This follows an interesting discussion we’ve been having on Forumosa about starting businesses.
Of course, though, I wouldn’t equate gambling with starting a business. Why? Apart from the odds issue, there are far more factors that you can control when you start a business. If you gamble, esp. in a casino, the odds are absolutely stacked against you: the house controls the cards, the house controls the dealers, the house controls who plays, the house monitors ‘cheating’ strategies (and bans anything that is mildly profitable, even ‘card counting’…)…
Gambling is for suckers
Basically, if you gamble, you’re a sucker. But in business, you actually have a good chance of ‘being successful’ and keeping your original stake at the very least. However, there are many reasons a business ‘fails’ including the fact that the owners just get tired or sell out to others or close up one day or die… None of these in particular suggests that the business was an unprofitable one.
It’s in the blood, or not
It’s likely that as Brits, we tend to shy away from doing business, worry about the undue risks, plan until there’s no breath left to actually run the business, borrow lots of money to go into business (IMHO, a huge mistake and a massive risk, but common in the UK), are unusually PESSIMISTIC about doing business, and (even now) still ‘look down’ on entrepreneurs as a breed.
Keep your ass covered
When we started our school, we didn’t worry so much about the risks (and there are many), we just wanted to try it ourselves after seeing so many people screw up royally (is that an adverb?)… we didn’t overly plan except that we knew we could pay the rent on our school for six months without ANY income at all even after setting up the school, we paid ourselves no salary either, we didn’t borrow any money to invest (a huge relief), and we were neither pessimistic nor optimistic about our chances, … Did we have a concrete business plan? No, we didn’t. Did we need one? Not really, we already knew the business in many respects.
Manage the risks, not the luck
IMO, most unsuccessful business owners here fail to manage the basic risks first, don’t make these kind of decisions, and wince at the first hurdles. How? They fail to secure a source of personal income (that covers life expenses, not including their business) first; they overly underestimate the expense of starting up and running for months with little income preferring to spend as much as possible in the first few weeks, and reserving nothing or having nothing to draw on afterwards; aren’t willing to pay themselves a pittance to get things started because they (likely) see a salary for themselves as ‘deserved’; don’t really market themselves well enough except through discounts (a prime strategy) that does NOT work well here… attracts the wrong customers, diverts attention, undermines your profit structure (esp. if you haven’t done your work properly); and so on…
While many seem to believe luck plays a role in starting a business, I like to think of it as luck comes to those who are ready; if you’re not ready, then it’s wasted largely.
Working Hard Not Smart
Usually, restaurants are cheaper to open, require less capital to start up, most believe they ‘can’ cook, and reasons like that… but restaurants are bloody hard work, esp. if you focus on doing a lot of meals or full-day service. My sis-in-law had a restaurant for six months or so, I remember working in it, but they really didn’t know how to run it optimally. Instead they opened at 11:30 and ran it until 11:30pm every day. So they nearly killed themselves doing it, too.
Focus, focus, focus
While I had no access to the financials, it didn’t make much sense to work so long, esp. as lunch hours were always the most busy. I would have preferred to have very busy lunches where people were served quickly, afternoon teas, and close up at 5pm each day. Instead they did dinners, bar hours, etc… and I’m not sure why they thought it was necessary. There is the belief in business here: more is better; you’ll see it everywhere, too.
Cram schools here open multiple classes including math/art, Chinese, Science … instead of focusing on one thing. Restaurants try to serve all kinds of food (I know restaurants that sell rice, noodles and spaghetti!) to all customers at all times. Stores sell everything… there is a lack of focus in many businesses here. Market stalls sell fresh pork and underwear… it’s quite amazing how people relate two disparate businesses.
In the end,…
In reality, it’s the ones who take their money (or someone else’s) and actually try to do something with it in the creation of their SMB, they will learn the experience of being IN business. Most serious entrepreneurs are also SERIAL entrepreneurs, in other words, they will try and try again till they get it right, even if that means they run 5 or 10 businesses in their lives…
No guts, no glory
And I’m sorry to say, no matter what MBA you take, what business course you attend, what class you take, no matter what you read or study, it won’t make a jot of difference unless you actually try to set up and/or run a real business. Fundamentally, Entrepreneurship is a practical skill; so whenever I see academics on TV lecturing on business fundamentals, I really have to wonder what they bring to the table when they themselves don’t bear any risk at all. It’s that willingness to bear the risk that illuminates who will be entrepreneurs and who won’t. That’s what separates entrepreneurs from salaried workers, … the knowledge that next month, if there’s no profit, you won’t take a home salary.
Hope the ramble influences you to think about starting your own business. Drop your comments here.