Starting a Business: What to Expect and How to Prepare
What must an entrepreneur assume when starting a business? Embarking on the thrilling but perilous journey of entrepreneurship inevitably involves making certain assumptions.
After all, launching a startup is an act of calculated risk, requiring conviction, sacrifice, and grit to defy the odds. Despite the allure of shortcut success, the sobering statistics prove that most new ventures fail in the first few years.
However, for determined founders with a viable idea, proper planning and persistence can tip the scales toward triumph.
This article will explore the key assumptions aspiring entrepreneurs must make when venturing into the competitive arena of business creation.
From harsh realities like budgeting for debt and 80-hour work weeks to motivational mindsets of believing in one’s vision and learning from failure, we’ll cover the mental, physical, and emotional dedication needed to bootstrap a company.
Launching a successful business requires reasonable optimism, resilience, and strategic preparation.
- Work extremely hard with long hours and make personal sacrifices, especially at first.
- Be financially conservative, bootstrap aggressively, and have contingency plans. Profitability takes time.
- Build a talented team as soon as viable to distribute workloads.
- Validate market demand and carefully evaluate all aspects of your business model.
- Persist through failures by viewing them as learning opportunities, not reasons to quit.
- Have clear business and financial plans for how you’ll delight customers and achieve growth milestones.
With pragmatic expectations, determination, and smart execution, entrepreneurs can turn their visions into thriving companies.
The Hidden Costs of Starting a Business: What Every Entrepreneur Needs to Know
1. 10 Key Assumptions for Entrepreneurs Starting a Business
Embarking on the entrepreneurial path is a leap of faith – you must make bold bets without any guarantee of success. But realistic optimism, not blind confidence, is the key. Savvy founders temper their hopes with pragmatic assumptions to set their startups up for victory.
a. Success is Not Guaranteed
The brutal truth is that 9 out of 10 startups fail. Entrepreneurs must assume from day one that their venture could flop despite working around the clock.
However, this statistic should steel their resolve, not deter them. With meticulous planning and non-stop hustle, you can beat the odds.
b. Hard Work is Necessary
Launching a business is a 24/7 grind. Assume long hours are inevitable – 80+ hour weeks are common for founders. Hustling is the name of the game.
From handling menial tasks like making coffee to sealing million-dollar deals, be prepared to do whatever it takes. Blood, sweat, and tears fuel startups.
c. Sacrifices Will Need to be Made
Kiss your work-life balance goodbye, at least temporarily. Assume you’ll miss family events, holidays, and leisure time – startups demand undivided attention.
Financially, don’t expect a steady salary either. Be ready to reinvest every dollar into growing the business. Personal sacrifices pave the path to profits.
I recommend you read this article: Wealth Management for Entrepreneurs
d. Failures are Learning Opportunities
Mistakes and failures are part of the entrepreneurial territory. Assume you’ll mess up often. The difference between success and failure lies in how you respond.
View every stumble as a chance to gain valuable insights and course correct. Each failure brings you closer to a breakthrough.
e. Time is Needed for Business Success
Overnight success is extremely rare. Assume it takes most companies 3-5 years to become established and profitable.
Have realistic expectations for growth and don’t get discouraged by early struggles. With consistent effort, customer traction and revenues will come. Patience and persistence pay off.
f. There are No Shortcuts to Success
While every entrepreneur seeks the quick cash out, sustainable success comes from hard work and skill, not gimmicks or luck.
Assume no magic bullet or hack can replace sound strategy and execution. Stay focused on delighting customers profitably – real rewards follow.
g. Self-Belief is Crucial
Doubt is the entrepreneur’s worst enemy. Assume you must maintain an unshakable belief in your abilities and vision, especially when others don’t. Self-confidence carries you through dark days.
