“Being an entrepreneur is a trend right now,” says Diana House, herself a multi-business entrepreneur, “but not everyone realizes how hard it is. You constantly need to psych yourself up to face problems that are sometimes extremely challenging. You can feel lonely without a boss, who ideally is someone you can turn to for advice and help.”
In February 2015, we published survey results indicating small business optimism – and that’s great news. After talking to Diana House, though, who owns and runs multiple small businesses – most recently cofounding Cole + Parker, a company that sells $30 socks to “leaders, legends and entrepreneurs” – we thought it was also important to discuss how being realistic is a crucial trait for success.
Recipe for realism
Here are four ways you need to be realistic, according to Diana, before starting on your entrepreneurship journey:
- Realistic about resources: Before you quit a job and/or start a business, do you have enough resources built up to survive your first year? Few people are overnight success stories, so you need sufficient financial resources. For Cole + Porter, Diana raised $42,000 through Indiegogo.com crowdsourcing and then self-funded the rest of the startup costs through money earned at her first small business, Tiny Devotions.
- Realistic about talent and skills: Be honest with yourself. Do you have what it takes to tough it out and make it? It’s a trend right now to think you’re made for entrepreneurship, but that’s not necessarily so. In her case, by the time she’d started Cole + Porter, Diana was already an experienced businesswoman – plus she has a lot of what she calls “hustle.”
- Realistic about products and/or services: Dip your foot in. Let the market decide if they want what you have. Consider a crowdsource campaign before manufacturing a product. What kind of response did you get? So, how are $30 socks realistic? Look at the next bullet point for clarification!
- Realistic about your target audience(s): For some markets, $30 socks would be considered outrageously expensive. But Diana carefully chose her target audience and sells 95% of her products to wholesale markets. These socks are then resold in upscale men’s stores where suits cost $1,000 and where $12 socks simply wouldn’t fit into the retail line.
Here’s more candid advice. In Tony Robbins’ business mastery course, Diana shares, he points out that the further along you go in business, the more likely it is that you’ll fail. Often times, people assume that the first year as an entrepreneur is the toughest but, statistically speaking, failure rates climb. “You constantly need to develop yourself,” Diana says, “and get better as you go. And, you need to acknowledge that you’re always going to need to take risks. Any business is a risk and there are no guarantees that it will succeed.”
More realism resources from around the web:
- According to CNBC (July 2014), 400,000 new businesses are started each year, but 470,000 are closing, leaving a deficit of 70,000. Although some close because the owner retires, the takeaway is that starting a business is risky – but plenty of risk can be averted through appropriate planning. This article shares useful tips and strategies to consider.
- Forbes published an article in 2013 that lists five common reasons that small businesses fail, along with solutions. One key problem, according to the writer, is that “entrepreneurs must walk 1,000 miles in the shoes of their customers. Not 10. Not 100. One thousand. Your customer holds the key to your success deep in their pain, behavior, dreams, values and the jobs they are trying to accomplish.” Read the article for the recommended solution to this particular challenge – and to four other key challenges.
- The U.S. Small Business Association (SBA) provides a readiness quiz so that you can determine if you’re prepared to take the entrepreneurial plunge.
At the age of twenty-three, Diana traveled from the United States to Australia to attend law school. There she “surfed, coffee-shopped and fell madly in love with yoga and the laid back ocean-side lifestyle.” She then traveled to Bali, Indonesia, where she began making her own mala beads, which are traditionally used by Buddhists and Hindus for keeping count while repeating a mantra in the name of a deity.
Then, reality hit hard. She needed to head back to the U.S. to begin interning at a law firm.
It was while she was feeling the internship grind that a Lululemon head designer saw her mala beads and encouraged her to pursue her passion. She began selling her beads on Facebook, and this lead to her mala bead business at TinyDevotions.com, where she sold out of her beads on the very first day. And, according to the website, these “mala beads and intentional accessories are worn by celebrities, fashionistas, wellness warriors and yoga goddesses all over the globe.”
She is also a cofounder of Cole + Parker, a business that has a dual goal – to support other entrepreneurs both locally and globally, while also making amazing socks. Part of the sales proceeds help Kiva, an organization that offers loans to low income and otherwise underserved entrepreneurs around the world.
More tips from Diana
Diana was part of the MP Star Financial entrepreneurship study, where we collected traits that entrepreneurs believe are important for success – and the traits that are most important from Diana’s perspective include:
- Resilience: “The more successful your company, the bigger the problems.”
- Risk taking: “The entrepreneur has to stomach the risk of everything: the new hire, the new product, the legal issue, the accounting issue.” As her father puts it, if there aren’t butterflies in your stomach, you’re not playing the game hard enough. If it feels too stable, you’re not pushing hard enough. Small risks only lead to small rewards. You need to feel the fear and do it anyhow – to push past the fear.
- Innovation: “Doing the same thing you did last year won’t work in today’s climate. If you’re not innovating, other people will catch up to what you’re doing and perhaps put you out of business. Plus, innovation is what keeps all exciting, fresh and growing.” And, as she points out, it’s astonishingly easy nowadays to put up an online store, so barriers to entry into the marketplace have never been so low. Keep innovating!
Bonus Tip from MP Star Financial
One of the most common reasons for small business failure is cash flow problems. If this is preventing you from growing your business, apply for invoice factoring online.