Across Canada, there are a lot of people starting businesses. According to Statistics Canada, there were over 2.7 million people who consider themselves entrepreneurs in Canada in 2010. Many of these are running small- and mid-sized businesses; more than 98% of the businesses in Canada have fewer than 100 employees. Small business is the engine of our economy. For many of us, starting a company means fulfilling a lifelong dream.
But entrepreneurship brings with it some unique challenges. It’s hard to know whether you’re really ready for the plunge. I’ve been through it, and I’ve learned a lot. That’s why I feel confident sharing these four things that every entrepreneur should know before starting up.
1. Your strategy is important, but so is its execution
Yes, you need a good strategy for your business. But success depends on execution, execution, execution. When things go wrong—and launching any business involves many twists and turns—it’s easy to lose sight of why. We usually default to assuming the problem is in the strategy, not its execution. In my experience, you shouldn’t be so quick to abandon your strategy. Rather, you should focus your energies on making sure you’re being razor-sharp in its execution.
When things aren’t going as planned, step back and speak to your customers and suppliers. They’ll be the first to let you know what needs to be refined. Be flexible to changes in market conditions, but don’t lose the competitive advantage you’ve established in your strategic direction. And above all, be mindful of your brand and the impacts of your decisions on it.
I was very lucky with the opening of the first Vin Room. Opening our second location, Vin Room West, was a lesson in humility. Things that I have come to take for granted were huge challenges in our next location. I underestimated the difficulty of entering in a new market, the challenges of human resources in suburban locations and the need to tweak things accordingly. It was tempting to throw away my strategic plan, but in reality it was its execution that needed to be tweaked.
2. You don’t have to do—or know—it all
The old stereotype of entrepreneurs being “chief cook and dishwasher” is all too true. I’ve been there and done that. It’s easy to let your enthusiasm get the best of you and you want to do everything. But this is actually hard on your business. I’ve learned it’s better to work smart than to work hard.
While there’s a lot to be said for bootstrapping, there comes a time when you need to be the leader and direct the action instead of doing it all. It’s best to do what you’re good at and let others do the rest.
I knew when I started my business that I didn’t have all the answers. But I’ve learned that if surround yourself with the right people, you don’t need all the answers. I’ve come to think of an entrepreneur as being like a really good conductor; success comes principally from making sure the right people are in the orchestra. And I’ve been consistently surprised by how many people would agree to play once they believe in my song.
3. Don’t expect to turn a profit in your first year
When I started Vin Room in 2008, I prepared myself for the likelihood that the business wouldn’t take a profit in the first year. The numerous bankers I visited reminded me that 80% of restaurants fail within 12 months of launch. We weren’t one of them, but it did take us into our second year of operations to turn a profit. Moreover, it was almost three years before I started taking a salary.
My case is hardly abnormal. Karen Anderson was a nurse for 21 years before she launched her business, Calgary Food Tours, in 2006. She explains it well: “As an entrepreneur, it is a myth that you have a bunch of a cash and start a business.” In reality, she, like many, she was bankrolling the business with income from other sources. Now, after many years of hard work, she’s finally in a good place financially with her business; but it took a lot longer than expected. It does for most of us.
4. You’re going to make mistakes. Probably a lot of them
If you’re like many, being an entrepreneur is a second second (or third, or fourth) career. That’s a good thing, because it allows you to bring valuable experience from previous jobs and industries to your new venture. But it can be very tempting to think that what worked at your old employer will work in your new business. That’s not always the case.
It was very humbling for me to learn that some of the programs that I implemented successfully in my past career in the corporate world were a dismal failure in my own business. For instance, in my old job, I had successfully implemented a rewards program for staff that involved reward dollars, which, when accumulated, could be traded for prizes of different values. I was convinced it would work in my wine bar and I lobbied hard for its implementation. It failed miserably. I couldn’t get management buy-in for the program and staff weren’t excited about it as it didn’t involve instant gratification (something those in the service industry are accustomed to).
Initially, I took the failure personally. But I quickly learned that it’s acceptable to make mistakes (and I’ve made many—the botched reward program is just one example), as long as you learn from them. And when you accept that mistakes are part of the job, you actually free yourself to try things without fear of failure. I believe this ultimately helps your business in the long run.
These are just a few of the many lessons I’ve learned so far in my life as an entrepreneur. By sharing them, I’m hoping others who are in the shoes I was in eight years ago can learn from them—and, hopefully, more fully embrace the amazing experience that starting a business can be.
Phoebe Fung is proprietor of Vin Room, a Calgary-based wine bar with two locations and that ranked No. 25 on the 2011 PROFIT HOT 50 list of Canada’s Top New Growth Companies, proprietor of VR Wine, a boutique wine store, and a former financial executive with a multinational energy company.
More columns by Phoebe Fung