As Henry Ford put it: “Whether you think you can or think you can’t, you’re right.”
i. Help and Support Are Needed
Lone rangers rarely succeed. Assume you’ll need to augment your weaknesses by getting mentors, hiring key talent, and forming strategic partnerships. Having the right advisors and team fills critical gaps in your startup’s arsenal.
j. A Viable Business Idea is Required
Passion alone won’t cut it – you need an idea that solves real pain points for customers. Assume you must validate your assumptions about product-market fit early and often.
Is there sufficient demand for your solution? Asking tough questions prevents wasted effort.
k. Knowledge and Expertise Are Necessary
Don’t assume subject matter expertise will magically appear. Assume you must continuously build your entrepreneurial toolkit with skills like sales, marketing, finance, HR, operations, and leadership. Glaring knowledge gaps sink startups. Invest in learning.
Making reasonable assumptions creates an accurate roadmap for the obstacles ahead. With eyes wide open, grit, and smarts, you can beat the odds and build a thriving, profitable business.
The price is high, but the rewards of entrepreneurship eclipse them all.
2. Financial Considerations for Startup Founders
Launching a business necessitates making prudent financial assumptions. Most startups require major capital outlays at the outset, long ramp-up periods to profitability, and contingency plans to survive setbacks.
As a savvy entrepreneur, you want to budget smartly and bootstrap creatively.
See this related article: Financial Management for Entrepreneurs
Here are 6 important financial assumptions or considerations you need to make when starting your business:
a. Assume You’ll Need Substantial Startup Capital and Funding
Don’t underestimate how much cash you’ll burn through before revenues kick in. From incorporation, equipment, product development, marketing activities, and staffing, costs add up fast.
Realistically assess how much runway you’ll need before breaking even.
Most experts recommend having at least 6-12 months of operating costs secured through savings, loans, grants, crowdfunding, or investors.
Don’t stretch yourself too thin financially in the early days. Having adequate capital reduces risk and provides more stability to build your business.
b. Budget for Expenses and Don’t Expect Profitability Immediately
Profit is unlikely from day one. Assume you’ll operate at a loss for a significant period before the business becomes self-sustaining. Meticulously project your operating expenses like:
- Salaries + benefits
- Professional services
Leave wiggle room for unexpected costs. It takes most startups 2-3 years to reach profitability. Be conservative with financial forecasts and don’t promise investors quick returns.
c. Plan for an Initial Period of Bootstrapping and Lean Operations
In the early days, avoid unnecessary expenses. Embrace frugality and bootstrap like your life depends on it!
Assume you’ll need to do more with less. Strategies like:
- Minimizing payroll by wearing multiple hats
- Using free tools instead of paid software
- Negotiating deals with suppliers
- Subletting office space
- Bartering services
The longer you can bootstrap, the less dependent you are on outside funding. Stretch your runway through lean, scrappy operations.
d. Have Contingency Plans to Cover Costs if Revenue is Delayed
It’s wise to hope for the best but prepare for the worst. Assume potential scenarios where customers and revenue don’t materialize as quickly as expected.
To mitigate risk:
- Line up credit you can access if needed
- Build an emergency fund equal to 2-3 months of operating costs
- Sign contracts with flexibility around payment terms
- Focus on cash flow early and maintain healthy cash reserves
- Pursue grants, contests, and other “free money” sources
With contingency plans, you can ride out unforeseen hurdles and shocks to your startup’s finances.
e. Don’t Obsess Over Valuation Before Proving Your Concept
Many founders fixate on achieving a huge valuation before launch. But lofty valuations mean nothing until you have a product customers want. Avoid putting the cart before the horse.
Assume you must fixate on nailing product-market fit first and delighting users profitably. Once you prove your startup’s concept and growth trajectory, generous valuations will follow.
f. Consider Revenue Streams Beyond Direct Sales
Don’t limit yourself to obvious monetization models. Assume you may need to get creative with revenue, like:
- Licensing technology/IP
- Offering premium add-ons
- Crafting subscription tiers
- Bundling products/services
- Drop-shipping goods
- Affiliate marketing fees
- Selling data insights
- Providing consulting/support
A diversified income mix provides flexibility if certain streams underperform.
