentiate your products and services and these must be based on the needs and desires of your customers, not your own personal tastes.
I’ve chosen to be in the business of building and selling companies. Why? Because it allows me to be intensely engaged, applying my expertise where I see the strongest opportunity for success.
I totally immerse myself in the industry and after a solid run, large growth and the right offer, I know it’s time to exit and take a season off. I call this mid-life retirement. However, it never lasts long. Sooner than later I’m back on the hunt, looking for the next exciting venture.
If you build a business with a sale as the ultimate goal, you are not making the business dependent on you. That means you are building value into the business itself. So unless you want to manage the company forever, start thinking about building to sell from the start.
If you do achieve a sale, first celebrate, and then be sure to reap the benefits of your work. Look for ways to invest in smart, passive income generating opportunities and continuing growing your net worth.
Overall, invest your time and money in things you know you can grow and sell, that don’t require a lifelong attachment.
From one entrepreneur to another, let’s BUILD, RETIRE, BUILD & RETIRE, together.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.