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From Mark Ford, editor, Creating Wealth: Earlier this year, I talked about grappling with fear and contending with negative thoughts. Today, I’ll deal with a particularly important financial fear: the fear of starting a business.
When business writers talk about why so few people become entrepreneurs, they cite “fear of failure” as the No. 1 challenge.
I agree. Fear of failing is a real factor. But to overcome it, you need to figure out what it means in more specific terms.
When I feel trepidation about starting a venture, I’m not worried about something as abstract as “failure.”
I worry mainly about three things: I sometimes worry I don’t have the knowledge or skills to make the idea successful. I worry I might lose all the time and money I’m about to invest in the idea. And I worry if word gets out I’ve had to close, businesspeople will think I’m a fool. (Especially the people who doubted my idea in the first place.)
Best-selling author Seth Godin talks about that first fear. He says most people who buy books on entrepreneurship never get beyond the dreaming stage because “deep down inside, they don’t think they have what it takes to succeed.”
I don’t know if that’s the most common fear of starting a business. I wish it were. But I’m afraid too many entrepreneurs have the opposite problem.
They don’t realize they don’t have what they need to succeed.
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If you have that fear, you should respect it… because nine times out of 10 it’s valid.
My No. 1 rule of wealth building is to invest only in what you know. If you think you might not know enough or have the right resources, you probably don’t.
The solution to that fear is to put your plan on hold and acquire the experience to know what you need to know.
If your fear is being shamed by a failure, you can—and should—move forward. You can overcome this kind of fear by doing what I talked about in that previous essay: Imagine the worst possible outcome and visualize being emotionally okay with that.
Another thing you can do is be a bit humble when you’re announcing your venture.
Rather than bragging about all the money you’ll be making, keep the claims small and try a little self-deprecating humor. “This is probably a terrible idea, but I’m going to try it.”
If your fear is losing your time and money, you need to follow the protocol I outline in The Reluctant Entrepreneur…
- Keep your current job and all your current income.
- Start the business in your spare time at home.
- Spend the first few days creating a short business plan. Identify your product and why you believe you can sell it. List the media where you can advertise. Do a quick and dirty cost/benefit analysis. The entire plan should be no more than four pages.
- Spend the next few weeks or months, spending as little money as you can, testing your “optimal selling strategy”—your plan for selling your product: how you will position it, how much you will charge for it, what media you will use to advertise it, and what sort of advertising copy you will use.
- Find a corner of the overall marketplace where you can test your selling strategy cheaply. If your ultimate market is retail, for example, you could consider selling your product on Sundays at a flea market.
- Create a cash flow projection that’ll allow you to ramp up your marketing if the initial testing is positive.
- If possible, get someone to act as your mentor—a retired business owner who’s willing to teach you what you need to know and encourage you to take the steps you have to take.
- When the business starts growing, read Ready, Fire, Aim, my book on the subject. That will give you the details of what you need to do to take your business from inception to $100 million in annual revenues and beyond.
Fear is a good and useful emotion. Successful entrepreneurs don’t deny it. They overcome it sensibly and cautiously by taking baby steps and proving the optimal selling strategy before going big.
If you have what it takes, don’t let either the fear of embarrassment or the fear of losing time and money get in your way. Keep your risk low and your dreams high.