Few entrepreneurs start businesses to offer a product or service that they’re not passionate about. Many entrepreneurs have been enjoying a hobby for years and one day decide to make a business proposition out of that hobby. Passion is an essential part of starting and developing a successful business, but without applying business smarts, the venture is likely to fail. Applying sound business principles to any startup will channel all that energy in the right directions, kind of like a guard rail on a mountain road keeps a speeding car from soaring into a chasm. The high failure rate in new restaurants is not driven by poor quality food but more often because they are founded and managed by cooks with a passion for food but no formal business training.
As an entrepreneur with a fantastic idea and enough funding to make a go of it, you need to be aware of the following ways your passion can sink your business:
- Lack of Preparedness: Under no circumstances should you start a business without a written plan. You need to establish what you are going to sell and what customer need will it satisfy? How are you better than your competition? Understand your costs and prices so that you know how much profit you can expect to make. When will you break even?
- Not Having Ready Customers: Put the movie Field Of Dreams out of your head. Just because you build an amazing product, don’t expect people to run in your direction with handfuls of cash. You need to have a strong network and use it wisely to get the word out about your offering. If cash is tight, use social media, blogging and email to educate your network about your offering and establish your credibility.
- Fishing in the Wrong Pond: Not everyone shares your passion for model trains or vegan, gluten-free snacks. Don’t be disappointed- just find the tribe that does and start with them. Social media platforms like Facebook, Instagram and Pinterest are great places to find the tribe who have a built-in love of what you are offering.
- Clouded Judgment: Passionate entrepreneurs are notorious for overestimating early sales and underestimating costs. Don’t trust yourself to get this one right alone. Run your sales forecast and budget past someone whose business sense you respect, who understands your industry.
- Ignoring Warning Signs: Customers complaining about your product on social media, layoffs in your town or region, and big price increases by your suppliers are things you need to take seriously. Never assume a change for the worse in your business environment is just temporary. Ask yourself if the change could drive you out of business if it lasted or worsened over a year or longer. Make a plan to address and overcome any negatives that emerge.
- Failing to Have a Plan B: Many businesses start out headed in one strategic direction but run up against some sort of barrier to success. Take time to think about the different kinds of barriers, such as competition, government regulations, cash flow, and the availability of competent workers and develop plans to deal with each. Contingency plans are a form of insurance; if you’re lucky, you will never need to use them.