Financial preparation is a key pillar of startup success. Make savvy assumptions, budget wisely, bootstrap aggressively, and plan for uncertainty.
With smart money management, you amplify your odds of building a thriving, profitable company.
3. The Monumental Time and Effort Required to Launch a Business
Embarking on your entrepreneurial journey? Be prepared to immerse yourself fully – startups demand unrelenting time and effort. Managing your expectations around workloads and work-life balance is key.
a. Assume You’ll Need to Work Extremely Hard with Long Hours
Long days, late nights, and weekends will become the norm. Most founders work 80-100+ hours per week, especially at the outset. Sleepless sprints are often required to get a startup off the ground.
Be mentally ready to grind day in and day out. Setting up systems and processes, creating products, recruiting team members, and winning customers – these tasks take tremendous work ethic and persistence. Hard work compounds over time to build momentum.
Here’s a sample workload week for a new entrepreneur:
- Monday to Friday: 12+ hour workdays split between sales calls, product development, accounting, customer service, marketing tasks, etc.
- Evenings: More hours spent responding to emails/messages, planning for the next day, and thinking strategically about the business.
- Weekends: At least 5-10 hours of additional work time.
Work will spill into personal hours and dominate your schedule. Starting a business is all-consuming. Say goodbye to work-life balance for a while.
b. Be Prepared to Sacrifice Work-Life Balance, At Least Initially
Your social and family life will take a backseat. Expect to miss events, milestones, holidays, and leisure time occasionally. Entrepreneurship requires extreme focus, especially when starting out.
Don’t beat yourself up about missing life happenings. Share your plans openly so loved ones understand your current priorities. Schedule focused family time to recharge when possible.
Once your business becomes more stable and you build an able team, gradually restore balance. But in the early days, assume work will rule your calendar.
c. Hiring Help Takes Time, So Be Ready to Handle All Tasks
Want to offload work to new hires? That takes time and money. Assume you’ll need to be a Jack or Jill of all trades covering every function independently until your startup gains momentum.
Don’t expect to immediately hire a team to scale your vision. Finding and vetting the right people is challenging. Even once you hire, ramp-up time to productivity is slow. Manage your own expectations around capacity.
Until you can afford talent, maximize your personal productivity:
- Automate repetitive tasks
- Block distracting websites during work hours
- Set daily objectives and track results
- Follow rigid schedules and routines
- Outsource specialized work if absolutely needed
The more sweat equity you contribute early on, the faster you’ll build startup traction.
d. Persistence Through Challenges and Failures is Critical
Launching a successful startup is a long game requiring granite-like persistence. Assume you’ll frequently face obstacles, setbacks, and failures.
When tough times hit, forge ahead relentlessly. View hurdles as opportunities to learn and improve. Refuse to quit or get discouraged. There is no overnight success formula. You must grind day after day. Stay hungry and humble.
Establishing a startup takes immense personal sacrifice. Manage your expectations around effort and time commitment. Immerse yourself fully and persist despite hardships. Your vision will become a reality!
4. Critical Factors to Consider Before Starting a Business
Taking the entrepreneurial plunge requires carefully evaluating your startup idea against key success factors. Performing robust analysis of the market opportunity, competitive landscape, operations, and finances amplify your odds of gains over pains.
Validate Market Demand
A brilliant idea means nothing until proven in the real world. Assume you must validate concrete demand for your product or service. Get objective data directly from prospective customers through tactics like:
- Customer interviews: Ask about their pains, needs, and willingness to pay.
- Focus groups: Gauge interest and feedback on your concept.
- Surveys: Quantify how many would purchase your offering.
- Landing pages: Measure visitor-to-lead conversion rates.
