Business isn't what it used to be. That's generally a good thing, but in our rush to be entrepreneurs we often overlook the ways in which being in business for yourself is actually more difficult than it has ever been in the past!
We discuss barriers to entry, accountability, financial aspects--and how you can make sure YOU don't fall into any entrepreneurial traps!
Pamela: Hello everybody this is Pamela.
Tracy: And this is Tracy
Pamela: And we are back for another episode where we discuss How Business Really Works.
Tracy: So, today we're going to talk about why getting into businesses easier, but is actually harder today than it was 20 years ago.
So Pam, why do you think it's easier to get into business today?
Pamela: Well, it all comes down to barrier to entry. So 20-30 years ago before the advent of the internet and all of this wonderful technology that we have at our fingertips, mobile devices, tablets etc., there was quite a high barrier to entry to getting into business for yourself. You know you had to apply for a loan and maybe you weren't approved for that loan, maybe you were.
But you had to develop a business plan and have that vetted. That still happens today, but it's not the same process that it used to be. But there were financial barrier to entry. There were technological barriers to entry. And I think that was kind of a good thing because it really meant that people with the great ideas, who were really driven to produce, they're the ones that started businesses.
Tracy: Well, and if you think about it, there was also geographical barriers there aren’t today.
Yeah, we had the internet 20 years ago, but think about it. Did we have Facebook? Amazon was just a glimmer in someone's eye, just getting off the ground. You really couldn't, unless you have programming skills, you couldn’t create your own website like you can today. You couldn't talk to people half the world away for free. You didn't have social media. You didn't have Periscope, Facetime. You know, we could just make an entire lot of tools that you can use for free today.
So yeah, the barrier to entry financially is virtually nil.
Pamela: Today you can crowdfund your idea and if you have an idea that resonates with a lot of people, you can put it out there on Kickstarter, on Indiegogo, on GoFundMe. And if your idea is a good one, then you can actually just raise your money without ever having to go to a bank.
(Time - 2:09)
Tracy: Yeah, but it also makes it harder, because you're not properly vetting ideas.
Pamela: That's right.
Tracy: You're not putting ideas in front of the right people because you don't have to anymore.
Pamela: Right, right, you don't have to.
Tracy: So I think sometimes, people jump into something because they had an idea. But they haven't really thought this idea through to fruition. They don't have the total end goal in mind. They don't know where this idea is going to take them.
Pamela: Yes, not a well thought out, well-formed. Not always this isn't always the case,
Tracy: But we see it happen a lot.
Pamela: We do.
Tracy: We do see that happen a lot. And you see people that, because one communication is so easy and there's so much many of us out there giving advice, that you see people that jump from idea, to idea, to idea, and it actually makes business more difficult because you're not thinking things through.
Nobody's going to turn around and go to the bank and borrow tens to hundreds of thousands of dollars to start a business the way they used to, when they were paying five thousand dollars to get a website built, and they were having to print all this advertising, they were having to pay for all this advertising, pay for placement and do all these other things. People didn't do that without a really solid concrete plan.
But today, you’ll just jump into business off an idea, because you can.
You know a proper business plan, it's not only going to be “where I want to be in five years”, but it's going to be how I'm going to get there. So, how am I going to market and acquire customers, when am I going to be revenue positive, what kind of form is that going to take, how long is that going to take, and what is the growth going to be.
(Time - 4:02)
If you had to go in front of a banker to get a loan, you're going to have to do quarterly projections. You’re going to have to meet those quarterly projections if you're going to want to renew your loan. Same thing with investors, investors have expectations. They're not going to let you just whittle around for the next 12 months without producing revenues. It’s just not going to happen.
And you need to take the responsibility to treat your business the exact same way, even though you can start it up with virtually no funds. Just because it didn't take money to get in, doesn't mean the business doesn't need to make money. Set the timetable. Set the expectations. Use it as a measuring stick and hold yourself accountable.
When you go to Indiegogo and Kickstarter it’s great because, you know, you get this crowd funding. You get satisfaction. You've got the money to move forward, but the problem is it doesn't put those other steps in there. It doesn't put in the accountability. So, one of the reasons businesses so much harder nowadays is there's not the outside accountability. You are solely responsible to yourself.
Pamela: Well one thing we didn't discuss actually is that there's a lower barrier to entry. Which is good, but there are also a lot of free tools available for you, free or cheap tools available for you. Technological tools like Dropbox, is free for the most part unless you want to upgrade. Google Apps is free. You can get a domain name for dirt cheap these days. You can get an AWS network setup for very little money per month. So, you don't even have to have your own in-house network. You can have that all done in a cloud for free or cheap. Mobile devices, I mean there's just this unlimited amount of tools available to you that won't cost you a lot or will cost you nothing, so again, it's a double-edged sword. That's a good thing because it makes it very easy for you to start your business, but I think that gives a lot of us a false sense of accomplishment, like since I have all these tools, since I have an AWS micro or whatever level I'm choosing, I should be able to just get my business going and start making money, right? Wrong?
