Recently, I had the good fortune to speak to a room full of young, aspiring entrepreneurs about my professional journey. I hoped to draw some parallels for them to follow, to the extent that those parallels could aid them.
The first part of the session was a 60 minute prepared talk about the initial hurdles that young startups face from a legal standpoint. Following the discussion, there was a question and answer segment, and I was asked the following question by the host:
“How long did it take you to achieve your success?”
This very question is asked of businesspeople all the time in interviews. It is a question that you really should answer with another question.
Thus, I responded to my counterpart: “How you define success?”
I could feel the audience sit up straight. Defining success or defining outcomes is something that young (and old) entrepreneurs should do all the time. Without knowing the destination, it is impossible to determine when (or if) you have arrived.
Is success achieving $100,000 in annual sales? Does success mean that you work from your home every day? Does success mean that you drive fancy cars and wear expensive shoes? The answer is different for everyone.
One of the biggest mistakes one can make is assuming that others share your value system. We don’t all want the same things, although advertisers will repeatedly tell you that we do. Think about the things that the advertisers push on us: home ownership is The American Dream, big cars, expensive colleges, and all that goes along with that.
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For me, I value two things in my professional life above all: 1) independence and 2) time. We’ll come back to those shortly.
For aspiring musicians, or those looking to start businesses in the performing arts, there should be a reasonable, achievable goal. That goal is called viability.
There are lot of self appointed YouTubers out there who claim to be thought leaders for entrepreneurs. There are a lot of frauds out there, so examine who you are taking advice from very carefully. Invariably, the message from these people is that is you follow their system, you will walk a path to glory and financial excess, private jets, Rolls Royces, and the like. The trouble is, that is not the way the world works. That is not how you build a viable business from the ground up. There is no magic formula that will propel you into wealth.
You build a viable business with planning, energy, determination and yes, a little luck. The first thing that aspiring creators should do is take a realistic look at their expenses. How much do you need to earn in order to live? What is your overhead really like?
Once you know your overhead, reduce it as much as you reasonably can. As I tell my clients, it is not how much money you make, but it is how much money you spend that determines your financial reality. If you make $1 Million a year, that’s great, but it is not great if you spent $1,300,000 that year, and are $300,000 in debt. Controlling expenses is a key to building a viable early stage business.
The less money you have to put out, the more freedom you have with respect to how you run your business. For example, a person who only has to spend $1,000 per month in fixed expenses has a different reality than a person who has $10,000 per month in fixed expenses. That is the difference between having to gross $3,000 per month and having to gross $15,000 per month.
Lower overhead enables you more freedom to create and build your business. That freedom makes ALL the difference!