- Google Keyword Planner: Assess search volume for relevant keywords.
If your startup solves a widespread pain point, customers should respond enthusiastically. Beware of building in an echo chamber! Assumptions can be deceiving. Let the market tell you if the opportunity exists.
Project Your Startup Budget
Meticulously estimate costs, securing enough capital to fuel operations until profitability. Budget for:
- Incorporation, legal, and accounting fees
- Salaries, benefits, HR costs
- Workspaces, equipment, supplies
- Research and development
- Inventory, manufacturing, shipping
- Marketing, advertising, PR
- Software, tools, services
- Travel, transportation, lodging
Build financial models projecting revenue and expenses. Secure loans, investors, or grants to cover your startup budget, plus contingencies. Don’t stretch yourself too thin at the outset.
Understand Your Legal Obligations
Startups face many legal and regulatory requirements. Consider:
- Business structure: Corporation, LLC, partnership, etc.
- Permits/licenses: Business licenses, health permits, liquor licenses, etc.
- Zoning: Clear commercial real estate for office/retail use.
- Insurance: Liability, errors & omissions, directors & officers, etc.
- Employment law: Payroll, benefits, employee rights/contracts.
- Industry regulations: FDA, FTC, CFPB, EPA, and other agency rules.
- Taxes: Federal, state, and local taxes, sales tax collection.
- IP protection: Trademarks, copyrights, patents, licensing agreements.
Consult attorneys and government agencies to ensure full compliance. This avoids painful lawsuits or penalties down the road as your company grows.
Craft Sales and Marketing Strategies
Assume you must invest significant time and money into sales and marketing activities to acquire customers. Devise targeted strategies to:
- Identify your ideal customer personas
- Articulate your competitive positioning
- Establish pricing structures
- Create product marketing assets like brochures, demo videos, and case studies
- Develop sales scripts, email templates, and call workflows
- Build a CRM system to manage leads and pipeline
- Design campaigns across social media, SEO, email, events, etc.
- Allocate budget for digital ads, billboards, direct mail, swag
- Leverage referrals, affiliates, and partner marketing
Robust sales and marketing plans ensure your startup can scale profitably as new customers sign on.
Prepare to Manage Risk and Uncertainty
Starting a business necessarily involves uncertainty and risk. Strategies like:
- Conducting market validation
- Seeking expert mentors
- Taking pre-orders or crowdfunding
- Starting lean before going all in
- Creating detailed contingency plans
- Securing business interruption insurance
- Developing crisis management protocols
can help mitigate, but not eliminate, unknowns. Mentally prepare for a roller-coaster ride. Not everything will go according to plan. With agility and grit, you can handle unpredictable curveballs.
Laying the proper operational, legal, and financial foundations maximizes your likelihood of startup success. Do your homework before taking the plunge!
5. Building a Strong Foundation for Startup Success
Beyond making savvy financial and operational moves, entrepreneurs must also assume responsibility for building an unshakable core upon which to grow their business. Defining your startup’s mission, vision, values, culture and team lays the groundwork for sustainable growth.
Put Passion Into Your Mission, Vision, Values, and Culture
These elements form the heart of your company. Clearly convey:
- Mission: Your purpose and aim.
- Vision: Your ambitious dream for the future.
- Values: Your guiding principles.
- Culture: The environment you aim to create.
This provides direction and inspiration as your startup evolves. Your mission galvanizes your team around shared goals to serve customers. Core values shape the ethics and character of your company. Vision provides the guiding star as you scale your concept. And culture defines the vibe and social norms that empower employees to execute.
Take time to define these elements thoughtfully before launch. Revisit them often as your business grows to realign as needed.
Surround Yourself with a Great Startup Team
Even solo founders can’t go it alone forever. Assume you’ll need to build an A-team to complement your skills and propel growth. But hiring has its challenges:
- Early-stage startups can’t afford top-dollar salaries. Offer equity to attract talent.
