By Joe Petrowski

After working for a few years out of college, so many young people desire to start, own and operate their own businesses. While most are likely inspired by the Steve Jobs and Bill Gates of the world, and many other tech tycoons who started in their garage or basement, this desire is perfectly understandable and should be encouraged. While achieving mega wealth like Gates, Jobs or Bezos is rare, the desire to be your own boss and the pride in creating a product, service or process is universal and as American as apple pie.

In fact, the great majority of jobs, wealth and better living were created by American entrepreneurs not by established corporations and not by governments. While community organizing and public service is noble, individual entrepreneurs have done more to improve living standards for the common person world-wide than all the governments and political agitators put together. Steve Jobs, Bill Gates, Thomas Edison, Henry Ford, Will Durant, Jeff Bezos, Clarence Birdseye, JP Morgan, John Rockefeller, Ray Kroc, Sam Walton, Cyrus McCormack, George Mitchell and Andrew Carnegie are the real heroes of progress and quality of life improvement.

The question is often asked: How do I get started? The following is a primer that I think is helpful. I’ve started, grown and sold several businesses in my career and the following is what I have learned.
First. remember the essence of a new business is one of 3 things that must be present. If you have all 3 call me and I will invest “pari passau” (on equal terms).

  1. Fulfill a need
  2. Satisfy a desire
  3. Do something more efficiently, faster or of a higher quality

If you cannot identify quickly and in one paragraph any of the above you may not have a business opportunity.
Next generate a realistic business plan. That starts with some good research on understanding the following:

  1. What is the demand for your product or service?
  2. Who is your customer and size of the market?
  3. What is your pricing point?
  4. What is your cost of service or product?
  5. What is your cost of infrastructure to deliver the service or product (people, plant, equipment)?
  6. Who are your competitors?
  7. Who will you be taking business from?
  8. What is your competitive advantage over others?
  9. What are your barriers to entry and what barriers can you create to forestall imitators?
  10. What is your ramp up time and the level of sales to breakeven? That is if your total operating cost is $100,000 and your gross margin is 10% how soon can you get to $1 million in sales or revenue.
  11. How will you finance between debt and equity and how much capital will you need and where can you source both. Debt for entrepreneurs is hard to get and expensive, especially early on when interest payments need to be made before profits roll in. But, giving others equity loses your control which is the very reason you launched a start-up.
  12. All entrepreneurs need start-up assistance, legal, regulatory, financial and operational. Identifying those needs early and building a team of advisers is essential.

 

Remain Patient and Confident

Some 500,000 business start every month in this country. Half of them survive five years, one-third last 10 years and 25% last 15 years or more. Roughly 65% of all net new jobs in the last 20 years were created by start-up entrepreneurs, so tell our political leaders: “Yes, I did build that.”

Of the 14 all-star business entrepreneurs listed earlier, all were billionaires and all of their business have survived to today.