(Time - 6:20)
Tracy: But you don’t have a plan.
Pamela: But it doesn't work. Either I don't have a plan or I'm not using those tools effectively. Really, I have so much more responsibility than I used to as a business owner, maybe different responsibilities. I think that's what it comes down to.
Tracy: Well, I think you don't understand your responsibilities.
Tracy: Because the tools are free and you don't value them, because they're free. And all the time you spend using these tools, are you properly valuing your time? The things you would have paid someone else to do in the past, you’re now taking on yourself because, oh, well it's free, it’s easy, I can do it.
Pamela: Yeah and why not do it to save money.
Tracy: Is that the accurate use of your time?
Pamela: Yeah and we have another video on this topic about setting priorities on your time and deciding how to spend your time on which activities and we’ll link to that video in the cards here and I’ll put a link to it in the description of the video. Go check that out it's got some great information about setting goals for yourself and how to plan your time. But basically, all these free tools just kind of creates this smorgasbord of things that you can accomplish for yourself and it's great that we can accomplish these things for ourselves, but should you be doing those things yourself? Should you be doing your own website? Maybe you should, I can't decide that for you, but we're just telling you what to think of when you make these decisions.
(Time – 7:48)
Tracy: And another thing is, just because all those free tools are out there, doesn't mean you should be using all those free tool.
Pamela: That’s true.
Tracy: You need to pick and choose which ones are getting me to my goal. Then of course, you have to have that goal set in the first place. You have to have that plan. You've got to know where you're going. So you know, good gosh, the the list of free tools I don't use way exceeds the free tools that I do use.
Pamela: Yes. Yep, same here. You’ve got to pick and choose.
Tracy: Got to pick and choose. The most important thing, value your time. Put a dollar figure on your time.
Pamela: And, I will also say when you are deciding which tool to use, let's take Facebook Live versus YouTube Live. They’re the same concept. You're going to be live. You’re going to be interacting with your audience. But where is your audience? Maybe your audience is not on Facebook or maybe they are more on Facebook than they are on YouTube. You have to know where your audience is at in order to reach them. So if I'm deciding between these two free tools, which one am I going to spend my time on it's going to depend where my audience is and where I’m going to get the most traffic. So, you got to think of things like that as well.
(Time – 9:00)
So we mentioned the level of responsibility that you have for your own success has now gone up and kind of changed from what used to be. There are things you need to consider when we say responsible for your own success
Tracy: Yeah because basically you've got to set your own goals. You've got to determine the path to take. You've got to measure the results and make sure you're headed in the right direction.
Before those things, you know you would usually be seeing your banker on a regular basis about your loan or however you would have things finance. A lot of times they were investors because the cost of business, getting into business was so much higher, you had all these investors that you would have to meet with and answer to.
You know, your accountant and stuff. Most people who are starting their own business, at least, you know, real startups, small businesses today, they're using FreshBooks or whatever.
Pamela: Yeah, they’re not even using the accountant.
Tracy: They go to them once a year to get the tax forms filled out. You're missing an entire level of knowledge and responsibility in there, so you have to take responsibility for that especially if you want to start with just an idea. Don't just jump in there. Create the plan. Educate yourself. Make sure that, well you know, we talk about our five-year plan. We talk about that all the time. This is something that we bring up, I think, in every video we do.
Pamela: Pretty much, that should give you a clue as to how important it is.
Tracy: Don't take an idea and leap just because there's no barrier to entry. Take the time to make a plan, to research things. Research where your audience is going to be. You know, look into which tools I should actually use. Are they going to get me where I need to be? Because you can't do everything.
(Time – 11:00)
That would make it good episode. You just can't do it all.
So our point is, the lack of financial need to start a business today can actually hurt you more than all these free tools and stuff can help you.
Pamela: Yeah if you're not disciplined about it and if you don't have a plan going forward and you don't take steps to enact that plan in a methodical fashion. Sometimes, sometimes you know, there's an anomaly and someone will come up with the idea and I'll just wing it and they can make it happen. That does happen. But we're here to tell you that that's not the rule and you are not likely going to be the exception to the rule. None of us really is going to always be or anytime be the exception to the rule. So you've got a plan. You've got to take your business seriously. You might have a great idea but if you get lost in the offerings or if you don't take responsibility for seeing that through in all the ways we've mentioned then you're not going to make it.
So we hope you have found this video helpful as to why business is much easier and also much harder to be in for yourself these days. If you are starting your own business, we're assuming that's why you’re here, let us know what business you're in. Let us know what you think about the technology that's available to you. How do you use it? How do you get your ideas from just an idea to funding that idea? Do you go on Indiegogo or GoFundMe? Let us know what you're doing and how we can help you some more. Give us your feedback and don't forget to like this video and subscribe to the channel and we'll see you on the next one.