- It’s hard to evaluate capabilities and culture fit from interviews alone. Check references diligently.
- Speed to productivity for new hires takes months. Have patience ramping them up.
- Poor performers must be promptly coached up or let go. Don’t tolerate dead weight.
Here’s how to build a stellar team:
- Write detailed job descriptions so prospects understand the roles.
- Source candidates from your personal/professional networks first.
- Ask probing behavioral interview questions that reveal abilities and character.
- Check portfolios, GitHub, awards, and testimonials to evaluate skills.
- Ensure alignment with your mission, vision, and values.
- Start with contractors or part-time staff to test-drive new hires before committing full-time.
Who you attract, develop, and retain makes all the difference in achieving startup success.
Craft a Focused Strategy and Executable Business Plan
Assume you must translate your big vision into a coherent strategic plan comprising:
- Competitive positioning: How you’ll differentiate vs. rivals.
- Business model: How you’ll deliver value profitably.
- Target customers: Who you’ll serve in the market.
- Key partnerships: External relationships to leverage.
- Marketing plan: Strategies to acquire and retain customers.
- Operations plan: Internal processes for executing work.
- Technology plan: Platforms, tools, and systems needed.
- Financial plan: P&Ls, cash flow, projections, KPIs.
- Milestones: Key goals and timelines for scaling.
This provides a blueprint for how all the startup pieces fit together. It evolves over time as you test assumptions and refine them based on market feedback.
Every successful startup begins with passion and purpose before logically mapping out how to transform vision into reality. Laying a strong foundation in the early days allows sustained growth for years to come.
Conclusion – What Every Entrepreneur Needs to Know in Starting a Business
Embarking on your entrepreneurial journey requires reasonable optimism and pragmatic planning.
- Success is earned through hard work, not guaranteed. Be mentally prepared for the grind.
- Mind the financial fine print needed to keep operations running. Budget realistically.
- The early days demand intense commitment and sacrifice before work-life balance improves.
- Learn constantly, accept failures, and persist through challenges. This forges resilience.
- Validate your assumptions about customers’ needs and product-market fit early on.
- Assemble the best possible team to complement your skills and drive growth.
- Have a sound strategic roadmap for how you’ll build the business and delight customers.
With clear eyes, open minds, and steel wills focused on creating real value profitably, entrepreneurs can turn pipe dreams into reality one step at a time. The thrill lies in overcoming the inevitable trials that temper you.
Frequently Asked Questions
What are the most important assumptions entrepreneurs must make when starting a business?
The key assumptions include:
- You’ll need to work extremely hard – 60+ hour work weeks are standard, especially at first.
- Profitability takes time – Most startups operate at a loss for at least 12-24 months before reaching break even.
- You’ll face many challenges and failures – Obstacles should be viewed as opportunities for learning and growth.
- You can’t go it alone forever – At some point, you’ll need to build a team to complement your skills.
- Ideas hold no value until validated – Assumptions about market demand must be thoroughly tested.
How much runway should you have saved before launching your startup?
Ideally, 6-12 months of operating capital to cover costs like salaries, software, marketing expenses, etc. This provides a financial cushion in case revenues come slower than expected.
What are signs that your startup idea may not be viable?
- Lack of enthusiasm from prospective customers
- No search volume for related keywords
- Many established competitors already serving the market
- Unclear path to profitability
Signal that your idea may not solve a real market need. Pivot or reconsider launching.
When should you begin hiring employees?
When your startup’s operations exceed your personal bandwidth. Many founders start by hiring VAs, freelancers or agencies to supplement their skills before making full-time hires. Prioritize hiring to support sales and revenue generation first.
What systems should you set up early when starting your business?
- Bookkeeping/accounting software
- CRM to track customers
- Project management systems
- Email marketing and sales automation
- Social media and marketing analytics
- Cybersecurity and data protection
Automating core systems early allows you to scale more efficiently.